After more than 30 years of extraordinary growth, the Chinese economy is shifting onto a more conventional development path, and a difficult rebalancing is under way, affecting nearly every aspect of the economy.
For starters, China's current-account surplus has shrunk from its 2007 peak of 10 percent of GDP to just over 2 percent last year — its lowest level in nine years. In the third quarter of 2014, China's external surplus stood at $81.5 billion and its capital and financial account deficits amounted to $81.6 billion, reflecting a more stable balance of payments.
This shift can partly be explained by the fact that, over the last two years, developed countries have been pursuing re-industrialization to boost their trade competitiveness. In the United States, for example, manufacturing grew at an annual rate of 4.3 percent, on average, in 2011-2012, and growth in durable-goods manufacturing reached 8 percent — having risen from 4.1 percent and 5.7 percent, respectively, in 2002 and 2007. Indeed, America's manufacturing industry has helped to drive its macroeconomic recovery.