The old adage –“if it ain’t broke, don’t fix it” – does not seem to apply to economic growth in China. In spite of China’s record-setting growth rate over the past 25 years, it is widely argued that it relies too much on fixed investment as an engine of expansion.

Some analysts say China should rely more on technological change, which, unlike investment, is not subject to diminishing returns. Others suggest that domestic consumption should replace investment as the growth engine. Some say China relies too much on exports, the alleged culprit being an exchange rate policy that keeps its currency “undervalued”.

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