China's rapid economic growth over the past 30 years has transformed the world's most populous country almost beyond recognition and reshaped the international economic and geopolitical landscape, forcing huge shifts in global international trade and investment flows. This growth is now slowing, meaning many of the key dynamics that have accompanied China's rise are themselves evolving. While many observers are nervous about the Chinese slowdown and its implications, a more balanced, less inflationary and less resource-intensive model of economic expansion may bring more sustainability to China's development story and allow Beijing to fundamentally rebalance its relations with international partners.
The Chinese economy grew at an average of 10.4 percent per year from 2001 to 2011. That rate slipped to 7.8 percent in 2012 and registered 7.5 percent in the second quarter of 2013. Part of the slowdown is structural as China's economy matures and follows a similar growth trajectory to previous Asian tigers. Additional factors include apparently significant changes to the government's policy objectives and approach, coupled with sluggishness in other areas of the global economy. Given the size of China's economy, the implications for development, particularly in Asia, are enormous.
During the era of rapid growth, when China rose from a marginal feature in most global markets to the dominant entity in everything from steel drill bits to fertilizers, securing the basic economic inputs to achieve double-digit GDP growth became the primary objective of much of Beijing’s domestic and foreign policy. This often came at a cost to the local environment, with cost advantages achieved through lax regulatory oversight and heavy state intervention.