Comments on Yukon Huang "Understanding China’s unbalanced growth", 1/10/2013, http://www.eastasiaforum.org/2013/09/30/understanding-chinas-unbalanced-growth/
Yukon Huang provides an interesting and fresh analysis of the causes of the Chinese aggregate economic composition and the link to the past transitional experiences of Japan and Korea is particular insightful.
It is difficult if not impossible to achieve fast rapid economic growth and rapid urbanisation for a long and sustained period in a huge country like China with high consumption and low investment, because urbanisation by nature requires huge investment in housing and infrastructure.
The notion of imbalance between investment and consumption in the China case is itself confused with the so called external balance particularly when major industrialised countries have been struggling in the wake of the GFC.
External balance, however, can be more easily understood because there is an external demand constraint.
The so called investment and consumption, however, is harder to understand in theory as Huang mentioned. That is because as long as investment is supported by savings particularly when there is demand for investment like housing and infrastructure associated with urbanisation, it is hard to call it imbalance.
People including economists should not simply apply the aggregate proportion norms in the mature and industrialised economies to rapidly industrialising and urbanising countries.
It is a wrong approach.