China Research

Most international analysts are well aware of the fact that the economy of China has been slowing down substantially in the past decade. There are different reasons for this, both temporary and structural ones. The research institute of the Finnish central bank (The Bank of Finland Institute for Emerging Economies, Bofit) is regularly also analyzing China, both scientifically and statistically – with high quality (https://www.bofit.fi/en/monitoring/weekly).

Clarification by different time series
The table I apply below, is actually taken from this source. Please have a look at it and join me for some indicators (https://www.bofit.fi/en/monitoring/statistics/china-statistics/) – and you will easily recognize that the Chinese economy indeed has been downsizing. This development is visible despite the fact that statistical standards still are questioned by many foreign analysts for being too positive (which we do not know for sure anymore even if it certainly has been the case in the past).
Anyway, the tables produced by Bofit show a very visible downturn of GDP-growth rates, for example from 10,6 percent in 2010 to 5 percent in 2024. The sky is not the limit anymore for Chinese GDP growth, reflecting the so-called middle-income trap and other structural deficits, for example coming from huge government support to state-owned enterprises (SoEs). A similar trend can be observed for industrial production.

Even more dramatic looks the downturn of fixed investment, nowadays achieving only small increases. This happened on the other hand after years of overinvestment with investment ratios up to 45-50 percent of GDP (normally around 30 percent). But also Chinese consumers have become uncertain about their future – leading on trend to a much lower growth rate of private consumption or propensity to consume as economists call it. Chinese exports, however, have been performing quite well also more recently (e.g. in 2024 still the largest supplier of the German economy).

Finally, the balance on current account still achieves surpluses but they have been shrinking quite strongly. Such surpluses mean that there is no need of borrowing money in foreign currency, even if it happens for diversification reasons. If China one day should face considerable deficits in the current account balance – let’s assume more than 5-6 percent of GDP – recognizable improvements of macroeconomic statistics will certainly be claimed by global financial analysts and investors.

Summary: It could be a good idea to regularly study Bofit’s publications on emerging markets.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University