# China’s Slowing New Normal

1 Opinion April 28, 2015 Project Syndicate ![A. Michael Spence](/sites/default/files/styles/246w/public/assets/images/con_032670.jpg?itok=cxjGfIlv) By A. Michael Spence > Given weak growth in external demand and an already-large market share for many goods, China cannot count on export growth to sustain economic performance in the short run.

The world’s two largest economies, the United States and China, seem to be enduring secular slowdowns. But there remains considerable uncertainty about their growth trajectory, with significant implications for asset prices, risk, and economic policy.

The US seems to be settling into annual real (inflation-adjusted) growth rates of around 2%, though whether this is at or below the economy’s potential remains a source of heated debate. Meanwhile, China seems to be headed for the 6-7% growth rate that the government pinpointed last year as the economy’s “new normal.” Some observers agree that such a rate can be sustained for the next decade or so, provided that the government implements a comprehensive set of reforms in the coming few years. Others, however, expect China’s GDP growth to continue to trend downward, with the possibility of a hard landing.

There is certainly cause for concern. Slow and uncertain growth in Europe – a major trading partner for both the US and China – is creating headwinds for the US and China.

Read full article as published by [Project Syndicate](http://www.project-syndicate.org/commentary/china-new-normal-investment-by-michael-spence-2015-04)

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*A. Michael Spence is the William R. Berkley Professor in Economics & Business.*## More Opinions from A. Michael Spence

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