GlobalSource Partners examines how China’s slowing growth and rebalancing process could reshape global markets. Michael Pettis argues the key issue is not an imminent crisis but how wealth transfers from the state sector to households unfold. That distinction may determine whether growth settles near 3% to 4%.
The Impact in China and Abroad of Slowing Growth
Absolute Return Partners
Michael Pettis
Research
9 Pages
Key Takeaways
Growth Rebalancing Path: Pettis expects GDP growth to decline by roughly 100 to 150 basis points annually, averaging just 3% to 4% during 2012 to 2022.
Household Income Shift: Successful rebalancing requires household income and consumption growth of about 5% to 6% annually through wealth transfers from the state sector.
Commodity Demand Impact: China consumed 63% of global iron ore production in 2012, helping explain why metals prices could fall more than 50% during adjustment.
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