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China's Growth To Slow By 50 Percent?

Key conclusions from a paper by Gabe Collins and Andrew Erikson at China Sign Post:

–China is likely to follow an S-Curve-shaped path of slowing growth as key internal and external challenges—including pollution, corruption, chronic diseases, water shortages, growing internal security spending, and an aging population—feed off of one another and exact increasingly large costs.

–One prominent China-based economist believes that the country’s growth will need to slow to 3-4% per year—less than half the current rate—if it is to sort out structural imbalances in its economy.[1]

–China is encountering these headwinds at a much earlier stage in its development than did the U.S. and other great powers, thanks in part to its late start in modernization and its dramatic internal disparities.

–China could very well continue to expand its economy (and by extension its national power) at a rate that the U.S., Japan, and many European countries would envy.

–However, the global economic, environmental, and security implications of 4-5% Chinese economic growth are very different from a 7-8% annual growth regime.

Read the whole thing.  (h/t @ianbremmer).  Of course nobody, including the Chinese, know what comes next in China, but these authors make some cogent and important points.  At some point, China’s growth potential will drop to more normal levels, and the adjustment will be wrenching.  Much depends on how much political and social stability China can build before that transition point is reached.

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  • Stephen Clark

    It appears that the observations of Collins and Erickson lend support to the thesis of Babones as presented in “The Middling Kingdom”, Foreign Affairs, Sept/Oct ’11, in contrast with Subramanian’s as presented in “The Inevitible Superpower” from the same edition of FA. Both are worth reading in this context.

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