How can China boost domestic demand?

Rebalancing of China’s economy away from investment and heavy industry will require significant reform of the financial sector and of monetary policy, including higher (not lower) interest rates. Financial sector reform will include further development of the still small corporate bond market, a gradual loosening of control on equity listings and a shift away from the administrative controls that have left many private firms unable to access credit. The government can also lean on fiscal policy to boost domestic spending as growth of external demand eases.