What Might Happen in China in 2016?


What Might Happen in China in 2016?

China in 2016 – an $11 trillion dollar economy, increasingly diverse, increasingly volatile, increasingly hard to slot into a single box to describe its performance.

Absolute size should not be overlooked – whatever rate China grows in 2016, its absolute share of the global economy and of many specific sectors will be larger than ever.  Too often we lose sight of the absolute scale of China’s economy in debates over a point up or down of growth.  And we also overlook the reality that this $11 trillion economy is made up of multiple sub-economies, each over a trillion dollars in size, some booming, some declining, some globally competitive, and some fit for the scrap heap.

How you feel about China depends more than ever on the parts of the economy you engage in. Selling kit to movie theaters has been great business in 2015, selling kit to steel mills less so. In your China, are you dealing with a tiger or a tortoise? Your performance in 2016 will depend on knowing the answer to this and shaping plans accordingly.

Many well-established secular trends in China will continue in 2016, the expansion of the service economy perhaps most prominent among them.  In this note, as usual, I won’t spend much time on the most familiar, but will highlight what I believe will become more important and more visible in 2016, either as trends now accelerating to scale, or where a discontinuity may become a tipping point.  I hope you find it of interest.

Gordon Orr is a director emeritus of McKinsey and senior external adviser.

 Image Credit: Flickr/Remko Tanis

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