China's Economic Deceleration and Growth Potential

According to economist Alicia Garcia-Horero, China is experiencing a structural deceleration in its economy, not a temporary blip or crisis. The rapid growth of previous years has exhausted itself, which is a common phenomenon after reaching a certain level of development. While China was previously an outlier in terms of growth, it is now expected to be underwhelming compared to other countries. However, it is unlikely to become the worst-performing economy. By 2035, China's aging population will start to impact its growth, ultimately leading to growth rates similar to Japan's. This deceleration is not solely due to a particular crisis or demographics, but also the misallocation of resources and unproductive investment. The Chinese government is facing the challenge of maintaining growth levels amidst these factors.