http://www.economist.com/blogs/freeexchange/2015/01/chinas-slowdown
Recently, the Chinese government released statistics about the performance of the economy in 2014. The article discusses how a lot of the focus has fallen on China's fall in growth rate from previous years, resting at 7.4% (the lowest in 24 years), and 0.1% short of the government's target for growth. However, the article also suggests that focusing only on this may be a little myopic since there is also good news to be had.
While, China's growth has certainly slowed to a degree, the larger size of its economy means that it is still generating high levels of demand, even with a lower growth rate. Another concern has been that a large percentage of China's growth has been driven by investment (48.3% of GDP in 2011), and relatively lower consumption. However, consumption as a share of GDP has been rising recently, albeit relatively slowly. The second thing worth paying attention to is that real wage growth in the previous year was faster than the growth rate of the economy (8%), with rural wages growing faster than urban wages.
The article ends by noting that there may be errors in the data due to the way the government reports it, so these numbers are difficult to double check. Also, the strength of China's economy will be tested in the coming year with property investment expected to weaken. The IMF cut its forecast for China's 2015 growth to 6.8%, even lower than 2014.
Recently, the Chinese government released statistics about the performance of the economy in 2014. The article discusses how a lot of the focus has fallen on China's fall in growth rate from previous years, resting at 7.4% (the lowest in 24 years), and 0.1% short of the government's target for growth. However, the article also suggests that focusing only on this may be a little myopic since there is also good news to be had.
While, China's growth has certainly slowed to a degree, the larger size of its economy means that it is still generating high levels of demand, even with a lower growth rate. Another concern has been that a large percentage of China's growth has been driven by investment (48.3% of GDP in 2011), and relatively lower consumption. However, consumption as a share of GDP has been rising recently, albeit relatively slowly. The second thing worth paying attention to is that real wage growth in the previous year was faster than the growth rate of the economy (8%), with rural wages growing faster than urban wages.
The article ends by noting that there may be errors in the data due to the way the government reports it, so these numbers are difficult to double check. Also, the strength of China's economy will be tested in the coming year with property investment expected to weaken. The IMF cut its forecast for China's 2015 growth to 6.8%, even lower than 2014.
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