August 14, 2019

The great growth story of China awaits a modern-age epilogue

In Mint, Niranjan Rajadhyaksha highlights four transitions of the Chinese economy that Indian policy makers should focus on. Excerpts:

 

"First, it is well known that China is in the midst of a secular slowdown. The days of sustained double-digit growth are over. The IMF says that the Chinese economy will be expanding at 5.5% by 2024. A forthcoming working paper by M. Zhu, L. Zhang and D. Peng estimates that Chinese economic growth will slow to 4% by 2030. Some private sector economists say that China could end up growing at half that rate if the strategic squeeze being applied by the US right now is successful.

 

Second, the drivers of Chinese economic growth are rapidly changing. Domestic consumption is becoming more important in the growth mix while domestic investment is losing ground. The external trade story is likely to change dramatically, with China slipping into a minor current account deficit by 2024. In other words, the excess of domestic savings over domestic investment will disappear. China will continue to have a trade surplus in industrial goods, but that will be cancelled by a growing trade deficit in services..."

 

Read the whole article here.

Topic : State Capacity / In : OP-EDS
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