“We’re talking about an 8 trillion dollar economy now growing at a nominal rate in US dollars of 12.5 per cent per annum. What people have been saying for the last five years is that China shouldn’t be growing this fast and the National Development and reform Commission (NDRC) and the Chinese government believe that, too,” Investec Asset Management strategist Michael Power told CNBC Africa on Monday.
“Admittedly it’s slowed down fairly dramatically from where it was but it’s still growing at a sold rate. That’s why they have been purposefully slowing down the economy. They are changing the shape of the economy, they’re making it more consumer rich.”
Last year China grew in nominal us dollars at 24 per cent and is expected to grow at 12.5 per cent in nominal us dollars, which Power considers to be a big slowdown.
“Where China’s growth in real Remnimby is heading is towards the six and a half and seven per cent, which I think is far more sustainable longer term. You don’t want to have a situation whereby only one day in January this year was actually declared non-dangerous in terms of pollution in Beijing,” added Power.
According to Power, the sort of growth that China is generating has had some complications such as an increase in pollution and a growth that was debt-rich. Government has therefore now aimed for slower growth that is more sustainable.
“China is adjusting its model as to how fast it wants to grow and in what way it wants to grow. We can’t carry on just assuming that because the world is flying on one engine called China, if that engine for our purposes and the rest of the world’s starts to slow down, it’s causing us enormous amounts of pain,” said Power.