As China’s economy has struggled to gain traction this year, many investors accept that its economic growth rate will be below the government’s official target of 5 percent. This is reflected in a significant underperformance of China’s stock market relative to the U.S. and other global peers in the past four months. During August, foreign investors sold Chinese shares at a record pace according to the Financial Times.
There is currently a diversity of views about China’s economy. Until recently, most forecasters anticipated that China could sustain 5 percent growth throughout this decade. However, the IMF now puts China’s GDP growth at below 4 percent in coming years. The Lowy Institute, an Australia-based think tank that conducts research on the Asia/Pacific region, offers a more pessimistic prognosis: It projects that growth will slow to 3 percent by 2030 and average 2%-3% per annum over the next two decades.
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