Trade & Investment

China's economic slowdown to end soon: experts

Updated: 2015-07-27
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China's economic slowdown is likely to grind to a halt by the end of this year or the first half of 2016, and the GDP growth rate will stay around 7 percent, said Daokui Li, director of Tsinghua University's Center for China in the World Economy, in a panel discussion Thursday.

Experts attending the panel held by the Council on Foreign Relations in New York believed that sluggish fixed-assets investment accounted for the recent slowdown of the Chinese economy, yet early signs of recovery have already emerged.

"The Chinese economy is undergoing a fundamental structure change, the traditional sectors are slowing down, but the exciting new sectors are attracting investments," Li said.

He noted that there are three new engines of growth firing up in China: urbanization, green economy and consumption.

"In the process of greening up the industrial capacity, there will be a lot of investments. If China greens up 10 percent of the production capacity, that will add 1.25 percent to GDP growth," Li said.

He also stated that consumption now accounts for 46 to 47 percent of China's GDP growth, which will definitely reach 50 percent in five years.

Li's words were echoed by Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics.

Lardy said that the consumption share of GDP has been going up for four years in China and will act as a major driver of the country's economy.

Experts further argued that the current economic slowdown in China can be seen as a challenge as well as a positive development.

"The downward pressure shouldn't be thought of as entirely challenging, in some way it should be welcomed, because it's primarily because of modification of the growth in investment in property," Lardy said.

"China has been massively investing in property. This was the correction that had to come sooner or later," he said.
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