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Susan Shirk on the Danger of Slower Growth in China

In China, Slowdown Is a Bigger Danger Than Growth

01/15/2013
Peter Orszag, Bloomberg

A slight acceleration in Chinese economic growth at the end of last year is reinforcing the common narrative that China’s expansion is a threat to other nations, including the U.S.

The bigger danger over the medium term, however, may be a slowdown in Chinese growth -- which appears to be more likely than most U.S.-based commentators seem to realize.

China, after all, is fast approaching income levels associated with the “middle-income trap,” the point at which many other countries have moved from rapid to sluggish growth. This trap opens up for several reasons, including that economies expand disproportionately, at early stages of development, by shifting workers from agriculture to manufacturing. At some point, though, the gains from such shifts disappear, and new sources of growth are needed. China appears to be near this point.

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Susan Shirk is the chair of the 21st Century China Program and Ho Miu Lam Professor of China and Pacific Relations at the School of International Relations and Pacific Studies (IR/PS) at UC San Diego. She also is director emeritus of the University of California system-wide Institute on Global Conflict and Cooperation (IGCC) and chair of the IGCC International Advisory Board. 

In 1993, she founded, and continues to lead, the Northeast Asia Cooperation Dialogue (NEACD), an unofficial “track-two” forum for discussions of security issues among defense and foreign ministry officials and academics from the United States, Japan, China, Russia, and the Koreas.

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