Having been previously led by investment and credit, China’s growth in the coming decades will rely more heavily on the strength of the Chinese consumer. And this structural story remains solid. Household consumption, for instance, rose close to 10 percent in the last quarter of 2019, from 8 percent in 2018. This reflects the rising share of consumer spending on services (such as education, travel and recreation), and it illustrates phenomenal income growth. Over the past decade, real income rose by 120 percent in China, and with the savings rate at about 27 percent (of disposable income), it provides for further pent-up consumer demand in the coming years.
At the time of this writing on Feb. 24, the ultimate duration, spread and economic impact of the coronavirus outbreak remain highly uncertain. A significant downside impact on short-term economic growth, however, is highly likely. The prolonged shutdown in production in China could potentially also disrupt supply chains
