1 Introduction
1.1 Background: debate on China's growth prospects
There is a range of views amongst analysts and forecasters about the sustainability of China's growth and the impact that it will have on the rest of the world. Developments in China are vital to the performance of the world economy, with China expected to become the world's largest economy by the mid-2020s, and important for New Zealand as China is its second largest trading partner. Much has been written on the drivers and sustainability of China's recent high growth rate and its impact on the Australian and New Zealand economies.[1] This paper addresses the outlook for China's growth and its potential impact on the demand for commodities and the New Zealand economy in the next decade.
1.2 Related papers and outline
This paper follows Bowman and Conway (2013) which looked at the recent economic performance of China and its flow-on impact on the New Zealand economy. In another Treasury Working Paper, Osborn and Vehbi (2013) quantify the impact of China's growth on the New Zealand economy in the recent period through the framework of an econometric model. The purpose of this paper is to discuss the outlook for the Chinese economy and how it will impact on the New Zealand economy, concentrating mainly on the demand for primary commodities. The paper is more concerned with medium- to long-term developments and structural issues than with short-term fluctuations and risks, while acknowledging that they may affect longer-term outturns.
The paper is organised as follows. Section 2 discusses the outlook for China's economic growth over the medium to long term, while Section 3 examines the outlook for China's impact on the New Zealand economy. The final section draws some general conclusions.
Notes
- [1]See the discussion and references in section 1.2 of Bowman and Conway (2013).
