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Taking Cues from China

By Matthew Kerkhoff

 

The big economic news of the day, or rather last night, is that China’s economy grew at a 6.9% rate during the third quarter. This is the fastest growth rate of any major economy, yet it’s the slowest pace at which China’s economy has expanded since the financial crisis.

 

The WSJ provided a unique angle to the story, noting that China’s economy is almost twice as large now as it was just six years ago. This reinforces how even with slowing growth rates, China will continue to support massive levels of consumption and production.

 

I realize this is obvious to many, but I think it’s worth pointing out that China will not be able to keep up this high growth rate forever, or even much longer.  Maintaining a steady growth rate is impossible over time simply because of the effects of compounding. All major economies bump into this problem, just as ... Log in or subscribe to continue reading.


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