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China’s transitioning economy slowing growth: Conference Board

Economy will slow to 4% growth between 2020 to 2025.


NEW YORK — China’s economic growth will decelerate to 4% a year between 2020 to 2025 — well below widespread expectations of steady 7% to 8% growth over the next decade, a business research group predicted.

The Conference Board has forecast China will endure a rockier-than-expected transition from fast growth based on exports and massive investment in factories and real estate to a slower but steadier economy based on increased spending by Chinese consumers.

“This adjustment process will necessarily be painful,” the report warned. “The full transition of China’s economic growth model is likely to be a long slog.”

Chinese officials have acknowledged that the transition will require tough choices, such as reducing government loans to inefficient but politically connected companies. But they have been slow to act, the Conference Board said. “China’s leaders have forestalled needed structural adjustments” by rolling out stimulus measures whenever the economy starts to sputter, the report said.

The government is aiming for growth of 7.5% this year, well below peak growth of 14% in 2007.

The Conference Board said that US and other foreign companies can benefit in some ways from more moderate growth in China. It will be easier to attract skilled Chinese workers, who will increasingly value steady employment instead of jumping from company to company in search of higher pay as they could in the boom years.

It will give foreign companies opportunities to buy struggling Chinese firms. And the report also predicted that it means the Chinese government _ which has been investigating foreign companies for allegedly anti-competitive practices — will be “more hospitable” to foreign companies that want to invest in China.

© 2014 The Canadian Press

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