Xi Jinping's 'new normal' with Chinese characteristics
With growth slowing and policy options few, China's demand for resources will be limited
The world needs to get ready for a new normal with Chinese characteristics. Reacting to yet more evidence that China's growth is moderating quickly, President Xi Jinping more or less told us last weekend to get used to it.
"We must boost our confidence, adapt to the new normal condition based on the characteristics of China's economic growth in the current phase and stay cool-minded," Xinhua quoted Xi as saying.
What that means for China is not just slow growth, but slow growth complicated by a lot of debt, a hint of deflation, trouble brewing in the real-estate sector and very limited policy options.
What that means for the rest of the world is less demand for natural resources and even less reason to be optimistic about the prospect for more, well, normal labour markets and inflation.
The idea of the "new normal", popularised by Pimco, the US fund management firm, was that the after-effect of the overleveraging and subsequent financial crisis would be a long period of subpar growth, with all the ills and complications that implies.
And while China managed to kind of, sort of dodge that in the immediate aftermath of the crash, courtesy of massive stimulus and the resultant real-estate boom, its growth path is now decidedly on the downslope.