China's Darwinian solution for mitigating the impact of a global slowdown

Overview

Fears that a widening economic downturn will lead to a significant deceleration in China’s growth are overblown. Expansion is slowing as relentless cost pressures drive some firms out of business, but most are responding by committing to new investments to restructure and improve their competitiveness. On balance we expect this restructuring process to cushion the slowdown, with GDP growth next year easing to the 9-9.5 per cent range.

We believe government policy will leave market...