The world’s fastest-growing major economy is slowing its roll, just slightly. China’s announced a 7 percent growth rate in the most recent quarter, on an annualized basis.
And if you’re saying to yourself right now, “I’d love to hear numbers like in the U.S., or in Europe,” yes, you’re right. Seven percent is huge. But compared to the past few decades, when China’s growth seemed unstoppable.
Lately, China-watchers have wanted it both ways: a more balanced and stable economy that continues to push global growth with its breakneck pace.
“It’s probably an irrational expectation,” says Matthews Asia investment strategist Andy Rothman.
Even at 7 percent, though, China is driving a third of global growth. That’s more than the U.S. and Europe combined. Constant economic growth has fostered a culture of entrepreneurship in the Communist state.
“When I started there in ’84, there were no private companies at all. Today, 80 percent of employment is private, all the new job creation is private,” Rothman says. “People starting up businesses in garages, just like the U.S.”
More than GDP figures, today Rothman focuses on the job market and income growth. China is doing well by those measures, he says. In his talks with small, private companies, he finds that businesses are having to give raises to both skilled workers and those on the factory floor alike, to hang on to the workforce they need.
While that’s a good sign for China, the average person still can’t buy a car or home. Despite massive urbanization, half of the population is in the countryside, where incomes are much lower.
As this all settles out, Rothman says, we should be prepared for the day when China’s growth range matches other industrial nations: plus or minus 3 percent a year.
And as deceleration of Chinese growth continues, Rothman says we’ll have to brace ourselves for the hyperbole.
“Every quarter, people are going to be telling us, ‘Hey, that was the slowest quarter since the Tang dynasty,'” Rothman says.
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