Economic growth in China will slow sharply over the approaching decade to 3.9% as its productivity plunges and government leaders fail to push through difficult reform measures to revamp their economy, according to a report from The Conference Board.
The report from The Conference Board, an independent New York-based research association, forecasts that annual economic growth in China will slow to an average of 5.5% between 2015 and 2019, compared to economic growth of 7.7% in 2013, and will fall further to an average of 3.9% between 2020 and 2025.
China is in “a long, slow fall in economic growth … the competitive game has changed from one of investment-driven expansion to one of fighting for market share,” the report says.
China could counter the economic growth slowdown by reducing the government’s role in its markets while also revamping credit markets so that lending is not based on political decisions, but rather on commercial decisions, the report said.
China, the world’s second-largest economy, and one of the most important factors impacting the global economy, has grown at an average annual rate of 10.2% for the 30 years through 2011. Since 2012, growth in China has shifted gears and has trended downwards. The Chinese government has set a growth target of 7.5% in 2014, however Chinese Premier Li has said that growth slightly lower than this target will also be acceptable.
Premier Li recently said that the “quality” of economic expansion is just as important as its speed amid concerns on if China is going to be able to reach its growth target this year, reiterating that the nation doesn’t “face a hard landing as some say.”
On Tuesday, October 21, China is scheduled to report its third-quarter economic growth.
Source: The Conference Board
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