China’s Economy at an Inflection Point

With an abundance of speculation on China’s future economic growth, sometimes it’s hard to process it all. A new column by Anil Gupta and Haiyan Wang tries to explain six upcoming trends of the Chinese economy as a result of the new Five Year Plan that has been passed. From Bloomberg Businessweek:

No. 1, there will be a sharp slowdown in the rate of growth in exports from China.

A second major change is also underway. As part of a serious drive to reduce growing economic inequities in the society, China is strengthening the social safety net for its citizens.

Third, China is emerging as one of the world’s leaders in its commitment to become more energy efficient and reduce the carbon intensity of its economy.

Fourth, China is making a concerted drive to transform itself from an economy propelled by low-cost manufacturing to an economy whose comparative advantage will also derive from innovation

Fifth, Chinese policy makers are systematically engineering a consolidation of many capital intensive industries—such as steel, cement, autos, and earth moving equipment—which are far more fragmented in China than in almost any other country.

Sixth, the Chinese government is pulling all available levers to boost outbound foreign direct investment.

Read the reasons behind their explanations for each of these trends here.


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