Of course if China’s growth comes in at 8 percent, the news is correspondingly better.)įinally, what about the capacity of China’s economy to create jobs? In 2013, the latest year reported in the World Bank’s World Development Indicators, China’s labor force numbered 793.3 million. and the EU continues to hold even if China went to 6 percent growth-only a little bit less so. (Table 1 traces out a range of numbers, confirming that the positive outcome I have just described for the U.S. But even then, the worst you can say is that China’s 7 percent growth means you can expect simply the same relative increase in export business with China as you did a decade ago. Only if you are a fast-growing economy like those of the ASEAN-5 does China’s 7 percent growth mean something not quite so large. What if you are not in the U.S.? If you are in the EU, China’s expansion is even more of an increased opportunity.
exporter, relative to the economy he lives in, more than a doubling of the increase in size of this potential export market. Put differently, China’s expansion over the next 12 months-even at only 7 percent-will represent for a typical U.S. economy, China’s expected 7 percent expansion in 2015 will be an increase in a potential export market of 4.3 percent ten years ago, that same ratio was just 2.1 percent. economy will produce GDP equal to $18.3 trillion. GDP was $13.1 trillion the IMF reckons that in 2015 the U.S.
Suppose you are an exporting business in the United States. A representative exporter will gauge prospects for selling to China based not just on China’s scale, but also that of their own economy.
#Simple arithmetics full
Thus, even at an expected growth rate a full five percentage points lower than what someone a decade ago might have optimistically forecast, China will generate economic growth in absolute magnitude almost 3 times larger than it did then.īut, wait, the world today overall, not just China, has changed. To put matters in perspective, this increase of $790 billion is 2.8 times the size of the increase of $274 billion 10 years ago. Professor of Economics and International Development, London School of Economics and Political Science China’s GDP then was $2.3 trillion at market exchange rates. Suppose the year is not 20, exactly a decade ago, and you are an exporter, somewhere in the rest of the world, predicting China will grow, say, 12 percent over the coming 12 months. The effect of this slowdown on those who sell to China and on those working in China must be extreme.īut maybe not. This seems an epic change from when that economy regularly turned in double-digit growth. In 2014 China’s GDP grew 7.4 percent, its slowest rate of increase since 1990. I mean: What does this slowdown in 2015 mean for you, in the rest of the world, looking to China as an export market or you, in China, seeking employment as your economy’s labor market adjusts to its New Normal? Nor do I mean the impact on the world economy, a colossal actual thing, but still a relatively abstract concept.įigure 1. I ask here not about the New World Order, global power shifts, or whether the United States retains its position as a global hegemon. What does China’s growth slowdown mean to you?
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