Economic growth is expected to moderate over the medium term as structural forces that have benefited China over the past decade – including population growth, rapid investment and productivity – weaken. The IMF forecasts real GDP growth to dip below 6% in 2020 and further moderate to 5.5% by 2024, reflecting the ongoing shift from investment-led growth to a consumer-oriented economy. Solid export growth has allowed China to manage the economic transition to date. But ongoing trade tensions with the US poses significant risks to China’s export outlook, notwithstanding the recent “phase one” trade agreement lowers some US tariffs on Chinese imports. Beijing has instituted tax cuts and increased investment in infrastructure to support domestic demand. Monetary policy easing has been measured to avoid stoking financial stability risks.
Despite the softer GDP growth trajectory, per capita income will continue to increase from a low base to US$15,000 by 2024. Since China ranks only 70th in the world for per capita income (up from 116th in 2007), it has considerable scope to grow even richer. The growing push into knowledge-intensive industries should pave the way for stronger growth in incomes.