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With China Slowing, Can Asia Still Be The World's Growth Engine?

By Larry Cao, CFA

It is widely known in business and finance circles that China has been a significant contributor to global growth. By some estimates, China contributed to as much as a third to worldwide growth from 2010 to 2013. With recent report that China's growth disappointed in 2014 and may well continue to remain at a record low level in the coming years, investors naturally worry if China, and more broadly Asia, will continue to be the world's growth engine.

Economists seem to be less concerned. Steven Barnett of the IMF argues that, for one, slower growth rates do not necessarily translate into smaller contributions to world growth. In USD terms, China's share of world GDP grew from 2% in 1995 to 12% in 2013. (The numbers are 6% and 15% if you look at it in terms of purchasing power parity.) Barnett estimates that China's contribution to… Read More …