Opinion | China’s economic expectations rest on future faultlines with the West as 70th anniversary looms amid trade war
- The world’s second largest economy is approaching a crucial turning point after a remarkable run of headlong growth that has transformed its economy and society
- Louis Kuijs and Gary Duncan from Oxford Economics, a leading global economic advisory firm, look ahead to what could be a watershed period in its economic history
China marks the 70th anniversary of the founding of its People’s Republic on Tuesday, reaching both a notable moment in the story of its ruling Communist Party but, more significantly, what may well be a watershed period in its economic history.
After a remarkable four-decade run of headlong growth that has transformed its economy and society, and stunned the world, China is approaching a crucial turning point.
Already the world’s second largest economy in market exchange rate terms, the largest in purchasing power parity, and the largest manufacturer and trader in goods, China confronts a slew of challenges to its economic ascendancy, including the trade war with the United States, high leverage, mounting demographic pressures, and environmental sustainability problems.
But no challenge faced by China is a critical as whether it can sustain relatively rapid economic expansion and escape the so-called middle-income trap where stalling growth would set a ceiling on its development.
Whether China can sustain relatively rapid economic expansion and escape the so-called middle-income trap where stalling growth would set a ceiling on its development, is more critical for it and the world to address
It would be unreasonable to expect the unprecedented and breakneck growth sparked by the reforms of Deng Xiaoping after 1978 to endure. In the 40 years since, the fastest sustained expansion by a major economy in history saw growth average 9.5 per cent, doubling China’s gross domestic product (GDP) every eight years, and lifting 850 million people out of poverty.
