China’s Long-Term Growth Story Still on Track | Capital Group

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Investment Insights

September 2015

China’s Long-Term Growth Story Still on Track

Economist Stephen Green gives his view on the key drivers of China’s economy over the next ten years.

Video

Featuring

Stephen Green

Transcript

Stephen Green: Looking further out for China, I think probably in the next ten years an average rate of growth around seven percent is, is pretty reasonable to expect. We’re, you know, we’ve slowed down from these very, very high rates. Pre-crisis we were probably running at a 15, 16 percent growth every year, which was extraordinary. So we’ve considerably , we’ve slowed down a lot since then, and then you get into, some of the reasons for that is all the stuff that we all know about. You know, China’s demographics, that easy investment or that easy investment phase of building steel factories and building real estate. That’s not over, but it’s definitely maturing. And now we’re going to be driven by services and consumption, technology, and these things just intrinsically are a little bit slower.

So I think China can probably run at six, seven percent. It’s still a relatively low income economy, $10,000 GDP per capita. And when you compare that to OECD countries, which are 30, $40,000, I think that’s still a lot of catchup that should be relatively easy, assuming the government continues to push through reforms.

So there are sort of lots of bearish views out there that say that China can only grow at two or three percent for the next ten years. I think that’s overbearish. I think six, seven percent is probably a reasonable expectation.


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