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Working Paper

China's Slowdown and Rebalancing : Potential Growth and Poverty Impacts on Sub-Saharan Africa

GROWTH RATES GROWTH RATE FINANCIAL SERVICES LINES OF CREDIT CUSTOMS UNION FUTURE GROWTH GOVERNMENT EXPENDITURES URBANIZATION PRODUCTION PRICE INCREASES PRICE DISTORTIONS TRADE BALANCE CAPITAL ACCUMULATION INTEREST INCOME CONSUMER GOODS FREE TRADE AGREEMENTS INVESTMENT POLICIES EMERGING ECONOMIES REAL GDP EXCHANGE CONSUMER GOODS GDP PER CAPITA DEVELOPING COUNTRIES EXPORTS ELASTICITY DISTRIBUTION OF INCOME ECONOMIC RELATIONS DISTRIBUTION EQUILIBRIUM FREE TRADE AGREEMENTS VARIABLES CAPITAL STOCK PRICE INPUTS WEALTH SAVING MARKET ACCESS DATA AVAILABILITY ECONOMIC OUTLOOK FREE TRADE FOREIGN DIRECT INVESTMENT TRENDS ECONOMIC OUTLOOK DEVELOPMENT FOREIGN MARKETS LABOR MARKET PRIVATE SAVING TRADE BALANCE SAVINGS TECHNICAL ASSISTANCE GLOBAL ECONOMY USE VALUE PER CAPITA INCOME DEVELOPMENT ECONOMICS EXTREME POVERTY ECONOMETRIC MODELS TELECOMMUNICATIONS REAL GDP ADVANCED ECONOMIES PER CAPITA INCOME VALUE‐ADDED TRADE RELATIONS NATURAL RESOURCES INDUSTRIALIZATION ECONOMETRIC MODELS GLOBALIZATION TECHNICAL ASSISTANCE PRICE DECLINES MARKETS WTO POTENTIAL OUTPUT ECONOMIC REFORMS TRADE POLICY TARIFF BARRIERS ECONOMIC MODELS ELASTICITY OF SUBSTITUTION NATURAL RESOURCES GROSS DOMESTIC PRODUCT DOUBLE TAXATION CONSUMER DEMAND SUBSIDIES COMMODITY PRICE TAXES LDCS DOUBLE TAXATION INFRASTRUCTURE INVESTMENT UNEMPLOYMENT INVESTMENT POLICY EMERGING MARKETS PRODUCTIVITY GROWTH DATA AVAILABILITY CONSUMPTION VALUE ADDED LINES OF CREDIT WAGES TRANSPARENCY BARRIERS POTENTIAL OUTPUT UNEMPLOYMENT RATE FINANCIAL CRISIS FUTURE VALUE COMPETITIVENESS FOREIGN DIRECT INVESTMENT CURRENT ACCOUNT BALANCE CREDIT FIXED CAPITAL WORLD ECONOMY DEMOGRAPHIC CHANGE COMPARATIVE ADVANTAGES FOREIGN INVESTMENT DEMAND LABOR FORCE GROWTH COMPARATIVE ADVANTAGE AGGREGATE DEMAND DIVIDEND CONSUMERS AGRICULTURE ECONOMY FREE TRADE TARIFF BARRIERS SHARES BENCHMARK INVESTMENT POLICY ECONOMIC MODELS OUTPUT INFRASTRUCTURE INVESTMENT GOVERNANCE INSURANCE EXPOSURE BUSINESS CYCLES TAXATION COMMODITY PRICES TRADE FUTURE STUDIES USE VALUE GDP FINANCIAL CRISIS GOODS MARKET SHARE GROWTH RATE BILATERAL TRADE INVESTMENT BUSINESS CLIMATE NATURAL RESOURCE EXTREME POVERTY SHARE COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES FINANCIAL MARKETS TRADE RELATIONS DEVELOPMENT FINANCE COMMUNICATION VALUE ADDED ECONOMIC HISTORY GDP PER CAPITA COMMODITIES EXCHANGE RATE MIDDLE‐INCOME COUNTRIES DEMOGRAPHIC ECONOMIC RELATIONS FOOD PRICES CAPITAL INVESTMENT ADVANCED ECONOMIES COMMODITY PRICES COMMODITY POSITIVE EFFECTS GLOBAL ECONOMIC PROSPECTS PRICES DEVELOPMENT POLICY
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World Bank, Washington, DC
Africa | East Asia and Pacific | Sub-Saharan Africa | China
2016-06-13T21:17:17Z | 2016-06-13T21:17:17Z | 2016-05

This paper explores the economic impacts of two related tracks of China's expected transformation—economic slowdown and rebalancing away from investment toward consumption—and estimates the spillovers for the rest of the world, with a special focus on Sub-Saharan African countries. The paper finds that an average annual slowdown of gross domestic product in China of 1 percent over 2016–30 is expected to result in a decline of gross domestic product in Sub-Saharan Africa by 1.1 percent and globally by 0.6 percent relative to the past trends scenario by 2030. However, if China's transformation also entails substantial rebalancing, the negative income effects of the economic slowdown could be offset by the positive changes brought along by rebalancing through higher overall imports by China and positive terms of trade effects for its trading partners. If global supply responds positively to the shifts in relative prices and the new sources of consumer demand from China, a substantial rebalancing in China could have an overall favorable impact on the global economy. Economic growth could turn positive and higher on average, by 6 percent in Sub-Saharan Africa and 5.5 percent globally, as compared with the past trends scenario. Finally, rebalancing reduces the prevalence of poverty in Sub-Saharan Africa compared with the isolated negative effects of China's slowdown, which slightly increase the incidence of poverty. Overall, China's slowdown and rebalancing combined are estimated to increase gross domestic product in Sub-Saharan Africa by 4.7 percent by 2030 and reduce poverty, but the extent of this varies by country.

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