About That Chinese Slowdown

A lot of people are remarking on the reported slowing of the Chinese economy. Here’s the Washington Post’s reaction:

The slowdown in the final quarter of the year was not quite as bad as many economists were expecting, reaching 6.4 percent.

But many economists take official Chinese figures with a large pinch of salt. Using a range of data to come up with a more reliable figure, Julian Evans-Pritchard, a China analyst at the Capital Economics consultancy, said that the growth rate probably slowed to 5.3 percent in last three months of the year.

Regardless of the number, the direction is clear, and the slowdown is being felt nationwide.

A few quicktakes:

  1. As noted, if the official number if 6.4%, the actual growth rate is probably lower.
  2. We’d be pretty happy with a 5.3% growth rate.
  3. It has been widely speculated that the Chinese authorities believed that a very rapid growth rate was necessary to preven unemployment and subsequent unrest. China’s working age population is declining and will do so for a number of years moving forward. Do they need as much growth as they did, say, ten years ago?
  4. There will be run-on effects. Expect the economies of South Korea, Japan, Vietnam, and Taiwan to slow as well.

Will China’s slowing economy spark a global recession? Will it spark an Asian recession? Stay tuned.

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