A casual visitor to major Chinese cities like Beijing will find little indication that one of the world’s biggest and longest economic booms may be nearing an end. Crowds still throng shopping districts like Wanfujing, a short walk from the Forbidden City. Construction in and around the capital remains active by world standards, and traffic congestion is getting worse.
But inside office towers at the China World Trade Center, the heart of the central business district and home to the China headquarters of numerous multinational companies, concerns about the economy and impending changes in the country’s leadership come up in nearly every conversation. Capital equipment orders and retail sales are slowing, even for luxury products that have seen nothing but steady growth. Soaring labor costs are causing multinationals to worry about their large long-term investments. Many wonder whether a slowdown in exports and a correction in the overheated property market mean that China is headed for a hard landing.
Our take on China’s economic future is nuanced: there is a short-term view, a medium-term view, and a long-term view.