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

The Next Chinese Economy

China’s economy may be decelerating, but its prospects remain strong, with GDP possibly reaching $10 trillion in 2014. Once it weathers the current rebalancing, it could well be stronger than ever.

BEIJING – After more than 30 years of extraordinary growth, the Chinese economy is shifting onto a more conventional development path – and a difficult rebalancing is underway, affecting nearly every aspect of the economy.

For starters, China’s current-account surplus has shrunk from its 2007 peak of 10% of GDP to just over 2% last year – its lowest level in nine years. In the third quarter of 2014, China’s external surplus stood at $81.5 billion and its capital and financial account deficits amounted to $81.6 billion, reflecting a more stable balance of payments.

This shift can partly be explained by the fact that, over the last two years, developed countries have been pursuing re-industrialization to boost their trade competitiveness. In the United States, for example, manufacturing grew at an annual rate of 4.3%, on average, in 2011-2012, and growth in durable-goods manufacturing reached 8% – having risen from 4.1% and 5.7%, respectively, in 2002 and 2007. Indeed, America’s manufacturing industry has helped to drive its macroeconomic recovery.

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/TRbBcoJ;
  1. bildt70_SAUL LOEBAFP via Getty Images_trumpukrainezelensky Saul Loeb/AFP via Getty Images

    Impeachment and the Wider World

    Carl Bildt

    As with the proceedings against former US Presidents Richard Nixon and Bill Clinton, the impeachment inquiry into Donald Trump is ultimately a domestic political issue that will be decided in the US Congress. But, unlike those earlier cases, the Ukraine scandal threatens to jam up the entire machinery of US foreign policy.

    0
  2. krueger21_trumpamericamediocre

    Making America Mediocre

    Anne O. Krueger

    America owes its economic strength to its private sector, which has long benefited from an absence of undue influence by politicians and the state. But under US President Donald Trump's administration, discretionary decisions by policymakers are increasingly giving some companies advantages over others.

    0