Is China Coming Up Against a Great Wall?

China’s potential economic stagnation could be to India’s advantage.

Yan Barcelo 10.09.2021
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Foggy Shanghai skyline

There is a growing perception that China’s seemingly irresistible rise is set to slow. In a 2017 study, Morningstar anticipated obstacles to China’s ongoing growth. “China is far from the first country to endure slowing economic growth following its ascent from agrarian poverty to middle-income status,” said the study. “Many see growth eventually stagnate, a phenomenon economists term the ‘middle-income trap’,” it continues. “While we don't think China is especially likely to fall into the middle-income trap, the odds of escape aren't great.”

“I’d say the key factors which are associated with slowing growth in middle-income countries are still at play for China,” says Morningstar economist Preston Caldwell. “Fraying trade relations have only added to causes of China’s growth slowdown. The main causes are domestic. An ageing population means a shrinking workforce. Capital stock growth has to slow as the country has already invested far too much. And total factor productivity growth is likely to be mediocre compared to the country’s last couple decades.”

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About Author

Yan Barcelo  is a veteran financial and economic journalist with more than 30 years of experience, writing for many publications in Toronto and in Montreal, including CPA MagazineLes Affaires and Commerce.

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