The View | A Chinese economic slowdown is good for the world. In time, it’ll be good for China too
- Richard Harris says consolidation after the rapid growth of the 2000s will lower prices and curb interest rate rises, thereby stimulating the global economy. Beijing, too, could use the help to rein in runaway debt and retool the economy
Last summer I, and most of China, went to Florence. I paid homage at the tomb of one of my favourite thinkers, Niccolo Machiavelli. It was he who first said: “Never waste the opportunity offered by a good crisis.”
It has stubbornly remained in the 6-8 per cent range for years. It’s not the figure; it’s that it has remained so stable against the volatility of every other economy. Surely 1.3 billion people should be making an even bigger splash at that pace?
The Financial Times recently reported Professor Xiang Songzuo of Renmin University as saying that academics in Beijing have estimated GDP growth to be as low as 1.67 per cent in 2018. Even in 2014, Professor Harry Wu of Hitotsubashi University in Tokyo, who has spent 20 years refining his models, put growth that year at 3.9 per cent against the official 7 per cent.
The problem for analysts is that we can see the impending current account deficit, the debt mountain, the excessive amount of real estate in the economy, and a more hostile trading environment. We know the picture is bad; but we don’t know quite how bad, or the true dollar size of the economy, or where the bottom is likely to be – so we don’t know when to buy again.