As with the United States, the massive size of the Chinese economy means that lower GDP growth rates create a headwind for the global economy as a whole. It is therefore no surprise that the International Monetary Fund has just revised its forecast of global economic growth downward by the most substantial margin in three years.
A bigger but somewhat slower growing China of the future will contribute about as much to global demand as the smaller but faster growing China of before. This is arithmetic: An economy that is twice as big can grow by half as much and contribute the same to global demand. By the way, China today is more than twice as big as it was a decade ago. So, the good news is, even with slower growth, China will continue to be an engine of global output. Indeed, an even bigger engine than before.
Big challenges lie ahead for the emerging economies. To avoid serious social and political pressures, growth has to be not only rapid, but broad based and equitable, in the sense that if there are steep income increases for some accompanying rapid growth, they must be perceived as deserved by effort and job creation, and not due to exploitation of rents or political favours.