China's growth slowdown cushioned by changes in economic structure

Following 30 years of rapid growth of about 10% per year from 1981-2010, average growth in China decelerated to around 8% in 2011-2014. China's growth is expected to decline further as faster growth in the service sector is unlikely to be strong enough to offset the drag from industrial sector deceleration in the near term. 

"We forecast real GDP will slow to 6.9% and 6.6% in 2015 and 2016, respectively, from 7.3% in 2014", says BofA Merrill Lynch 

On the other hand, the economy has become more balanced due to resilient consumption and rapidly expanding service sectors. This transition toward a more consumption-driven and service-sector led economy has helped cushion the overall economic slowdown in China. Consumption is also playing a more prominent role in driving growth. Official data suggest consumption contributed 1pp more to GDP growth than investment year-to-date in 3Q15