First published: Prospectmagazine.co.uk, 8/12/2015
Slower economic growth, looming bad loan problems and pressure on party officials are all causes for concern
Trying to get a handle on what’s going on in the Chinese economy is becoming increasingly difficult—and necessary. Back in September, The US Federal Reserve decided to back away from raising interest rates as it had forewarned, largely because of turbulence surrounding Chinese financial markets and uncertainty about the economy. Mario Draghi has articulated the ECB’s dovishness around the same theme. The Fed looks poised to pick up the baton of higher interest rates next week, but China remains an enigma for even the most seasoned of China watchers.
The official view is that the economy grew by 6.9 per cent in the year to the third quarter 2015, and the 13th Five Year Plan (2016-2020) implicitly targets an annual growth rate of 6.5 per cent per year. This is some distance from the double-digit growth that characterised much of the two decades to 2011, and it was only to be expected that China would slow down at some point. Other than China, no country has been able to put together more than a decade of double-digit growth, and so China really was a special case. Even so, this phase has also ended. Today’s problem is that more and more people doubt that the official statistics are realistic….Read more: