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Japan faced similar challenges in the 1980s, and 38 years later, it is still an open question whether they have successfully rebalanced their economy. The competitiveness of Chinese manufacturing is not due to efficiency, but rather a series of subsidies and transfers from the household sector to the manufacturing sector. Reversing these transfers would undermine the manufacturing sector's competitiveness.
The Impact on the United States and the Global Economy
China's investment-driven growth model and its resulting trade surpluses have had a significant impact on the United States and the global economy. The US has absorbed roughly half of the world's trade surpluses through its own large trade deficits.