Economic growth is expected to moderate over the medium term as the economy continues its march towards advanced economy status. GDP growth is forecast to dip below 6% p.a. by 2022 and decline further to 5% p.a. over 2022-30 as investment-led growth gives way to a more consumer-oriented economy. Solid export growth had allowed China to manage the transition to date, but the escalating trade stoush with the US poses significant risks—the economy grew 6.5% in Q3 2018, the slowest pace since the GFC. Beijing has announced stimulus, including tax cuts and greater support for infrastructure investment, to support domestic demand. This threatens to undermine the economy’s transition.
Despite the softer growth trajectory, per capita income will continue to increase rapidly, and exceed US$12,000 by 2022. Since China ranks only 72nd in the world for per capita income (up from 116 in 2007), it has considerable scope to grow even richer. The growing push into knowledge-intensive industries should pave the way for greater Chinese income growth.