China is the first large and over-indebted economy to have (1) recognized that there is a problem and (2) made the decision to attempt to address the problem. Keynesian thinking is all but gone, but how to navigate the way forward is still totally uncertain.
It is also the case that key (and quite powerful) constituencies would rather go back to the debt fueled growth model and are resisting the necessary change.
For those interested, continue to monitor all things “China economy” over the next several years. It will provide critical context for what lays ahead for all G7 nations. Then again, the primary difference will be that China looks to be taking a proactive stance on addressing the issue where as the G7 nations may have their hand forced with not much ability to do so thoughtfully.
