McKinsey: China will Continue Rapid Growth in 2012

February 4th, 2012
in econ_news

Econintersect:  Gordon Orr, a director in McKinsey’s Shanghai office, says China-templeSMALLthat, despite food price inflation and a stagnant housing market, China should maintain a rapid rate of growth this year.  In an article in McKinsey Quarterly Orr gives ten reasons for his prediction and not all of them are positive.  His assessment is that the net of all ten factors will be quite positive for the Chinese economy.  Below is a list of the negative factors that will be holding growth down and then a second list of the positive factors which Orr sees carrying the balance to continued rapid growth.

Follow up:

Negative Factors

  • Real estate will stagnate.
  • Food price inflation will continue to be a problem.
  • Accounting scandals will continue.
  • Private-equity and venture capital activities may wane.
  • Automotive industry growth will cool to single digit growth.

Positive Factors

  • Government policies will spur consumption and investment.
  • Rural land ownership reform will move forward.
  • Construction of affordable housing for the poor will continue.
  • Aside from food, broader inflation will continue to moderate.
  • There will be a spike in green tech investment.
  • Chinese will continue to aggressively acquire overseas assets.
  • Hospital reform will accelerate.

Sources and References:

What’s in store for China in 2012? (Gordon Orr, McKinsey Quarterly, February 2012)

Real Estate:  Not the Big Overinvestment Problem in China (Michael Pettis, GEI Analysis, 25 January 2012)

Analysis blog articles about China (GEI Analysis)

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