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Reserve Bank of Australia Forecasts China’s Economy Growth

The Reserve Bank of Australia projects China’s economic growth to halve to around 3% by 2030. Low birth rates, low productivity, and low birth rates combine to slow its growth.

China’s period of ‘above-normal’ growth is drawing to a close,” Ivan Roberts and Brendan Russell from RBA write in a research paper on Thursday.

 “This will create obstacles for policymakers, as they attempt to support continued growth in income while forestalling risks arising from high levels of debt.” They added.

In 2010, China’s annual GDP rose 10.6% but steadily slipped as authorities sought to switch the drivers of growth from investment to consumption.

Policymakers are committed to rebalancing and reversing China’s population dynamic. RBA economists also see higher productivity, primarily through technical innovation, as a key to supporting China’s economy.

Currently, policymakers are meeting in China for the annual Central Economic Work Conference –  where they set policies and goals.

According to a Bloomberg survey, the official GDP target likely to be lowered from a 6-6.5% range in 2019 to around 6% in 2020.

China is Australia’s largest trading partner. Its economic growth has implications for exports and broader prosperity since trade between them has grown with time.

The depth of these linkages means that the potential for growth in China to slow further, either gradually or sharply, represents a significant risk for the Australian economy,” said Roberts and Russell.

Investors often track RBA’s views on China because of Australia’s leverage to the fortunes of the world’s second-largest economy.

Reserve Bank of Australia has one of the three international offices in China-mainly for economic analysis rather than trading.

RBA’s offices in London and New York are mainly for trading.

China’s GDP Growth Slows

China’s economy grew 5% in the third quarter-its weakest rate in almost 30 years. Growth slowed from 6.2% in the second quarter.

In 2019, the economic growth rate fell within the government’s annual goal of between 6-6.5%, but with a marked slowdown since 1992.

China has been battling weakened domestic spending and the prolonged trade war with the US hurting its exports.

The Chinese government intends to address the sluggish economy with tax cuts and increased access to credit. They want to improve the country’s business and investment landscape.

Last week, China and the US made progress in talks aimed at ending the long-standing trade was between them.

The potential deal prompted the US to suspend the tariff hike on Chinese goods set for Dec 15.

Chinese exports and imports have suffered under the US tariffs and decreased trade with the US.

According to the US media reports, the trade deal could pave the way for a better agreement later. Although tariffs between the two countries remain in place.


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