China failed to reach its economic growth target of 7% last year. China’s failure to maintain 7% growth was widely reported in the media throughout the world.
On January 19, the National Bureau of Statistics of China reported that China’s GDP in 2015 reached 67.6708 trillion yuan (about 10.3 trillion US dollars) with an increase of 6.9% from the previous year. The Chinese government had declared a 7% economic growth target, but just missed the mark by 0.1%. Wang Baoan, Director of China’s National Bureau of Statistics, said, “You will find a 6.9% growth is not easy to attain.” However, the Guardian, a British national daily newspaper, expressed concern over China’s economic slowdown, saying, “China’s economy grew at its slowest rate in a quarter of a century in 2015.”
Those outside of China view China from a harsher standpoint. According to the IMF’s World Economic Outlook (WEO) report released the same day, China’s GDP in 2016 is expected to grow 6.3%. If this prediction is right, China’s economic growth rate will fall by 0.6% from 6.9% in 2015. This figure is less than the economic growth target of at least 6.5% in the 13th Five-Year Plan (2016–2020) formulated under Chinese President Xi Jinping’s leadership. The International Monetary Fund is predicting a further gloomy future for China’s economy. China’s growth will slow to 6.0% by 2017. The IMF forecasts the Chinese economy will grow by only 6.0% in 2017.
This gloomy outlook applies if the pessimistic scenario comes true. It’s because China will experience a hard economic landing if it fails to turbo charge its capacity for innovation—a shift from manufacturing to services, from investment to consumption, and from exports to domestic consumption. A hard landing in the business cycle or economic cycle is an economy rapidly shifting from growth to slow growth to flatline as it approaches a recession, thus causing an increase in unemployment and a stock market crash.
The problem is that China’s economic slowdown may take a toll on the South Korean economy. China accounts for over 25% of South Korea’s total exports. As China’s economic slowdown deepens and global oil prices continue to slide, the South Korean economy is expected to face a new financial crisis. South Korea has been leaning toward China amid the global economic crisis. However, the situation is different now. China is emerging as a challenger to South Korea in industry by raising its technical workforce, and South Korean exports are beginning to decline. As a result, Korean companies are losing their footing.