This paper uses income accounting techniques to assess, counterfactually, the implied impact over the last 10 years of a hypothetical government policy to constrain investment growth in order to raise the share of consumption in GDP and to bring about a balance on current account. We find that both target variables are very sensitive to changes in investment and that a policy of careful reform is called for. In the light of this finding, we review Chinese government policy pronouncements and activity with a view to assessing their appropriateness.
Yutian, S., Hicks, J., Basu, P., Sharma, K., Bandara, Y., & Murphy, T. (2017). Balancing act: adjustment of China's economy to secure sustainable growth. Singapore Economic Review, 1-1. https://doi.org/10.1142/S0217590815501003