The Chinese economy is all set to face some really tough challenges in the coming years. China has reported that its economy grew just 7.4% in the year 2014, missing the Government’s target for 7.5% for the first time since 1998.
China is the second largest economy in the world and has enjoyed phenomenal growth over the last few decades, but despite being in a better place since the 2007 financial crisis the end result seems to be taking the turn for the worst.
China’s economy grew the at its slowest pace in 24-years as the country local governments and business are struggling under heavy debt.
So, what does this mean for the world economy? Could China drag the whole world with it?
Well, the Chinese economy has always had this magical growth but as the country develops these numbers are expected to come back to the real world. Though there is lot of potential left in China the growth is expected to reach a more comfortable pace.
Few had expected China to meet its 7.5 percent full-year target, but the performance was better than some had feared after a rough few months raised concerns the economy may be heading for a hard landing.
“The country’s period of miraculous break-neck growth is over, but let’s get over it,” said a commentary on the official Xinhua news service, referring to a long string of double-digit expansion.
“The end of the high-speed growth era does not spell an end for China’s economy.”
“This is the best possible miss you could have from a messaging standpoint,” said Andrew Polk, economist at the Conference Board in Beijing.
“The government is saying, ‘we’re not married to this specific target, we missed it and we’re okay.’ That seems to me a quite positive development.”
Experts believe this trend is to continue in 2015 and 2016 and some expect the growth to reach as low as 6.3% in 2016.