China: Farmers need to consume

Marty over at The Big Yuan offers his interpretation of Morgan Stanley's just-released analysis of China's eleventh five year plan and its global implications: “The only realistic way to ease the trade balance is to increase the flow of exports into the burgeoning Chinese consumer market. Both Dell and Wal-mart have announced expansion into China, but this will be a long-term fix.”

Dan Harris of China Law Blog replies: “China inevitably will see wages rise and consumerism increase, just as happened in Japan and then Korea. It will take time, but it will occur. The wild card for China, however, is the 800 million rural dwellers who are a long way from having much in the way of disposable income.”

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