4 things to know about China’s growth slowdown
The latest figures show that China’s economy is expanding at an annual rate of less than 7% – that’s below the official target but still very fast by the standards of developed economies.
However, it’s the slowest since 2009 when the global credit crunch hit most of the world. And as the engine of global recovery for much of the past six years, there are worries about what a decelerating China might mean for the rest of the globe. Here are four views that set the data in context.
1. China is still growing unusually quickly
Rapid growth has been sustained far longer in China than any other emerging economy at the equivalent stage, including the miraculous rise of neighbours Japan and South Korea, according to analysis from the World Economic Forum’s Thierry Geiger.
2. Growth is likely to slow further
China already accounts for about a sixth of global output and some slowdown was inevitable. Looking ahead 20 years, economists at the National Bureau of Research believe growth below 4% is likely. But by that time, the Chinese economy is likely to be several times bigger and the impact of slower growth is offset by the increased size of the economy.
3. The degree of slowing will depend on the response to competitiveness challenges
There’s more to economic success than sheer size of markets and China faces particular challenges in education and training and financial market development, according to the latest Global Competitiveness Report.
4. How China manages its currency could be key
Despite August’s depreciation, the renminbi has been rising in value ever since Chinese market reforms started. One option that would likely revitalise growth prospects would be to let the currency depreciate, according to development expert Professor Jeffrey Sachs.
Image: Tourists throng the Nanjing pedestrian road, a main shopping area, on the second day of the seven-day National Day holiday in Shanghai, China. REUTERS/Aly Song
Author: Mark Jones is Head of Digital Content at the World Economic Forum
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