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China’s Not-So-New Not-So-Normal

HONG KONG – I just spent a week in China, where I participated in the Boao Asia Forum, a conference similar to the annual gathering of the World Economic Forum in Davos. The topic of my panel was what President Xi Jinping has called the Chinese economy’s “new normal”: an era of relatively slower growth, following three decades of double-digit economic expansion.

But what strikes me most about China’s economy is how remarkable it is. Indeed, its performance continues to astound me. Though it undoubtedly faces plenty of challenges, the key question is how likely they are to bring down the economy.

Of the four BRIC countries – Brazil, Russia, India, and China – Xi’s is the only one that has met my expectations for growth so far this decade. From 2011 to 2014, the Chinese economy grew at an average annual rate of 8% per year. If it continues to grow by around 7% for the rest of the decade, as the authorities and many observers expect, it will achieve an average pace of expansion of 7.5%, in line with my projections.

The phrase “new normal” is a clever bit of messaging by China’s leaders, who must explain to the country’s 1.4 billion citizens why the economy will no longer be growing by 10% a year. But there is nothing normal about an economy that is already twice as large as the next largest, Japan, and will possibly outstrip the European Union within the next five years.