China’s Painful Structural Transformation
China's economy has slowed as it shifts from exports and investment toward domestic consumer demand. But rapid growth could return if urbanization accelerates and the authorities implement the structural reforms needed to enable emerging service sectors to thrive.
SHANGHAI – For more than a year, headlines worldwide have been pointing to a Chinese economic slowdown. But a closer look at regional dynamics within China tells a different story – one that is less about deceleration than changing gears.
According to China’s National Bureau of Statistics, the resource-rich province of Shanxi has suffered an economic slowdown, but the southwestern provinces of Chongqing and Guizhou have experienced vibrant growth. Hebei and three other northeastern provinces are feeling the effects of recession, but the heavy-industry economies of Tianjin, Shandong, and Jiangsu are booming.
After the 2008 financial crisis, when slower growth became the “new normal” for many countries, China began to accelerate its economic rebalancing by shifting the drivers of growth from manufacturing and exports toward goods and services for domestic consumption.