Executive Briefings

As China's Economy Slows, Experts Worry What Comes Next

China reported this week that its economy grew 6.7 percent in the third quarter compared with a year ago. That matched economists' expectations exactly, and was identical to the pace China set in the first and second quarters of this year. In economics, stability like that is remarkable - and usually not to be believed.

As China's Economy Slows, Experts Worry What Comes Next

Economists often look beyond the official numbers to find alternative ways to gauge the Chinese economy. Other figures and facts on the ground suggest that a lending binge that China has unleashed in recent months is helping to sustain growth.

But by historical standards, China’s growth is slowing down. This year's growth is set to come in at a pace slower than last year's, which was already the weakest pace in 25 years.

"China's growth has already slowed down dramatically from the heady rates before the financial crisis," said Diana Choyleva, chief economist at Enodo Economics. "The economy has reached the end of the road when it comes to its export- and investment-led growth model."

That is a concern for central banks, economists, investors and corporate executives around the world, as China has been a major engine of growth for decades. Their main question: What happens next?

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Economists often look beyond the official numbers to find alternative ways to gauge the Chinese economy. Other figures and facts on the ground suggest that a lending binge that China has unleashed in recent months is helping to sustain growth.

But by historical standards, China’s growth is slowing down. This year's growth is set to come in at a pace slower than last year's, which was already the weakest pace in 25 years.

"China's growth has already slowed down dramatically from the heady rates before the financial crisis," said Diana Choyleva, chief economist at Enodo Economics. "The economy has reached the end of the road when it comes to its export- and investment-led growth model."

That is a concern for central banks, economists, investors and corporate executives around the world, as China has been a major engine of growth for decades. Their main question: What happens next?

Read Full Article

As China's Economy Slows, Experts Worry What Comes Next