China’s Slowing Growth: Three Things to Know

July 18, 2013

China’s Slowing Growth: Three Things to Know
Explainer Video
from Video

China’s slowing growth carries risk for the global economy. Robert Kahn, CFR’s senior fellow for international economics, highlights three things to know about the economic challenges now facing China.

More From Our Experts

More on:

China

Economics

Global Repercussions: A Chinese economic slowdown could have global consequences. "The IMF has estimated that each percentage point decline in Chinese growth reduces global growth by about one-tenth of a percentage point," says Kahn. Effects from the slowdown can already be seen in lower commodity prices and weaker global markets, he adds.

More on:

China

Economics

Transitioning to a New Growth Model: In order to rebalance the economy, China must figure out a way to shift away from an export-oriented economy toward one that encourages domestic consumption and is broadly based and environmentally sustainable. "A more market-based exchange rate and a range of other structural reforms opening markets to more competition, and gradually liberalizing the capital account will be essential," Kahn argues.

More From Our Experts

More on:

China

Economics

Shadow Banking Risks Affect Transition: Non-traditional mechanisms of finance, like the shadow banking sector, introduce risk to the financial reform process. Shadow banking, "while still a small share of the overall market, could be the canary in the coal mine signaling a broader problem of non-performing loans," says Kahn. Therefore, reforms are likely to be gradual.

More on:

China

Economics

Up
Close

Top Stories on CFR

China

As religious observance in China grows, the Chinese Communist Party continues to toughen oversight, increase religious persecution, and attempt to coopt state-sanctioned religious organizations.

Refugees and Displaced Persons

The United States has long accepted refugees from around the world, but President Trump’s sharp cuts to refugee resettlement have sparked debate over the program’s national security implications.

Ethiopia

Ethiopia’s new leader is seeking aggressive reforms to put an end to discord and build on the country’s progress in recent decades, but a towering set of challenges threatens his agenda.