China's economy shows resilience

Headlines on the global economic outlook have shifted from a foundering recovery amid a cost-of-living crisis early this year to concerns over imminent recession, particularly in continental Europe. There is growing conviction that the central banks of developed economies will maintain high rates for a longer time.

The argument that more demand destruction is needed to contain high inflation is gaining ground. At the same time, the slow pace of China's economic recovery is adding to the global headwinds. Oftentimes, the debate is mingled with questions on how resilient is the Chinese economy.

Is China tracking a slower potential growth trajectory? Structural factors suggest China will not be able to maintain the 8 percent average real GDP growth rate of the past two decades. To begin with, growth will naturally slow down as the economy gets bigger and more mature. Also, China is losing some of its former advantages, such as abundance of labor and low factor cost of production.