China’s economy is slowing

By Shuyi Fu

Recently, “New normal” is a hot word about the Chinese economy. China maintained its high-speed economic growth over  the past 30 years. The speed is slowing down and it is entering a new period now. “The China’s economic growth slowed to 7.4% in 2014, downshifting to a level not seen in a quarter century.”  (Mark Magnier) In 2015, Li Keqiang, the current premier of China, said that the goal of the China’s economic growth is about 7%. Even though this speed is low, there are lots of reasons to keep in mind. In addition, we cannot only look at the rate of the economic growth but also look at other aspects of the economy.

Recently, Xi Jinping, the president of China, gave a speech talking about the slowing economic growth. With the development of Chinese economy, the volume of Chinese economy is growing and increasing. He thought that 7% is high and considerable on the basis of a large economy. In the past, China depended on increasing the input of essential factors in production to increase the GDP, using lots of lands, resources and labors. What China is focusing now is transforming from depending on putting large amounts of essential factors to technology and creativity. In the future, China needs to develop their economy with technology, not traditional labor and resources. This is a process of structural transformation. During this process, the speed needs to be slowing down in order to adjust properly.

Although the economic growth was 7.4% in 2014, the labor productivity increased 7% and Energy consumption per unit of GDP decreased 4.8%. (Phoenix Finance) The domestic consumption increased and the development of the service industry accelerated.

There is a large space for the industrial structures to upgrade. At present, most of the industries are low-end industries. It is beneficial to invest on developing those low-end industries to increase productivity.

Work citied

“China Economic Growth Is Slowest in Decades” By MARK MAGNIER, LINGLING WEI and IAN TALLEY

 Xi Jinping: now about 7 percent economic growth has been considerable increment, Phoenix finance


6 responses to “China’s economy is slowing

  1. It’s true that China’s economy grew really fast during the past years. If China focus on production by new technology, there will be less labor force, but much higher efficient production lines. So, will these two elements balance or one over another one?


  2. China has had a very rapid and sustained economic growth in the past decades. It is now the second largest economic power in the world. Therefore it is not really surprising to see a decline in its economic growth.


  3. China has had a very rapid and sustained economic growth in the past decades. It is now the second largest economic power in the world. Therefore it is not really surprising to see a decline in its economic growth. I think it is wise for the country to start considering new potential sources of economic growth instead of continuing to rely on its manufacturing industry. I think this new change will diversity China’s economy and strengthen it.


  4. It is hard to maintain a steady rate of economics growth for long term, especially considering the size of China’s economy currently. Personally, I do not see this as a necessary bad sign especially knowing that China is going through a transition from labor to technology, which in fact is a healthy transition. Also, China is doing a much better job at economics development. The corruption rate has decreased tremendously in the past two years since the stepping up of the new leader. China is also focusing heavily on improving economic situations in poor areas in Asia. China take a leadership role in the establishment of the Asian Infrastructure Investment Bank, who is aimed at improving infrastructure in poor regions of Asia. A number of Chinese companies are also emerging as top companies in the industry in the world. A good example is Alibaba, which IPO in the US last year. Lastly, 7% increase in economics growth is still a good number for China. Thus, in conclusion, I am China is improving economically as a whole, so the slow down in GDP growth is nothing to worry.


  5. I agree China needs to focus on the technology sector. I have read before that the ratio gap in PCI between let’s say United States and China is 1 to 4(PCI USA / PCI China). This is just an example. Some economists will argue that this gap is due to the technology gap these countries have, and I agree. There must be a reason why advanced countries are not focusing their energy on the agricultural sector. I believe they have ran and crunched many numbers and figured out that if they want to remain a prosperous economy their focus needs to be in the technology sector. Technology evolves quickly and because of this there is a lot of money to be made each year. Agricultural sector on the other hand has improved, but there is only so much you can do and improve in the agricultural sector. In agriculture time and land are the two major constraints, but in manufacturing either one of these is an issue. In manufacturing land is not an issue because you only need so much space to build a factory. Once it is built you can update the technology inside at any time. Also the automation of labor increased production and companies are coming out with new robots to increase their production. Robots also do not need any rest they can work around the clock, where as humans cannot. In agriculture once you plant the seed, you need a lot of time. You must wait and wait for the seed to develop and be ready to be harvested. It is almost impossible to speed up this process. Another issue agriculture has is in order for there to be a higher production, the amount of crops planted needs to be increased. This could be problematic due to land being a fixed variable (we cannot produce more land,there is only so much of it on this earth). To sustain their economic growth China must invest in new technology, once they will do that there is a good chance the standers of living will increase as well because China has the opportunity to become a leader of the luxury manufacturing goods.


  6. Dear Shuyi,

    When looking at the stages of development in economics, there is a point when even the most rapidly growing economies begin to slow. It is not necessarily a bad thing, but it just means it has reached a point when the growth has leveled off. Still, no matter what stage of growth and economy is in, it is always important to focus on what is best for your country and will keep it strong. Innovation and creativity can help steer the country to become even more productive than it was before.

    ~Professor Myra Chaudhary


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