The Wall Street Journal reports on a Conference Board forecast of China’s GDP growth over the next ten years.
The Conference Board forecasts that China’s annual growth will slow to an average of 5.5% between 2015 and 2019, compared with last year’s 7.7%. It will downshift further to an average of 3.9% between 2020 and 2025, according to the report.
Tomorrow China will reports their third quarter GDP growth. China’s economy is forecast to have grown 7.2 percent in the July-September period, according to a Reuters poll.
The Conference Board says that foreign companies should realize that China is in “a long, slow fall in economic growth,” the report said. “The competitive game has changed from one of investment-driven expansion to one of fighting for market share.”
For the 30 years through 2011, China grew at an average annual rate of 10.2%, a record unmatched by any major nation since at least World War II. [NBF- unmatched rate of growth at any time in history]
The report says that China could ease the slowdown by reducing the role of the state and revamping credit markets so lending is done on the basis of commercial decisions rather than political ones. But the Conference Board is skeptical that China will make fundamental changes soon because they could slow short-term growth and cause political pain.
Nicholas Lardy, a China expert at the Peterson Institute for International Economics, said the Conference Board conclusions are too gloomy. “China is far from exhausting productivity gains,” he said. It would get a big lift, for instance, from opening for competition the oil, gas and other sectors dominated now by China’s big state-owned firms, he said.
The International Monetary Fund and World Bank also expect China’s economy to slow over the coming years, but at a more modest clip. The Conference Board forecasts are “eye-popping,” said David Dollar, a China scholar at the Brookings Institution who formerly ran the World Bank’s office in China.
He called the report “a pessimistic take on whether China will aggressively pursue structural reforms.” Given the Conference Board’s main audience—its membership includes 2,500 of the world’s largest companies—the report is likely to spark a debate about the direction of the Chinese economy and the leaders’ commitment to change.
Michael Pettis thinks China will slow and crater commodity prices
Michael Pettis is an analyst on China who has long been saying that China would need to rebalance its economy and growth would slow down a lot. Pettis believes iron ore prices would fall below $50 a ton before the end of the decade because of China’s slowdown.
Lant Pritchett, and Lawrence H. Summers have suggested that the arithmetic of previous growth miracles implies that China will grow by 3.9% on average over the next two decades.
Nextbigfuture is more optimistic about China’s future growth
If China can successfully become the builder of the majority of the worlds infrastructure (rail, ports, roads, buildings, energy projects) then this will many trillions of dollars to China’s economy. It will also increase trade and the size of the economies of trading partners.
China is working on the high speed rail line to Laos and another to Thailand. This would be part of a grand system that links China with Singapore to the south and, through Myanmar and Bangladesh, to India in the west.
China and Russia also agreed to work together on other transport and energy schemes, including the development of heavy helicopters and a very large aircraft to rival Airbus’s A380, the exploration of two natural gas fields, more pipelines, nuclear power plants and the expansion of Russia’s Zarubino port on the Pacific coast, south of Vladivostok.
There are several reports that China and Russia are discussing a 4,350 mile long Beijing to Moscow high speed rail line. This would cost about $250 billion.
The new silk ‘road’
Even more ambitious, politically and symbolically, is a proposed 6,000km high-speed route from its western borders that would follow the ancient silk route through central Asia before turning south into Iran and running west through Turkey and Bulgaria to western Europe.
Chinese media have been enthusing over the scale of the “Silk Road Economic Belt” concept. It would involve more than 40 Asian and European countries and would knit together regions with a combined population of 3 billion
Trans Africa Line
China is about to lay track for a shorter and faster version of the Cape-to-Cairo rail line that imperialist planners such as Cecil Rhodes proposed as a way of uniting Britain’s colonial possessions. China’s version will begin with a line that runs from Ethiopia and South Sudan to the Great Lake states in the south.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.