China’s economy will decelerate from the scorching pace of recent years to an annual rate of 4.5 per cent to 7.5 per cent over the next decade, a shift that will have considerable impact on other nations, according to a note from RBC Global Asset Management.

As firms continued to ponder the implications of a China slowdown – the country has driven about a third of the world’s growth in recent years – the Canadian asset manager said the impact of a cooler pace of growth, while significant, needed to be read in context.

First, while China’s growth rate is likely to slow on a percent basis, this is not necessarily true on a renminbi basis. Because the Chinese economy is so much larger today than in 2005, a mere 6 per cent annual growth today would generate more additional output in renminbis (even on an inflation-adjusted basis) than the extraordinary 11.3 per cent growth rate did in 2005,” Eric Lascelles, chief economist, said in a note. “In one sense, then, Chinese growth isn’t slowing after all,” he continued.

“Second, global economic growth may be more resilient than commonly imagined, even in the face of slowing national economies. Take the following example. While it is unhelpful that sustainable US growth may slow from 3 per cent to 2 per cent over time, and that China could similarly slow from 8 per cent to 6 per cent, there is an important offset. China will constitute a much bigger share of the global economy in the future, and the US a somewhat smaller share,” he said.

Thus, whereas the US 3 per cent figure was the single most important contributor to global growth in the past, China’s 6 per cent figure will be the most important contributor in the future. This tilting composition toward emerging market nations limits the extent of the global economic slowdown, even as individual nations decelerate,” Lascelles added.

Among concerns that policymakers – foreign and domestic – have had for some time has been the very high proportion of Chinese gross domestic product devoted to capital investment, raising fears of malinvestment, such as concerns about “ghost cities” and “bridges to nowhere”. The country devotes a “hair-raising” 48 per cent of its GDP to capital investment.