After three decades of 9.8% average annual gross domestic product growth, China’s economic expansion has been slowing for 13 consecutive quarters — the first such extended period of deceleration since the “reform and opening up” policy was launched in 1979.
Real GDP grew at an annual rate of only 7.5% in the second quarter (equal to the target set by the government at the beginning of 2013). Many indicators point to further deceleration, and there is growing bearishness among investors about the outlook. Will China crash?
In fact, many other rapidly growing emerging economies have suffered — and worse than China — from the drop in global demand resulting from ongoing retrenchment in high-income economies since the 2008 financial crisis. For example, GDP growth in Brazil has slowed sharply, from 7.5% in 2010 to 2.7% in 2011 and to just 0.9% in 2012, while India’s growth rate slowed from 10.5% to 3.2% over the same period.
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