How will China adapt to less rapid growth?

Watch a full recording of the session ‘China’s Reform Agenda’ at the World Economic Forum’s Annual Meeting of the New Champions by using the video player below or following this link. Highlights from the session, including videos, tweets, and top quotes, can be viewed further down the page.

Highlights:

Background:

After a currency devaluation in mid-August followed by sharp movements in the stockmarket, China’s economy has been centre-stage in recent weeks.

One critical question has been about how the nation will adapt to the “new normal” of less rapid growth. The World Economic Forum’s Inclusive Growth and Development Report 2015 provides some insight into how China is performing in key categories in relation to a group of 26 countries considered to be upper-middle income.

China’s comparatively high scores in employment and labour compensation, financial intermediation of real economy investment, and corruption and rents certainly bode well for an improved and stabilized economic outlook; however, low rankings in basic services and infrastructure and fiscal transfers will need to improve if this situation is to rectify itself.

Insights:

China’s consumption is growing about 8-10% a year, with the internet world accounting for about half of that growth.

To change something takes time, like the evolution of natural species. Not all SOEs can change overnight. It might be useful to have pilot projects. Enterprises need trial-and-error reform. We should not assume that the government will never change.

Author: Murray Nicol is Digital Project Lead at the World Economic Forum

Image: An advertising board showing a Chinese stone lion is pictured near an entrance to the headquarters of China Securities Regulatory Commission (CSRC), in Beijing, China, September 7, 2015. REUTERS/Jason Lee