The rebalancing process will cause short-term pain and perhaps a rise in unemployment. Postponing it will make both of those problems worse when the adjustment finally takes place. China has to choose when is the best time to begin that process, and this depends on a lot of social and political factors. Most obviously, the 2012 succession process is a key variable. Because rebalancing mainly means increasing the household income share of national income and, with it, the household consumption share, it implicitly means redistributing income from businesses and governments to households, and exactly which businesses, governments, and households depend on which adjustment mechanism. There are several ways to rebalance, each with different implications for social policy, making it an issue that must be determined not by economists but by political leaders.
via seekingalpha.com
Too much recent economics coverage regarding the Chinese economy has been about how the government needs to increase the value of its currency. However, in this great article, we see there are other approaches as well.
