In this macroeconomic analysis, Bala Ramasamy, Professor of Economics, Associate Dean and Director of the Global EMBA (GEMBA) Programme at China Europe International Business School (CEIBS), explains why China must rebalance its economy toward domestic consumption to secure long-term growth.

Currently, consumption accounts for roughly 40% of China’s GDP, compared to nearly 70% in the United States. This imbalance increases vulnerability to external shocks, trade tensions, and geopolitical uncertainty — particularly amid continued uncertainty surrounding current US leadership.

For decades, China’s growth model has leaned heavily on exports and production capacity. he argues that under the upcoming 15th Five-Year Plan, China must shift emphasis toward consumption — strengthening the domestic demand base and reducing reliance on external markets such as the US and EU.

Key themes from this discussion:

• Why 40% consumption makes China externally vulnerable
• Comparison with US consumption-driven growth
• Export dependence over the past 30–40 years
• The strategic importance of the 15th Five-Year Plan
• Production-side vs. expenditure-side GDP focus
• Building domestic economic resilience
• The critical role of consumer confidence

Prof. Ramasamy emphasises that China’s fundamentals remain strong — infrastructure, industrial capacity, human capital, and technological capability. The missing ingredient, he argues, is confidence among Chinese consumers. If that confidence strengthens, China could sustain another 20 years of strong economic performance.

Who should watch this?

• Business leaders planning China strategy
• Investors tracking structural economic reform
• Policymakers evaluating growth rebalancing
• Economists studying export-led vs. consumption-led models
• Global executives monitoring US–China economic dynamics

This conversation offers a clear framework for understanding China’s next growth phase — and why domestic consumption may define its economic future.

Learn more about CEIBS, a global business school cofounded by the European Union and the Chinese government, here.