Containing China s Slowdown

NEW HAVEN China s economy is slowing.

Within China, the current slowdown is mostly homemade.

SHANGHAI Everyone is talking about China s economic slowdown.

In China, the economic slowdown underway is unmistakable.

On the demand side, the ongoing economic slowdown in China is starting to affect companies orders and revenues, adding to the challenges stemming from the persistently sluggish US economy.

China successfully navigated the crisis, avoiding a significant slowdown, by ramping up public spending.

Or it can let its currency appreciate, at the risk of inducing a growth slowdown and political and social unrest at home.

A further slowdown in China is a distinct possibility. China s leaders must do what it takes to ensure that such a slowdown is not viewed as secular trend a perception that could undermine the consumption and investment that the economy so badly needs.

In short, implementation of fiscal, financial, and structural reforms can mitigate the spillover effects from China s slowdown.

Just as China s economic boom benefited commodity dependent economies, primarily in the developing world, its slowdown is reflected in these economies declining growth rates.

Yes, China s economy has slowed. But the slowdown has been contained, and will likely remain so for the foreseeable future.

Even China is showing signs of a slowdown, owing to the government s attempts to control economic overheating.

It was already evident in the first and second quarters of this year that growth in China and other emerging markets was slowing.

Given this, China s economic slowdown since the first quarter of 2010 has apparently been caused mainly by external and cyclical factors.

But, even as China recovers from its current slowdown, it is not likely to provide a similar boost to all of its trading partners.

China doubters around the world were quick to pounce on the number, expressing fears of a stall, or even a dreaded double dip.

MILAN China s growth has slowed considerably since 2010, and it may slow even more a prospect that is rattling investors and markets well beyond China s borders.

And, in our globally integrated world, the slowdown in Europe will exacerbate the slowdown in the US, and vice versa.

Indeed, the US has overtaken China as Japan s main export market, as America s economy, too, recovers from half a decade of sluggishness.

More recently, many claimed that with the rise of China and the petro states, an American slowdown could be decoupled from the rest of the world.

China s economy has certainly become more unstable, with major slowdowns in real GDP growth in 2009 and again in 2012.

China is now the world s second largest economy, and, despite a recent slowdown to 7 annual GDP growth, it is outperforming all other major players.

Three decades of success in China, and a decade in which India supposedly overcame the old, slow, Hindu rate of growth, are ending with both economies slowing precipitously.

But, even as China recovers from its current slowdown, it is not likely to provide a similar boost to all of its trading partners. That lack of spillover will reflect the recovery s focus on expansion of domestic demand.

The fall in China s trade surplus since late 2008 is attributable mainly to the global slowdown and the stimulus package introduced by the Chinese government, rather than to changes in the RMB s exchange rate.

In particular, although China s tradable sector is highly exposed to developed economies, the government is likely to accept some short run slowdown, rather than adopting potentially distorting stimulus measures.

China successfully navigated the crisis, avoiding a significant slowdown, by ramping up public spending. But, as a result, it now has no further scope for increasing public consumption or investment.

CLAREMONT, CALIFORNIA China s current economic slowdown has no shortage of causes Europe s financial turmoil, sputtering recovery in the United States, and weak domestic investment growth, to name the most commonly cited factors.

China does not want its large current account surplus to cause the currency to overshoot on the upside, and it may now want to slow the renminbi s appreciation because of concern about the global economic slowdown.

Will the United States engineer a path to renewed growth? Will China find a way to reverse its economic slowdown?

If China s leaders continue to choose debt fueled growth over reform, they will only delay, and possibly prolong, the inevitable slowdown.

Population growth has been slowing since the late 1960 s.

The slowdown would be one tenth the size of the one the US is now enduring, and it would be largely confined to the construction sector.

But it is not just the slowdown that has the skeptics worked up.

But the slowdown has been contained, and will likely remain so for the foreseeable future. The case for a soft landing remains solid.

Most importantly, a slowdown of this magnitude would put China below the 8 growth threshold that its leadership apparently believes is necessary to avert social strife.

The problem is that the permits market price has plummeted in the midst of Europe s economic slowdown.

An economic slowdown will exacerbate all our financial problems.

The impending global slowdown has intensified protectionist pressures.

The financial crisis is over, but the age of general economic slowdown is only just beginning.

World trade has stalled. And China s economic slowdown and market turmoil this summer have created further uncertainty.

It is subject to what Milton Friedman called long and variable lags.

This deceleration was inevitable as China advanced from extreme poverty and technological backwardness to become a middle income economy powered by external trade and consumer spending. It was also desirable, because rapid growth was hitting environmental limits.

But the global economy is slowing down, and financial markets went into a tailspin during the summer.