MADISON, WISCONSIN ¨C At the end of last year, the ratings agency Moody¡¯s cut its outlook on China¡¯s sovereign credit rating to negative, citing risks from a deepening property crisis and a prolonged growth slowdown.
In fact, Moody¡¯s now predicts that annual economic growth will fall to 4% in 2024 and 2025, before slowing further, to 3.8%, on average, for the rest of the decade. Potential growth will decline to 3.5% by 2030. A major driver of this slowdown will be ¡°weaker demographics.¡±
Not surprisingly, China¡¯s leaders at the time said they were ¡°disappointed¡± with the downgrade, claiming that the economy still has ¡°huge development resilience and potential¡± and will remain a powerful engine of global growth. But China¡¯s assessment of its potential growth is based on deeply flawed forecasts.
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