Consumption cannot be only driver

Increased investment in high-tech and knowledge-intensive industries also needed to ensure comparative advantage

China's economy is at a crossroads. As 2013 begins, foreign and domestic observers alike are asking which path the country's economic development should take in the next decade. How can China ensure stable and sustainable growth in the face of significant internal and external challenges, including slowing medium- and long-term growth, rising labor costs, and growing inflationary pressures?

After the global economic crisis weakened external demand, which sustained China's unprecedented economic growth for three decades, the authorities agreed that internal demand, especially domestic consumption, must become the country's new growth engine. At the Party's congress in November, Chinese leaders declared their intention to double per capita income by 2020, unleashing 64 trillion yuan ($10.2 trillion) of purchasing power.