In a Working Paper on the Chinese economy, the economists of Allianz Group and Dresdner Bank predict that the Chinese economy will see average annual growth of 7 to 8 % this decade, in spite of a number of problems. China is catching up fast and is hot on the heels of the industrialized countries. Against this backdrop, the Chinese renminbi is likely to advance to the ranks of an international currency in the next two decades.
China on the way to an economic superpower
Nonetheless, the path that China’s economy will tread in the future will not be free of risks. WTO entry presents the banking sector, the weakest link in China‘s economic system, with some major challenges. Restructuring will take at least ten years and will lead to a sharp increase in public debt. A further problem is the massive expansion of China‘s real estate sector. As the government has already adopted measures to combat this development, we see good chances of a soft landing. Overall, this will not spoil the prospects for prolonged high economic growth in China.