Article at a glance:

Encouraging consumer spending in China

A history of social and economic dislocation has left an ingrained pattern of thrift in China: even as it begins to adopt a consumer culture, its savings rate continues to rise. This parsimony now threatens to slow the country's economic growth. If consumer spending is to keep pace with business investment, China's middle class will need to shed its caution and learn to spend more of its income.

The take-away

China's government can encourage consumer spending by creating tax incentives for home ownership and dispelling worries about the future cost of health care and retirement.