China’s risky money game

WASHINGTON, DC: To understand China’s surprise currency devaluation, you need context.

China is engineering a major economic transformation -- or, at least, trying. For years, it relied upon export-led growth and massive investments in housing, infrastructure (roads, rails, ports) and heavy industry (steel, glass, aluminum). This economic model now seems spent. World trade is weak. Over investment in housing, infrastructure and industry has left gluts. So China is switching its engine of growth to consumer spending on services and light manufacturing.