Economy in transition

After 30 years of record-setting growth，China is transitioning.Growth is moderating，and the economy is evolving to a more consumption-driven model，in which more GDP and employment will come from services.At the same time，the forces that have driven GDP growth in the past—a constant surge of workers into the labor force and massive investments in fixed assets such as infrastructure—are losing their power.Today，the labor force is no longer expanding because China's population is aging and returns on fixed asset investments have declined.Along with labor，investments in fixed assets have been critical to the rapid growth of the Chinese economy over the past 30 years.Capital investment，often funded with debt，went into factories，highways，transit systems，airports，and other assets.Decades of investment have left China with high levels of debt in the private sector and in the funding vehicles used by local governments to pay for infrastructure and housing projects.China also will need to find new ways to create higher valueadded employment as incomes rising，citizens continue to migrate to cities，and the share of employment in manufacturing declines.Today，China is at an early stage of the shift from manufacturing to a more service-based economy.