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China's Predictable Slowdown

Why the Economists Got It Wrong

A man looks at the Pudong financial district of Shanghai, China, November 20, 2013. Carlos Barria / Courtesy Reuters

China might be the world’s largest economy, at least by some estimates, but the growth that got it there is slowing. According to the International Monetary Fund, China's GDP growth in 2014 was less than 7.4 percent, the lowest annual figure since 1980. The IMF predicts that China's growth will continue to slow to just over 6.3 percent by 2019. And even China's usually optimistic central government is expected to lower its sights for 2015 to around seven percent.

The slowdown took almost everyone by surprise. Four years ago, China's economy was growing at 10.5 percent, and the IMF forecast in October 2010 that growth that year would be nearly 9.5 percent, an estimate it confirmed in October 2011. At that time, even the more pessimistic Economist Intelligence Unit had predicted that China's growth would remain above eight percent, at least through 2016. Even so, I argued in the September/October 2011 issue of Foreign Affairs, this growth would merely return China to its historical position as a middle-income country. I

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