China economic growth rate to slow down until 2025 - economist

23 June 2011 06:21  [Source: ICIS news]

SINGAPORE (ICIS)--China’s economic growth rate is expected to be at around 8.6% in 2010-2015 and will continue to slow down until 2025, an economist said on Thursday.

The slowdown is in line with China’s evolving workforce and the government’s efforts to tighten its monetary policies to curb inflation, said Fred Peterson, chairman of US-based Probe Economics.

China’s real GDP growth rate is expected to slow down to around 7.4% in 2015-2020, and will slow down further to 6.9% in 2020-2025 as the government “rebalances the economy”, Peterson added.

China’s growth is decelerating as “investments slow down and spending goes up”, Peterson said.

Peterson was speaking at the sidelines of the 15th World Chlor-alkali Conference in Singapore, which is held on 23-24 June.

The slowdown will be compounded as China’s manufacturing industry shifts into a service-oriented industry.

“It will be a harder leap for the economy to make [from manufacturing to services rather than from agricultural to manufacturing] as wages rise,” Peterson said, adding that the lack of English-speaking workers will be another major barrier for the country.

Around 1% of China’s total population, or around 10m people, can speak English compared with 10% or 100m English-speaking people in India, according to Peterson.

In addition, China will face competition from low-cost emerging markets in southeast Asia, especially Vietnam and Indonesia, Peterson added.

China’s economy will make up around 15% of the total global GDP by 2015, which is an increase from 9% in 2010, according to Peterson.

North America’s economy will fall slightly to below 30% of the overall global GDP by 2025, compared with 30% of total world GDP in 2010, Peterson said.

Global GDP in 2010 totalled $41,300bn (€28,910bn) and is expected to grow to $68,700bn by 2025, according to Peterson.

Near term “drags” on the global economy will include the recent monetary tightening policies undertaken by the Chinese government and the persistent supply overhang that is still hampering the US housing market, according to Peterson.

“It will take three to four years for the overhang to be absorbed,” Peterson said.

In addition, the European debt crisis and the 11 March earthquake and tsunami that struck northeast Japan will continue to weigh on the global economy in the near term, Peterson added.

($1 = €0.70)

By: Nurluqman Suratman

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