China’s economic downturn: The facts behind the myth
After years in which China’s economic hyper-growth was taken for granted there has been a dramatic reversal of international sentiment.
François Godement, Director of the Asia&China ECFR Program
Silvia Francescon, Head, ECFR Rome
After years in which China’s economic hyper-growth was taken for granted there has been a dramatic reversal of international sentiment. The Chinese economy is now widely believed to be faltering. This is an exaggeration”. China is not facing a deep-rooted economic crisis, however, but rather a crisis of expectations, on the part of Chinese and international observers alike. There is truth in the trends identified by pessimists, but they are not new. Each of them, save the overvaluation of China’s currency, has been clearly recognised in Chinese economic debates or even specifically called for several years. “China has now begun its transition from one economic model to another; one that is more consumption-driven and focused on service industries. How China’s leaders manage this transition will be vital in whether or not this ambitious change comes off smoothly. There will be losses but they will, in the main, be limited in scope, although exporters to China or those with high public or private debt levels may feel the effects very sharply indeed.”