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Op-Ed: How China should handle the gradual economic slowdown

Sharon Magen examines China’s gradual economic growth slowdown and suggests some ways Beijing can deal with this issue.
Chinese President Xi Jinping Photo Credit: EPA

Compared to the rest of world, China's economy today continues to grow at a rapid pace. Although China's growth is in fact gradually decelerating, its GDP per capita continues to grow and is expected to double its 2010 worth by 2020. It is therefore feasible to comprehend that China will continue to be a vital part of the global economy. However, as China's economic growth continues to slowdown, its government will have to implement relevant measures meant to effectively deal with this trend.

Economic inequality and poverty rates in China today are increasingly going down. Still, growing gaps between the rich and the poor remain high. In order to bridge across these daunting social gaps, the Chinse government will have to implement relevant tax reforms to upgrade its education system and to create and enable more employment opportunities for its vast lower class. Moreover, Beijing will have to enable broader access to health care services and pension funds. By doing so, the Chinese government will be able to enhance growth and consumption, as its people will not feel obligated anymore to save up for a rainy day.

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By increasing income, especially in its hinterland, China will be able to successfully increase growth, curtailing the current slowdown. Taking this step would also assist in bringing the entirety of Chinese society into the fold, thus enabling all of its inhabitants to enjoy the fruits of its meteoric growth. The enhancement of consumption-based growth would also help China in rebalancing its economy, as it transitions from an economy mainly focused on production to a service-oriented economy.

In addition to boosting the average Chinese citizen's access to social benefits, liberalizing the legal framework that governs its Foreign Direct Investment regime would assist in the development of further extents of the Chinese economy, such as infrastructure in rural and agricultural areas. Employment of relevant anti-corruption measures and efficient use of public funds would also be crucial to achieving this goal.

When dealing with the Chinese economy, it is important to take into account its aging society, which takes a toll on its workforce. Even after current legislation which permits two children per household, it is expected that the Chinese population will reach a maximum of 1.43 billion in 2030 and from there on decrease. By enhancing digitalization and automation efforts, it would be possible to mitigate possible damages that could be caused to the economy following the gradual decrease of available working hands.

Green energy efforts are also crucial to the effort of further sustaining the Chinese economy. The high level of pollution in China hurts its citizens badly; according to estimations, in 2010, for every 1 million Chinese inhabitants, 670 had perished due to medical complications related to air pollution and its effects. Implementing and sustaining green energy efforts are therefore central and vital to the future of the Chinese giant and the rest of the global economy. 



JOL Blogger | Sharon Magen

Sharon is a young American-Israeli currently based in Paris, France, as a Master's exchange student at the Paris Institute of Political Studies (Sciences Po). She is currently interning at the Permanent Mission of Israel to the OECD and involved in various student initiatives, such as the SciencesPo Refugee Help Think Tank and the Paris – Tel Aviv association, which promotes Franco-Israeli cultural ties.

Her undergrad was completed at the Hebrew University of Jerusalem in the fields of International Relations and South East Asian Studies. She has vast research experience from my time in the military as an officer in the strategic division and has also interned at the INSS (Institute for National Security Studies) in the fields of Sino-Israeli Relations and the GCC (the Gulf Cooperation Council).


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