After four disappointing years, Chinese economists have come to understand that the economy’s growth slowdown is structural, rather than cyclical, meaning that China’s potential growth rate has settled onto a significantly lower plateau. But this may not be bad news.
BEIJING – After four disappointing years, Chinese economists have realized that slowing GDP growth – from a post-crisis peak of 12.8% in 2010 to about 7% today – is mainly structural, rather than cyclical. In other words, China’s potential growth rate has settled onto a significantly lower plateau. While the country should be able to avoid a hard landing, it can expect annual growth to remain at 6-7% over the next decade. But this may not necessarily be bad news.
BEIJING – After four disappointing years, Chinese economists have realized that slowing GDP growth – from a post-crisis peak of 12.8% in 2010 to about 7% today – is mainly structural, rather than cyclical. In other words, China’s potential growth rate has settled onto a significantly lower plateau. While the country should be able to avoid a hard landing, it can expect annual growth to remain at 6-7% over the next decade. But this may not necessarily be bad news.