Real GDP growth is estimated to have accelerated to 10.2% in 2010, from 9.1% in 2009. This stronger growth has been driven by rising activity in most parts of the economy, thanks to loose credit conditions and a government-backed stimulus package that has boosted investment. Economic expansion will slow to 8.8% in 2011 as stimulus spending comes to an end and policy tightening leads to a slowdown in property investment growth. Weakening demand in major OECD markets will also serve to dampen export growth. However, strong income growth will support consumption. Low or negative real interest rates and relatively loose credit conditions will also encourage high-value consumer purchases.

During 2012-15 GDP growth will slow to an average of 8.3% a year. This will largely reflect slower investment growth, as more cities in China reach the stage at which mass redevelopment becomes less necessary and economically costly. The contribution from net exports will also weaken as a strengthening renminbi, anaemic growth in many developed economies and declining Chinese competitiveness cause export growth to slow relative to import expansion. However, high levels of job creation and rising wages should ensure sustained rapid growth in consumption. The ongoing expansion of social services (and in particular healthcare, education and pension provision) will support growth in state spending, although a return to fiscal conservatism will act as a brake on public expenditure growth. There remains the risk that China could suffer a sharp economic correction in 2011-15. The frothy housing market and ongoing massive overinvestment are the most likely sources of potential problems. The government's capacity to counteract economic crises is strong, as it proved in 2008-09, but its ability to do so without aggravating the imbalances that already threaten the economy is less certain.

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