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China’s Economic Transition

A very large and growing economic base
China joined a very exclusive club last year. Its economic output as measured by gross domestic product exceeded US$10 trillion, making it only the second country to achieve that. America exceeded the US$10 trillion level in 2000.

Back in 1995, the size of the Chinese economy was about US$1 trillion and the growth rate of the economy over the last 20 years has been quite remarkable. The economy is now 10 times bigger and has grown at a compounded rate of 13% per annum over the 20 year period.

As the size of the economy increased, the growth rate naturally had to start slowing down. However, the increase in China’s economic size means that slower growth now generates as much if not more additional demand than what it did at higher growth rates a few years ago. Last year’s growth yielded an extra 4.6 trillion yuan in GDP, 20% more than in 2007, when growth was at 14.2%.

Please click on the following detailed article for further information on China’s Economic Transition, discussing the following:

  • Better balanced economy
  • Need to look at different economic indicators
  • Chinese share market is not a proxy for the economy
  • Devaluation of the Yuan
  • Bumpy ride
  • Benefits of the economic transition

Should you have any questions in regards to the above, please don’t hesitate to contact an Intralink adviser.

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