The Chinese economy is slowing on a structural basis

As an economy grows larger and wealthier, maintaining double-digit growth rates becomes increasingly difficult. This pattern of slowing growth is especially true of countries that were able to take advantage of technologies developed in more advanced economies. In this respect, China's growth history is similar to another rapidly developing Asian country - South Korea. In both countries, integration into the global economy initially allowed for double-digit economic growth rates. As Korea's experience took place 20 years earlier it offers a glimpse into what the future may hold for China. As Korea's economy developed, its growth rate slowed from double digits to high single digits and eventually to low single digits. In all likelihood, the same will happen in China. China's economy will slow as real GDP growth per capita continues to rise (or in economist jargon, as it moves closer to the technological frontier), but also as its labor force growth slows due to population aging and a low birth rate. 

Estimates vary on long-term growth in China, but all are lower than where China is today. IMF forecasts as of the last World Economic Outlook have Chinese growth cyclically decelerating to 6.0% in 2017, and averaging 6.3% in 2019-2020. In contrast, the OECD long-term projections sees potential growth in China decelerating to 4.6% in 2022. Using Korea's experience as a simple benchmark and extrapolating would imply a trend growth rate of roughly 6.5% this year for China, slowing to roughly 5.5% in 2020. This is lower but not so far off from what Chinese authorities are currently targeting for economic growth.