The Chinese Economy: What China is Doing Right

September 03 2015

1. The latest forecasts from the IMF say that China’s economy will be 44 percent bigger in 2020.[1] This compares with –

16 percent for the U.S[2]
5 percent for Japan[3]
45 percent for India[4]

2. The IMF expects that China will account for 33.6 percent of world economic growth in 2015.[5] This compares with –

12.2 percent for the U.S
1.1 percent for Japan
15.5 percent for India

3. China has added more than the equivalent of Australia’s economy over the past two years.[6]

4. China is moving to a growth model driven by domestic consumption. In the first half of 2015 consumption accounted for 60 percent of China’s growth.[7] This compares with –

54.4 percent in the first half of 2014
45.2 percent in the first half of 2013

5. In the first half of 2015 Chinese household disposable income and consumption expenditure grew by more than 9 percent.[8]

6. In the June quarter of 2015 the wages of migrant workers in China – a key indicator of slack in the domestic labour market – grew by 9.8 percent.[9]

7. The leading independent forward indicator of Chinese consumer sentiment has increased for three straight months and is now higher than one year ago.[10]

8. The largest part of China’s economy is also its fastest growing. In 2014, the services sector accounted for 48.2 percent of GDP. This was 6 percentage points more than industry and construction combined. In the first half of 2015 the services sector expanded by 8.4 percent.[11]

9. The leading independent forward indicator of activity in China’s services sector has been in expansion territory throughout 2015.[12]

10. The official interest rate in China is 4.6 percent.[13] This compares with 0 percent in the U.S, Japan and the EU.

[1] https://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf

[2] https://www.imf.org/external/pubs/ft/scr/2015/cr15168.pdf

[3] http://www.imf.org/external/pubs/ft/scr/2015/cr15197.pdf

[4] http://www.imf.org/external/pubs/ft/scr/2015/cr1561.pdf

[5] http://www.imf.org/external/pubs/ft/weo/2015/01/pdf/statapp.pdf; http://www.imf.org/external/pubs/ft/weo/2015/update/02/

[6] http://data.worldbank.org/indicator/NY.GDP.MKTP.CN; http://www.rba.gov.au/statistics/tables/xls-hist/f11hist.xls

[7] CEIC database

[8] CEIC database

[9] CEIC database

[10] https://businessfocus.westpacgroup.com.au/blog/2015/august/26/westpac-mn...