THIS BYSTANDER HAS two brief points to make about China’s newly announced annual GDP figure, which came in at 6.9% for 2015, down from the previous year’s 7.3%.
First, the economy is slowing down, not melting down. That is what fast-growing industrial economies do after their growth spurts. South Korea and Japan did the same within living memory.
Second, for all the doubts, China’s national GDP numbers are no better or worse than those of most other large economies. (The quality of provincial level data is much patchier.) The less an economy is manufacturing based, the fuzzier GDP becomes as a measure. Services account for more than half China’s economy now.
What matters more is the pace of rebalancing the economy. On that, there is more reason for concern than whether GDP is a percentage point or two higher or lower than reported.
Update: In its new update to its annual World Economic Outlook, the International Monetary Fund has confirmed its expectation that China’s economy will continue to slow over the next two years. It has left its GDP growth forecasts for 2016 and 2017 unchanged at 6.3% and 6.0% respectively, noting that:
Overall growth in China is evolving broadly as envisaged, but with a faster-than-expected slowdown in imports and exports, in part reflecting weaker investment [as the economy continues to rebalance] and manufacturing activity.
In contrast, the Fund expects a gradual pick-up in the global economy from 2015’s 3.1% growth to 3.4% this year and 3.6% next, though the two forecasts are both 0.2 percentage points down from those it made in October.