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Submitted by Anders on
First of all. Thank you for taking the time to answering our questions. So few scholars take their public servant responsibilities serious. The rise in the M2 and the focus on fixed assets within the investment scope of the fiscal expansion in 08/09/10 does, as you and I agree on, leaves the Chinese with "over" capacity issues in certain sectors. If the growth rate within the GDP has to be sustained, then consumption (C) has to grow and all things being equal the other components of the economy (I,G,X-M) have to stay at their current level or rise. Correct me if I am wrong. What is your evaluation (roughly) of the scope for the Chinese government to stimulate C ? I agree with you that stimulating G and I through fiscal expansion has worked, but it seems to me that stimulating C in China is a different thing altogether. By my account there, for China especially, are serious side effects connected with such stimulation: unemployment, social imbalance, less state control and negative effects on the export sector. I was hoping for your opinion on what macro tools there would be relevant for the Chinese in stimulating consumption I have read your post from June last year, but still could you elaborate over this subject at a given time. Best Regards