China's stable GDP growth of 6.7 percent gave markets something to applaud.
An illuminating piece of the report was a boost in domestic consumption. For the first three quarters of the year, consumption was 71 percent of GDP; a nearly 5 percent jump over 2015.
Good, right? Possibly Beijing is moving slightly closer toward the goal of shifting China to be a service and consumption driven economy.
Good for some, but not for all. That’s because of the potential “spillover effects” China’s economy has on other countries’ economies.
Take, for example, the countries that supply the materials to drive China’s infrastructure and construction boom. As the International Monetary Fund notes, with China’s investment demand slowing disproportionately, exporters of investment goods—such as some countries in the euro area—will be more affected than exporters of consumption goods”. (p. 174-176)
The report estimates that a 1 percent quarterly decline in China’s final demand growth would hurt a country with average trade exposure to China roughly 0.1 to 0.2 percent over a year. In other words, the expected bumpy domestic transition means we should also expect quite a bit of international economic turbulence.