“China’s rebalancing is not merely about economics but ultimately, the political viability of the Chinese system. Beijing has delivered economic prosperity to many Chinese citizens. But these very successes have yielded numerous problems-some large-that could undermine the regime’s legitimacy if left wholly unattended.”
                                                                                                                             (Eurasia Group web site, China’s Great Rebalancing Act)

China’s economy has been slowing for a number of years, which is part of the reason that the global economy and commodity markets are so weak.

Indeed, the consensus expectation is that China’s real GDP will expand around 6.5% this year, the slowest rate of growth in 26 years and substantially slower than double digit growth rates of less than a decade ago.

In recent decades when China experienced blistering fast economic growth, the data indicated that it was due to an unusually heavy reliance on exports and domestic investment. As a result, China’s economy expanded rapidly and quickly became the second largest in the world, which obviously provides China with considerable economic power and influence.

However, China’s officials have for some time acknowledged that its mercantilist growth model, based on incenting industrial production and exports at the expense of domestic consumption, was not sustainable.

That is, China’s government recognized that it needs to rebalance its economy away from a heavy reliance on exports and investment spending in the direction of domestic demand.

In fact, since 2010 some of the new rebalancing objectives seem to be realized since in a relatively short period of time consumer spending expanded from about 50% of GDP in 2010 to 65% in 2016.

However, it is also clear that the slowdown in the world’s economy has also been a major contributor to the relative shrinkage of China’s large export sector.

In other words, it is likely that when the global economy returns to a more normal growth rate that the rebalancing efforts in China will also slow down.