China’s high GDP growth is sustainable – economist

23 February 2012 13:21  [Source: ICIS news]

LONDON (ICIS)--China could sustain high rates of economic growth “for decades”, a global economist said on Thursday.

China’s real GDP growth has declined from a peak of about 12% in the first quarter of 2010 to about 9% in Q1 2012, and is expected to stabilise at about 8% during this year, he said. 

While many analysts have described this as a “soft landing” compared to the more abrupt declines suffered by most other major economies in recent years, Brad Bourland, Chief Economist of Saudi Arabia’s Jadwa Investment, does not see it this way.

“I don’t see it as a landing’, 8% is still flying,” he said.

Furthermore, he believes Chinese growth has the potential to remain at this level for a long time. When speaking at the 16th ICIS World Base Oils and Lubricants Conference in London, he was asked whether the expansion of China’s middle class would mean an end to such growth. Bourland said it would, but not for some time.

Assuming a US growth rate of 2-3% and Chinese growth at 8%, the size of the two economies is likely to reach parity by about 2025, at approximately $16,000-17,000bn, Bourland said. However, he said GDP per person in China is growing at a much slower rate and will not reach the same as in the US for about 100 years.

“Because of this, I think high growth can continue for decades…but not forever,” he said.

The challenge for China is to manage this slowdown, when it eventually happens, in a controlled way. Bourland used the Japanese economy as an example of what not to do. Japan saw rapid growth after the Second World War, but when its middle class expanded, the resulting slowdown in growth was abrupt and has persisted since, he said.

By: Ross Yeo
+44 208 652 3214

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