In 2009, China bolstered an almost 10% year over year growth in GDP, compared to the United State’s, -3% that year. It averaged that 10% in 2010, dating back to 1980. The titan of the Chinese industry has seemed to be an unstoppable force, stealing American jobs and taking over the global economy, where they contribute $12 billion of production. The recent trade war with China has seemed to slow down their growth, and although a 6% GDP target set by their premier Keqiang, may still seem like a bustling economy, some think we may have hit an inflection point that will send China over the cliff.
China is slowing down, as all developed countries have. However, the slowdown is a big obstacle for China to overcome according to Managing Directory of the Monetary Authority of Singapore, Ravi Menon. China has to figure out how to moderate their slowdown in growth.
The inevitable of slowing down is happening finChina. Their working-age population is decreasing, and according to UN calculations, it will continue to decrease in the long run. Their GDP per capita is at $8,800, compared to the United State’s $50,000+. The Chinese population is clearly at a slowdown, and in an economy that relies so heavily on quantity rather than quality, they could be hurting if the UN projections turn out to be correct.
The United States and Europe’s economy will also have an impact on the slow down. We saw US unemployment drop to 3.8%, and another consecutive month of increases in jobs. The only Issue appears to be that as the wages continue to increase, pacing for 3.4% increase annually, the number of workers were able to higher in the United States slows down as it appears we’re nearing full employment. That means that we can only go down from here, and as China’s number one trading partner, our slowdown is likely to hurt them too. US economists may be pessimistic about our long term outlook, as we see an inverted yield curve at the moment. The news isn’t good here, and it’s likely not going to be good for our friends in Asia either.
In a recent conversation with a VP at Danaher Corporation, he thinks that 6% is going to be an inflection point in the Chinese economy. At 6% growth, it may not be worth an investors time and money to invest in Chinese infrastructure to keep on sustaining the tremendous growth they’ve experienced for the past nearly half-century.
With the United Kingdom’s recent slowdown, coupled with a poor American outlook, China isn’t going to be exempt from the negative global economic headwinds, pulling them past the 6% growth mark, and off the cliff that they’ve been nestled on, overlooking all the other industrialized nations that lag their robust expansion.