Matthews Asia: Key Questions For China Investors In 2015 [Part II]

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Matthews Asia: Key Questions For China Investors In 2015 [Part II]

Key Questions For China Investors In 2015 [Part II] by Andy Rothman, Matthews Asia

China is complicated and raises many questions for investors. On the one hand, China’s economy is growing more slowly at 7.4% last year, compared to 7.7% for the two prior years. On the other hand, because the base was far larger last year, the incremental increase to the size of the economy was 100% greater than the increase a decade ago, when GDP rose 10%. This is why the International Monetary Fund estimates that China accounted for almost one-third of global growth last year. With inflation-adjusted income up about 7% in China, compared to 2% in the U.S., consumer spending is booming, up 11% vs. 2% here. Media headlines, however, continue to tell us that China’s economy is doomed.

This is the second installment of a three-part Sinology series designed to answer some of the most important questions about China’s economy. We explore the reasons why the Communist Party is comfortable with slower growth, and just how slow a pace might be tolerable. This segment will also answer questions about the health of what has been the world’s best consumer story, and about prospects for further economic reforms.