Is Chinese re-balancing bullish?

With China's Q4 GDP up 7.9%, which was ahead of consensus expectations of 7.8%, I thought it would be a good time to look at China's likely growth path yet one more time. The Bonddad Blog had an excellent post entitled "Will China Save Us -- Again?" The blog post reviews the (pre-Q4 GDP) data showing a rebound in the growth of China's economy and closes with an indication that growth is re-balancing toward the consumer. Is re-balancing good news? There is no question that an over-reliance on infrastructure spending has resulted in unbalanced growth that is unsustainable. Michael Pettis recently highlighted an IMF study showing that Chinese investment accounted for close to 50% of GDP growth and concluded that this resulted in a subsidy of 4% of GDP per annum [emphasis added]: Now close to 50 percent of GDP, this paper assesses the appropriateness of China’s current investment lev...