Is China Headed for a Crash? Not Yet, Say Observers
Chan notes that official GDP figures are not reliable, with China not following the international standards of breaking down GDP by expenditure. He also calls the official unemployment figures “useless” since the jobless rate always hovers around 4.5 percent, whatever the condition of the economy.
But he believes moderately slower growth will not threaten China too much. Although some China watchers have suggested growth below 8 percent could lead to social unrest, he doesn’t think that’s too much of a risk.
“The country’s level of tolerance for lower growth has become higher—I think that’s pretty important,” he says. “Growth was a much more important variable five to 10 years ago. Now you don’t really have an unemployment problem, so slowing growth will have a lesser impact.”
And even at a slower pace in the next decade, any growth is good when the developed world is in turmoil and moving sideways at best.
“It is likely that China will slow, but at a rate that is enviable for other countries,” Davies says.