China faces decades-long growth ‘plateau’, says EU Chamber head
CHINA’S economic prospects are flat for the next two decades, requiring Beijing to tackle some deep-rooted problems to improve its growth outlook, according to the outgoing head of the European Union (EU) Chamber of Commerce in China.
“We are possibly facing a ‘plateau China’, with a little upside happening for the next 10 or 20 years,” Joerg Wuttke told reporters in Beijing on Monday (May 22). When it comes to economic growth rates, “we have to say goodbye eventually to the 4 per cent to 5 per cent scenarios and settle more for 2 per cent to 3 per cent”, he said.
Growth in the world’s second-largest economy is expected to return to pre-pandemic rates of close to 6 per cent this year, although that is largely due to a weak base in 2022. Beyond this year, economists expect growth to slow to 5 per cent or lower. The International Monetary Fund has also trimmed its long-term forecasts for China, arguing that even 4 per cent growth will be hard to achieve after 2025.
While Wuttke does not think China has reached its “peak”, he does anticipate some tough choices ahead for the Asian nation’s government. “China has virtually plucked the low-hanging fruits” and the hard work now boils down to raising productivity, Wuttke said. “It is now time for the painful reforms.”
He cited, as an example, the need to overhaul the education system to produce people with more relevant skills for a fast-changing employment market.
Compared with previous economic downturns, this time China has much less “wiggle room” to manoeuvre in fiscal, financial, and monetary terms, Wuttke noted.
“So my worry, if I look at China today, is that they might actually end up like Japan on a bigger scale but also on a lower level of GDP per capita,” he said. China has over-expanded on infrastructure, while skimping on social support, he added.
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