Crunch Time for China?

From the draft Global Trends 2030 report:

Most of the emerging economies weathered the 2008 financial crisis well. In the coming decade, we will probably witness not only relative economic gains by China, India, and Brazil, but also the increasing importance of emerging regional players such as Colombia, Indonesia, Nigeria, South Africa, South Korea, and Turkey. However, developing countries will face their own challenges, especially in continuing the momentum behind their rapid growth.

The health of the global economy will be increasingly linked to how well the developing world does—more so than the traditional West. The developing world already provides more than 50 percent of global growth and 40 percent of global investment. Its contribution to global investment growth is more than 70 percent. China’s contribution is now one and a half times the US contribution. In the World Bank’s baseline modeling of future economic multipolarity, China—despite a slowing of its economic growth—will contribute about one-third of global growth by 2025, far more than any other economy. The world economy no longer depends on US consumers but on investment growth in emerging countries.

Nevertheless, China will face stiff hurdles to achieving that goal in the 2030 timeframe. The country’s population will start aging rapidly….  China has averaged 10-percent real growth during the past three decades; by 2020 the economy will probably be expanding by only 5 percent, according to several private sector forecasts….  China faces the prospect of being trapped in middle-income status—of its per capita income not continuing to increase to the level of the world’s advanced economies. Many Latin American countries faced a similar situation in the 1980s and were unable to avoid the trap because of income inequality and their inability to restructure their economies….

An economically difficult transition could mean an equally difficult political one in the case of China.  Slower per capita growth will increase the difficulty  of meeting rising expectations, potentially sparking discontent. A political crisis would make it harder for China to meet its economic goals. A prolonged political and economic crisis could cause China to turn inward, blaming external forces for its problems at home.

Although the leadership and much of the middle class are now wedded to globalization because of China’s startling success over the past 30 years, suspicion of the outside world lingers and, similar to historical cases elsewhere, could reemerge as a powerful political force if Chinese economic development stalls….

By dtwining Posted in GT2030

3 comments on “Crunch Time for China?

  1. Pingback: “Global Trends”- CIA: Asia will as before be the center of economich development – Europa and US will losse their postions. Middleclass will be soon most important globally, but consume more and more, which will be a big problem for envi

  2. Pingback: “Global Trends”-Prognose der US-Geheimdienste: Asien überflügelt USA und Europa. Zum ersten Mal überhaupt wird eine Mehrheit der Erdenbewohner 2030 nicht mehr in Armut leben, “erstmals wird die Mittelschicht in den meisten Ländern da

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