Moderating Growth and Structural Change in the People's Republic of China: Implications for Developing Asia and Beyond

Publication | March 2016
Moderating Growth and Structural Change in the People's Republic of China: Implications for Developing Asia and Beyond

The gradual moderation in growth currently underway in the People’s Republic of China presents both challenges and opportunities for developing Asia, while concerns over a sharp slowdown in the near term are exaggerated.

A gradual moderation in growth is currently underway in the People’s Republic of China (PRC). This is the result of a combination of factors, including a shrinking working-age population, the natural process of convergence and rising labor costs, and a structural shift toward consumption-led growth partly encouraged by government. It also reflects continued weakness in external demand and the working out of overcapacity in some sectors.

Key Messages

  • A gradual moderation in growth is currently underway in the PRC.
  • The decline in PRC growth is expected to reduce gross domestic product (GDP) growth in the rest of developing Asia by about a third of a percentage point per year over the next 2 years.
  • The share of the commodity price decline explained by moderating PRC growth varies widely by commodity.
  • PRC’s growth moderation and structural transformation present both challenges and opportunities.