The rate of expansion of the Chinese economy, well, officially at least, has declined to the lowest level seen in nearly 30 years. The official rate of expansion for the Chinese economy in Q2 2019 was a paltry 6.2% (year-on-year). One can imagine the mass resignations of government officials and central bankers should a western economy slow to such an extent (irony off).
Whilst the figure by official Chinese expansion statistics is weak, and measures are in hand to boost it, it comes amid an intense trade war with the USA which is a major export market for the Chinese. Also, the figure needs to be put in some kind of perspective: in 2018, the estimated GDP of the Chinese economy was $13.6 trillion – roughly 22% of the global economy. Back in 1992, the size of the Chinese economy was “only” $2.7 trillion, so over those nearly 30 years, the Chinese economy has expanded by a factor of five. As the size of the economy expands, one would expect to see the growth rate fall off for the simple reason that a 5% expansion in 1992 would be $135 billion whereas the same expansion today would be worth $680 billion now.
In comparison, US growth in 2018 was 2.9% and the Dollar value of the world’s largest economy was $21.3 trillion.
Officially, China’s growth dipped from 6.4 to 6.2% between Q1 and Q2, making it the worst growth performance since 1992. China has reacted, already, by cutting taxes and boosting public spending in a bid to stimulate the economy (the global economy is also slowing down, partly as a result of Trump’s protectionist policies).
The long-term average expansion of the Chinese economy has been a remarkable 10% (over 30 years). For the reasons give above, this level of performance cannot be sustainable indefinitely. In 1992, China was not in the group of ten largest economies in the world, but it has long been the most populace country on earth. The nation still ranks as the 74th poorest country in the world, despite having the second largest economy (by comparison, the USA ranks as the 12th richest nation).