China has announced that its GDP will rally and grow by 7.5% this year. If a year of inflation in 2011 worried the Chinese, now their plan is to create growth so that rural workers can continue to flock to the cities and find jobs.
This rapid movement coincides with a real estate frenzy and a slowdown in exports to the West.
So the new leaders that will take the reins this year have the responsibility of changing their growth model. Until now, the model has been based on zero social spending, providing low rates of interest, making foreign currency cheap and keeping salaries flat.
All that favors investment and corporate profits instead of the consumer's ability to consume. Now China should encourage internal consumption so that its economy can become sustainable.
