In the throes of global meltdown a few years ago, 10% per year average GDP growth in China acted as a salve for a world in economic pain.
Now that China’s double-digit growth is beginning to slow down to a 7.5% annual rate while the developed economies continue to merely sputter ahead, the question is what impact that will have on the world economy, and who will prosper, and who will falter, from China’s slower growth.
The Financial Times’ economics editor explores this question in an analysis published this week, offering reassurance on what might at first glance appear to be unmitigated bad news.
First of all, the Financial Times’ economics editor Chris Giles points out that slower growth today is worth more than more rapid growth in the past:
“Slowing and rebalancing in China might hurt some but the effects should not be exaggerated. When China started to grow at 10% a year in the early 1980s, its expansion was as valuable for the world economy as the U.S. growing at 1 per cent. It was nice to have but easy to ignore. Over a quarter century of phenomenal Chinese growth, if its economy expands by 8% today, it is the equivalent of the U.S. growing 4%.”
So at a 7.5% clip, China’s contribution to global demand is second to none, he argues.