The “new normal” of the Chinese economy

Abstract

We examine the drivers of China’s recent economic growth slowdown considering a demand-led growth perspective and the structural changes over the last decades. We argue that such a slowdown corresponds in part to a desired trajectory towards a growth pattern based on a greater protagonism of domestic consumption and a more balanced economy focused on innovation. This change referred to as the “new normal” responded to external and internal structural trends and distributive and institutional conflicts that, after 2008, reduced the low wage growth path and generated high real estate speculative investments. We argue that the new normal will possibly lead to a moderate growth rate for China’s historical experience, but higher than that of the OECD, and possibly more socially and environmentally balanced than previously.