Matthews Asia: Just How Bad is 7% GDP for China

Irrational Expectations For China's Economy by Andy Rothman, Matthews Asia

Do we have irrational expectations for the Chinese economy? On the one hand, we asked China to restructure and rebalance its economy, and it has delivered. It shrunk its state sector, and privately owned firms now account for more than 80% of employment and almost all new job creation. Almost all prices are set by the market. Investment growth is slowing and consumption is now the engine of economic expansion. China’s service sector is now larger than its manufacturing and construction sectors.

But at the same time, we are freaking out because a natural consequence of this restructuring is gradually slowing economic growth. How, we ask, can China survive...