China’s Long-Term Growth Story Still on Track | American Funds

  • Forms

Investment Insights

September 2015

China’s Long-Term Growth Story Still on Track

Economist Stephen Green gives his view on the key drivers of China’s economy over the next ten years.



Stephen Green


Stephen Green: Looking further out for China, I think probably in the next ten years an average rate of growth around seven percent is, is pretty reasonable to expect. We’re, you know, we’ve slowed down from these very, very high rates. Pre-crisis we were probably running at a 15, 16 percent growth every year, which was extraordinary. So we’ve considerably , we’ve slowed down a lot since then, and then you get into, some of the reasons for that is all the stuff that we all know about. You know, China’s demographics, that easy investment or that easy investment phase of building steel factories and building real estate. That’s not over, but it’s definitely maturing. And now we’re going to be driven by services and consumption, technology, and these things just intrinsically are a little bit slower.

So I think China can probably run at six, seven percent. It’s still a relatively low income economy, $10,000 GDP per capita. And when you compare that to OECD countries, which are 30, $40,000, I think that’s still a lot of catchup that should be relatively easy, assuming the government continues to push through reforms.

So there are sort of lots of bearish views out there that say that China can only grow at two or three percent for the next ten years. I think that’s overbearish. I think six, seven percent is probably a reasonable expectation.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not to be comprehensive or to provide advice.