Sara Hsu, Guest Blogger
Concerns over China’s economy are all over the news—stories like “Feeling the Heat from China Slowdown,” “China’s Economic Hard Landing,” and “China’s Slowdown Digs a Hole for US Industrials” are now everywhere. One of the most pressing questions is, will China face a massive slowdown in economic growth? Here, we explain why this is such a concern and consider what possibilities exist for continued growth.
First, a primer on growth and the way it is tabulated. Growth simply refers to the change in GDP, usually from one year to the next. GDP is calculated any of three different ways—the income approach (how much individuals and entities earn in a period), the expenditure approach (how much is spent in a period), or the production approach (how much value is added during the production process). If we focus on a single approach—say, the expenditure approach—we can look at the individual components to determine how China can improve its GDP—and therefore growth—outlook.