Nearly two decades after former premier Wen Jiabao expressed concerns about China’s heavy reliance on export-driven growth, a recent report indicates that the situation has deteriorated. Economist Stephen S. Roach’s article in Malaysia’s The Star news website criticizes China’s failed attempts to rebalance its economy towards consumer-led growth. This failure raises significant concerns for both China and the global economy.
In 2007, Wen Jiabao had warned about the economy’s instability, imbalance, lack of coordination, and unsustainability due to overreliance on exports. Recent statistics cited in the article demonstrate a concerning decline in domestic consumption within China. Retail sales in China dropped unexpectedly by 0.6% year-on-year in May 2026, following a meager 0.2% increase in April, marking the first monthly decline in over three years.
Moreover, the proportion of household consumption to GDP stands at just 39.9%, almost unchanged from the 2005 level of 39.8%. This stagnation in consumer spending, as highlighted by Wen in 2007, suggests a worrying trend. The article suggests that China’s continuous dumping of cheap exports in foreign markets, leading to industry harm and job losses, is a direct consequence of this economic imbalance.
