The Chinese Economy: What China is Doing Right

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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.