China’s shift to a consumer and service economy completely transforms its role in the global economy

China’s economic model has been overhauled: growth is driven by consumption and services and no longer by investment, exports and industry. Accordingly, the private savings rate is falling, foreign trade is stagnant and the external surplus is disappearing. This completely transforms China’s role in the global economy: China no longer drives global trade, global growth or commodity prices; China no longer accumulates foreign exchange reserves or finances the United States’ external deficits; China’s market for industrial products is becoming much less attractive for foreign companies and industry is offshoring out of China.