Effects of China’s “new normal”

Published on Author taa16

While Chinese officials keep assuring that China’s declined growth rate is in accordance to their plan of entering a “new normal” period, many analysts cast doubts on such explanation and worry about the devastating effects it might have on people working in basic commodities such as steel and cement.

Under the new normal, China’s economy is supposed to be fairer and more sustainable as the country can finally begin making progress towards restoring its environment after decades of wanton pollution. However, the government’s effort to move the focus from manufacturing to service industries seems to mean differently to the miners and the upstream players– the iron ore industry, steel, refineries than to healthcare, tech, and culture industries such as film and music (or as The Guardian puts it, “this “new normal” will mean something very different for, say, an oil worker in far-northern Heilongjiang province than it will to an upwardly mobile tech entrepreneur in Beijing.”) The change would also widen the gap between coastal south-east regions and inland and industrial provinces in the north.

Strikes are increasing as wage growth are expected slow down. Businesses are struggling to survive as the vast economy adjusts to a more sedate growth pace after three decades of explosive expansion. While it is hard to tell now whether this decline in growth rate of China signals a weakened economy, the Chinese government will definitely face a lot of challenges in maintaining control over the financial system to prevent a crash.



Kaiman, Jonathan. “Hard times return as China bids to bring its economic miracle to an end”. The Guardian. The Guardian, 24 Jan, 2015. Web. 25 Jan, 2015.



2 Responses to Effects of China’s “new normal”

  1. It seems clear after reading the first few chapters of Hessler’s “Country Driving,” that China’s “new normal” may look very similar to the China of recent memory. The rural poor will continue to have little to no access to the tremendous growth seen in urban areas, and judging from your post (and my post on inequality in China), this problem is likely heading in the wrong direction.

  2. A slowdown to 7.4% (the latest number) elicits crocodile tears from most of the world. How might we judge whether growth is “too fast”? One might be whether there was inflation, another whether one or another metric (real estate prices) is out of line. However, for the benefits of growth to extend to rural areas we need workers in low productivity endeavors to be pulled into better ones, e.g., by moving from a farm in an area of poor soil to a nearby sity or even far away Beijing or Guangzhou (=the British “Canton”).

    How do your graphs fit in? What (if any) are the implications of the appreciation of the yuan relative to the US$? Why is India seen as outperforming China in growth before the end of the decade?