China’s Next Mountain to Climb

MILAN – China is entering a complex set of transitions that will lay the foundations for the advanced-country status that it hopes to reach in the next 25 years. After three decades of sustained growth and a remarkably successful policy response to the recent global crisis, Chinese self-confidence is soaring. But the lessons that the government may draw from the crisis may not be the best guides for the long term.

China faces several parallel and related challenges that are crucial for its internal development as well as its global economic relations. Among these are:

● a major microeconomic restructuring of the economy to anchor the country’s emerging middle income country status;

● a macroeconomic shift to a higher level of household income and consumption and a more rapid expansion of the middle class;