The evidence is striking. Consumer
confidence in China was recently at a ten-year
high – surpassing its levels in 2009 and 2010,
when nominal output growth was as high as 18
per cent and when the government launched a
$4tn stimulus package.
Imports have soared,
pushing China’s current account surplus to 1.2
per cent in the second quarter of 2017, about
one-third the level recorded in 2010. Moreover,
short-term consumer loans have soared,
accounting for a tenth of total new bank loans
compared to two per cent in 2007.
Even with this level of consumer
confdence, and soaring imports and short-term
loans, retail sales are stable rather than booming.
Imports may have risen 17 per cent last year
(compared with a five per cent drop 2016 and a
14 per cent drop the prior year), but the
equivalent figure for retail sales growth was
stable at ten per cent in July 2017 – the same
level hit in the previous two years.