Discussion Document – China’s Economic Outlook in 2015

China’s Economic Outlook in 2015: The Trump Card of a Yuan Devaluation
V Anantha Nageswaran, Co-Founder and Fellow for Geoeconomics, the Takshashila Institution.

China’s real economy grew at an average rate of 9.8% annually for the last thirty-four years, up to 2013. In October 2014, the International Monetary Fund declared China to be the world’s largest economy measured in Purchasing Power Parity exchange rates. China has also the dubious distinction of the emerging world’s second most indebted country with total non-­financial debt at 217% of GDP. China’s growth rate has slowed. As it sets out to tackle the debt burden, it will slow even further, complicating its stated goal of rebalancing growth away from investment to household consumption. The one potential safety valve is a huge currency devaluation – something that it resorted to in 1993, with chilling effects on the rest of Asia in the years that followed.

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This discussion document can be cited as: V Anantha Nageswaran, “China’s Economic Outlook in 2015: The Trump Card of a Yuan Devaluation”, Takshashila Discussion Document, 2014-03. (2014) www.takshashila.org.in/1534524506254.