Corporate Strategies for a Slowing China, Part 2

In our previous column (“Corporate Strategies for A Slowing China, Part 1”), we argued that the slowdown in the Chinese economy is structural, not cyclical. The era of 10 percent annual growth in gross domestic product and 13 percent annual growth in fixed-asset investments is over. Similarly, growth in exports will slow dramatically—from twice the pace of growth in world exports to staying on par with it. Domestic consumption, however, is likely to keep growing at its current annual rate of 8 percent. The net result will be annual GDP growth in the 6 percent to 7 percent range, with domestic consumption accounting for a steadily growing share of it.

In this column, we look at what these structural shifts mean for multinational companies’ strategies in China. We focus not on the upcoming 12 months but on the next five to 10 years, the relevant time frame for major strategic decisions.