The potential for healthy Chinese GDP increase will be reliant upon several key factors. Among them are increase consumer demand, low oil prices, energy subsidy reform, increased privatization, and increased welfare provision. Above all, China will need to foster a domestic increase in demand to make up for diminishing investment and exports, the former drivers of its economy.
One way of doing this is reforming the household classification system called hukou. A large number of people are migrating from rural China to its cities in search of wages above what farming pays, despite agricultural subsidies. Because these migrants are not privy to public services provided to city-classified households, their marginal propensity to consume is diminished. Knowing they will need to pay for healthcare and education themselves, migrants are incentives to save. If structural changes to this policy are put in place, the increasingly vast number of migrants will be more inclined to spend, boosting domestic demand. If household registration laws are not relaxed, record savings levels will remain, causing China to miss out on an opportunity to effectively restructure its economy.
Dreger, Christian, Tongsan Wang, and Yanqun Zhang. “Understanding Chinese consumption: The impact of hukou.” (2014).