average annual growth during 2000–11.
China’s import volumes of many commodities have continued to grow at a relatively robust pace despite the slowing in domestic commodityconsumptiongrowth ( Figure 3.4 ). The backdrop to recent developments in China’s commodity trade is that after having been largely self-sufficient, China has become a net importer for many commodities in the 2000s. This broad trend has continued, as shown in Figure 3.14 , which presents growth in net import volumes for the commodities analyzed previously and the contribution of consumption and
Although Asia remains a growth leader in the global economy, growth is expected to ease slightly to 5.5 percent during 2016, with countries affected to varying degrees by a still weak global recovery, slowing global trade, and the short-term impact of China’s growth transition. Structural reforms are needed if Asia is to maintain its position in the global economy, including reforms aimed at enhancing productive capacity. Needed reforms range from state-owned enterprise and financial sector reform in China to labor and product market reforms in Japan and reforms to remove supply bottlenecks in India, ASEAN, frontier economies, and small states.
The Chinese economy is undergoing substantial structural change to a model driven increasingly by consumption and services (rather than public investment and exports), with growth gradually slowing to a more sustainable pace. This transition is a desirable outcome that is good for China and good for the world, benefiting global growth and reducing tail risks in the long term. In the short term, however, this shift will likely be bumpy—as exemplified by recent market turbulence—and is likely to entail substantial spillovers.
Although growth in the Asia-Pacific economies is expected to decelerate slightly to about 5¼ percent during 2016–17, the area remains the most dynamic region of the global economy. Asia’s growth moderation partly reflects a still-weak global recovery and ongoing but necessary rebalancing in China. Downside risks have also increased. With external demand faltering, domestic demand should remain a major driver of activity across most of the region. Domestic demand, particularly consumption, will continue to be propelled by robust labor market conditions, lower commodity prices, and disposable income growth, along with, in some countries, macroeconomic stimulus. These factors will partially cushion the blow from languid external demand and increasingly tighter financial conditions. To strengthen the region’s resilience to global risks, policymakers should push ahead with structural reforms to raise productivity and create fiscal space while supporting demand as needed.
Rising inequality in many countries has attracted much attention from the public and policymakers alike.1 Until about 1990, Asia grew strongly and secured large gains in poverty reduction while simultaneously achieving a fairly equitable society (Jain-Chandra and others 2016). A large part of this success was due to the “miracle” economies—Hong Kong Special Administrative Region, Korea, Singapore, and Taiwan Province of China—where sustained rapid growth was accompanied by equitable income distribution.