Credit Suisse published recently a study by Professor Wang Xiaolu of the China Reform Foundation that tried to estimate the real size of China's economy, household income, and savings and consumption rates.

According to the study, China most certainly has a serious underconsumption problem and it is much worse than anyone imagined.

In fact, official statistics show that Chinese households consumed just under 36 percent of gross domestic product last year. This is an unprecedented number, much lower than the 65-70 percent typical of the US and Europe, and far below the 50-55 percent typical of other low-consuming Asian countries.

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