As China’s days of meteoric growth come to an end, can it find a way out of its lost decade?
- China ended the decade with a growth slowdown, a drop in its current account surplus and a sizeable budget deficit
- Having lifted millions out of poverty in the decades leading up to 2010, the country did not go far enough in the past 10 years to loosen government control
The most frustrating part of investment is the sense that one always feels as if one is playing catch-up. When I was a young fund manager for one of the largest firms in Asia, we received the first call from the London brokers in the morning.
I was running international portfolios in Hong Kong time, so I was always around long before anyone else. The calls would come in before European trading had begun, but their best ideas had always risen in price before I heard about them. I realised then that even professionals are late in the game.
Chinese gross domestic product rose by a staggering 1,100 per cent between 1992 and 2010. Its exports grew from 2 per cent of the world’s total to over 17 per cent. Income per head rose 970 per cent, 10 times faster than in the US. China’s economy was expected to overtake that of the US in size. It was simple maths.
But the low hanging fruit had already been plucked. There is an immutable rule in nature and economics that the bigger you are, the harder it is to grow.
