China growth to slow to 2 per cent over next decade as structural issues take hold, research firm says

Domestic structural issues are a bigger factor in the slowdown than US-China trade war, according to Capital Economics

Economists expect the current cyclical slowdown to bottom out in mid-2019, but rebound could be small

4-MIN READ4-MIN

The Organisation for Economic Cooperation and Development has forecast China’s economy will grow about 3.5 per cent in 2029. Photo: AP

Published: 10:03am, 8 Mar 2019Updated: 10:03am, 8 Mar 2019

China’s economic growth will slow to 2 per cent in the coming decade, well below the level forecast by major global institutions, according to research from Capital Economics, as the country becomes “another normal emerging economy.”

“Growth has halved over this past 10 years, and our projection is if they continue with this policy set-up [and structural issues], growth will halve again over the next 10 years,” Mark Williams, chief Asia economist for the research firm, said at a conference in Hong Kong this week.

The figure undercuts the forecasts of major international institutions.

“Two per cent [growth] for an emerging economy is about normal, particularly if you think about China’s demographics and other problems,” Williams added.

“What we are saying is China’s just going to become another normal emerging economy.”

On Tuesday, Chinese Premier Li Keqiang announced a growth target of between 6 to 6.5 per cent for this year as he delivered his government work report at the opening of the National People’s Congress – the country’s parliament.