American Funds ®

Market Commentary

January 2014

China’s Future Growth May Depend on Others’ Strength

American Funds Portfolio Manager Jim Rothenberg discusses the reliance of China’s future growth on the strength of the overall global economy, despite a rise in Chinese domestic consumption.



James F. Rothenberg


Kevin Clifford: If we can just go back to China for a moment: We’ve just seen the outcome of the Third Plenum, getting mixed signals from the Chinese government as to what growth might look like going forward. How does that impact China? How does it impact the rest of the developing world?

Jim Rothenberg: Well, I think there are two issues. One is China needs to sell all the stuff they make somewhere. So the rest of the world has to be reasonably healthy for the Chinese to really have very rapid growth rates. And while there has been a great deal of talk about internal consumption in China picking up, and that will replace some of the export-led growth, I think that’s a mixed picture at the moment, to say that that’s really strong enough to offset problems in the export world for them.

So I think they very much depend on strength in the U.S., strength in other parts of the world. They’re trying to develop a much better relationship with Europe; they’ve been very deep in Africa, deep in South and Latin America. And so I think we’ll have to see. But my guess is that they will continue to grow, but probably at rates that are somewhat less than people have become accustomed to, and we’ll have to see what that all means.

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