China is the growth motor of the global economy. It consumes so much and when there is a decline in consumption, the world panicks.
A very important development for investors is the rise of the middle class in China because those are the people that can afford a car, education, discretionary pleasures, and further fuel the Chinese economy and spur global demand for everything.
Chinese economic growth has recently slowed from 9% to the current 7% and sent short term shockwaves across the world. It is very important to see if China will be able to continue on this growth path.
What is important from the above data is that China still has a long way to go. A long way to go means more economic growth will happen as services increase in order to cater for a bigger middle class, productivity will increase due to higher education and more skilled workers, and agriculture will develop or/and become less profitable and not the only option for many. Fewer people working the fields will continue to spur global demand for machinery and also food. As China develops, its food appetite gets bigger which also helps the U.S. economy. The long-term trend is clear and inevitable which should reassure investors that the global economy will continue on its growth path and deliver amazing returns.
We will undoubtedly see more failed anticipations until some real economic shock hits China. The government will then intervene and put China back on to its growth track. Economic cycles are natural, especially for a fast-growing country. The downturn might last for a few months or years but eventually the long-term trend is clear.