China's latest 5-year-plan--the country's 12th--seeks to "improve people's livelihoods, social infrastructure and safety nets, and to tackle rising inequality," according to the BBC's Sarah Wang.  And that likely means pushing for an increase in consumer spending.  Martin Feldstein believes that any significant shift away from maximizing GDP growth as China's overarching economic objective will bring have far reaching consequences on the global economy.  Namely, interest rates will likely go up as China's savings rate goes down.  At Project Syndicate, Feldstein writes:

A country that saves more than it invests in equipment and structures (as China does) has the extra output to send abroad as a current-account surplus, while a country that invests more than it saves (as the United States does) must fill the gap by importing more from the rest of the world than it exports. And a country with a current-account surplus has the funds to lend and invest in the rest of the world, while a country with a current-account deficit must finance its external gap by borrowing from the rest of the world. More precisely, a country’s current-account balance is exactly equal to the difference between its national saving and its investment.

The future reduction in China’s saving will therefore mean a reduction in China’s current-account surplus – and thus in its ability to lend to the US and other countries. If the new emphasis on increased consumption shrank China’s saving rate by 5% of its GDP, it would still have the world’s highest saving rate. But a five-percentage-point fall would completely eliminate China’s current-account surplus. That may not happen, but it certainly could happen by the end of the five-year plan.

If it does, the impact on the global capital market would be enormous. With no current-account surplus, China would no longer be a net purchaser of US government bonds and other foreign securities. Moreover, if the Chinese government and Chinese firms want to continue investing in overseas oil resources and in foreign businesses, China will have to sell dollar bonds or other sovereign debt from its portfolio. The net result would be higher interest rates on US and other bonds around the world.

Read China’s Five-Year Plan and Global Interest Rates here.