Skip to main content

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions

China shopping mall Whitehotpix/ZumaPress

China’s Slowing New Normal

While some observers agree that China can sustain 6-7% growth for the next decade or so, provided that the government implements a comprehensive set of reforms in a timely manner, others expect its growth to continue to trend downward. Who is right will depend on China’s success in boosting household income and consumption.

MILAN – The world’s two largest economies, the United States and China, seem to be enduring secular slowdowns. But there remains considerable uncertainty about their growth trajectory, with significant implications for asset prices, risk, and economic policy.

The US seems to be settling into annual real (inflation-adjusted) growth rates of around 2%, though whether this is at or below the economy’s potential remains a source of heated debate. Meanwhile, China seems to be headed for the 6-7% growth rate that the government pinpointed last year as the economy’s “new normal.” Some observers agree that such a rate can be sustained for the next decade or so, provided that the government implements a comprehensive set of reforms in the coming few years. Others, however, expect China’s GDP growth to continue to trend downward, with the possibility of a hard landing.

There is certainly cause for concern. Slow and uncertain growth in Europe – a major trading partner for both the US and China – is creating headwinds for the US and China.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.

https://prosyn.org/yDW7Ne9;
  1. mahroum18_HAIDAR HAMDANIAFP via Getty Images_iraqprotestfire Haidar Hamdani/AFP via Getty Images

    The Arab World Needs a Brexit Debate

    Sami Mahroum

    The Arab world has witnessed at least one big Brexit-like event every decade since 1948 – and these political, economic, and social ruptures never seem to heal. The impact of these self-inflicted disasters is now painfully evident, and ongoing street protests in several countries suggest that a moment of reckoning may have arrived.

    0
  2. lhatheway7_Claudio Santistebanpicture alliance via Getty Images_ECBFedLagardePowell Claudio Santisteban/picture alliance via Getty Images

    Restoring Central Banks’ Credibility

    Larry Hatheway

    The old central-bank playbook of slashing interest rates to spur consumption, investment, and employment has become less effective since the 2008 financial crisis. Yet without effective tools and the public's confidence, central banks will be unable to rise to the occasion when the next recession arrives.

    0
  3. fischer163_action press-PoolGetty Images_natoflagsoldiers Action Press-Pool/Getty Images

    The Day After NATO

    Joschka Fischer

    French President Emmanuel Macron has drawn criticism for describing NATO as brain dead and pursuing a rapprochement with Russian President Vladimir Putin. But now that a wayward America could abandon the continent at any moment, Macron's argument for European defense autonomy is difficult to refute.

    9