In addendun due to space, just so people don`t misunderstand, there are Chinese based, Marxist critiques of these reforms you can find online.

Here is one such critique.

Yu Yongding Defends Investment-Led Growth, Dismisses Consumption-Driven Model - Influential Chinese policy advisor questions effectiveness of consumer subsidies, pushes for renewed infrastructure stimulus

1. “Consumption-Driven” Growth Doesn’t Exist

The concept of “consumption-driven” growth is most frequently discussed by American economists like Krugman and Summers. Krugman claims that China’s long-standing “investment-driven” growth model has brought the Chinese economy to the brink of financial crisis, while Summers argues that China’s “investment-driven” growth model has reached its end.

When discussing the choice between “investment-driven” and “consumption-driven” growth, we must first clarify whether we’re discussing long-term economic growth or short-term macroeconomic management. When Western academics discuss China’s “investment-driven” model, they’re actually referring to China’s economic growth strategy and paradigm. How to achieve China’s long-term stable growth (development) is fundamentally different from how to achieve a specific growth target in a given year, such as achieving around 5% GDP growth in 2025. The former focuses on medium and long-term economic growth, studying supply-side issues; the latter emphasizes short-term adjustment, studying demand-side issues.

As a matter of long-term economic growth, “consumption-driven” growth simply doesn’t exist as an economic growth model.

Taking Marxist reproduction theory as an example, when all savings are converted into investment, the higher the savings rate, the faster the growth of total social product. Conversely, the higher the “consumption rate,” the lower the growth rate of total social product.

Taking Lenin’s reproduction theory as an example, at age 23, Lenin engaged in a polemic with the Narodniks in an article titled “On the Question of Markets,” constructing what was essentially a growth model using difference equations. Lenin used this model to prove that despite Russia’s poverty and insufficient consumption—with the second department (producing consumer goods) unable to develop—the first department (producing means of production) could grow independently of the second department’s slow growth due to the continuous increase in organic composition. Therefore, Russia would inevitably enter capitalist society, making socialist revolution inevitable.

Currently, the Chinese government strongly emphasizes industrial and product innovation, placing technological progress’s role in driving economic growth in a prominent position. In this context, one could say China faces a choice between “investment-driven” and “technology-driven” growth, but technological progress doesn’t fall from the sky—it cannot be separated from various forms of investment. Therefore, one could also say China faces a choice between “general investment-driven” and “innovation-focused investment-driven” growth.

The production function can be expanded to include factors like institutional change and human capital. Improvements in human capital are related to education, health, and other factors. If consumption has a pulling effect on economic growth, this effect should be realized through human capital improvement. However, the transmission mechanism of consumption→human capital improvement→economic growth requires specific quantitative research; conclusions cannot be drawn simply. Moreover, consumption that can improve human capital is of specific types, and the provision of such consumption is inseparable from traditional investment.

In summary, for policymakers, economic growth’s dependence on investment, labor input, and technological progress varies in different periods due to different conditions. Growth models in different periods can be labeled as “investment-driven,” “labor-driven,” or “technology-driven.” But regardless, there is no such thing as a “consumption-driven” economic growth model or strategy.

3. Is China’s Consumption Rate Too Low? Actually, Goods Consumption Rate May Exceed the US

From the perspective of consumer goods expenditure as a share of GDP, China significantly exceeds the US. In 2022, China’s GDP was about 70% of US GDP; retail sales were 87.4% of US goods consumption (including dining). In other words, from the perspective of owning consumer goods (cars, TVs, air conditioners, etc.), China’s consumption expenditure as a share of GDP significantly exceeds the US. Additionally, there are many statistical scope and methodological issues that tend to underestimate China’s final consumption as a share of GDP.

Therefore, after considering consumption structure and price differences, the gap in consumption expenditure as a share of GDP between China and the US shown statistically is actually far less significant than the data suggests. Rough estimates show that measured by goods consumption as a share of GDP, China is about 1.25 times the US.

This is consistent with what Michael Roberts had documented in the past, China’s unfair ‘overcapacity’

The rationality of this nonsense is to be found in the Western mainstream view that China is stuck in an old model of investment-led export manufacturing and needs to ‘rebalance’ towards a consumer-led domestic economy where the private sector has a free rein. China’s weak consumer sector is forcing it to try and export manufacturing ‘over capacity’.

But the evidence for this is not there. According to a recent study by Richard Baldwin, he finds that the export-led model did operate up to 2006, but since then domestic sales have boomed, so that the exports to GDP ratio has actually fallen. “Chinese consumption of Chinese manufactured goods has grown faster than Chinese production for almost two decades. Far from being unable to absorb the production, Chinese domestic consumption of made-in-China goods has grown MUCH faster than the output of China’s manufacturing sector.”