Explained: Why China’s growth has slowed to a record low

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News:According to China’s National Bureau of Statistics,the Chinese economy grew by just 6% in the third quarter of the current calendar year.

Facts:

China’s growth slowdown

  • China’s growth rate has been slowing down since the global financial crisis of 2008-09. 
  • However,China had recovered quickly and got back to double-digit growth in 2010-11 but since then it has been slowing down steadily.

Reasons for growth slowdown:

  • China’s fastest growth phase was during a phase when it was led by exports growth.But in the wake of the global financial crisis, domestic consumption was seen to be a more robust way of sustaining growth.
  • On the domestic consumption side,China’s one-child policy had placed structural constraints and this was one of the reasons why that policy was withdrawn a few years ago.
  • Domestic consumption has also been adversely affected by rising inflation cutting into people’s incomes as well as the outbreak of swine fever. 
  • Further,the demand has been affected by the growth deceleration that has happened as a result of the trade war with the US and the consequent uncertainties.

Impact of China’s slowdown:

  • The slowdown in China which is the world’s second-largest economy after the United States is not just a cause of worry for the Chinese but also for the global economic momentum.
  • The global economy is driven heavily by economic activity in some of the biggest economies like the US, China and the Eurozone countries.