China's economy is slowing. After decades of double-digit expansion, the country's GDP is now growing at around 6 percent — the fastest of any major economy but still the lowest level for China in three decades. Several factors — some structural, some political — contribute to the deceleration. But regardless of their origin, China's troubles are not its alone. Their impact is already being felt throughout the region.
As any economy develops, its growth rate slows. Once-abundant resources (labor prime among them) become scarcer, comparative advantages erode and rent seekers establish footholds. China is no exception. It was inevitable that the explosive growth of the first two decades of reform would moderate as the country's red-hot coastal provinces developed and input prices soared. The only question was how the country would adjust to the slowdown and whether the government could temper expectations and maintain social order. That answer has assumed greater importance in recent months.
The most recent figures reveal China's growth has slowed to 6 percent, the lowest level in nearly 30 years. That is within the bounds of official estimates, but weakness is evident throughout the economy. Industrial output increased 4.7 percent compared with the previous October, but that is 0.7 percentage point below expectations and 1.1 percentage points below September's performance. Factory activity shrank for the sixth consecutive month, new export orders decreased for the 17th consecutive month and the value of delivered industrial exports shrank 3.8 percent, the third straight month of decline.