By JOHN ROSS

DATA available on the world’s two largest economies, China and the U.S., for 2013 provide an opportunity to take stock of China’s immediate economic prospects and the more general challenges facing its economic development strategy.

The short-term trends are clear. China’s economic growth decelerated marginally from 7.8 percent in 2012 to 7.7 percent in 2013. U.S. economic growth slowed more substantially – from 2.8 percent in 2012 to 1.9 percent in 2013. In money terms, China’s GDP in 2013 grew by US $1,030 billion and U.S. GDP by US $560 billion. Western media hype about U.S.’s “strong recovery” and China’s “major slowdown” was therefore the opposite of reality.

More significant for China’s development strategy than simply one year’s figures are the fundamental trends in the world economy. These show that since the beginning of the financial crisis the developed economies have entered what is best described as a “Great Stagnation.” This necessarily has major consequences for China’s development pattern.

During almost all the first three decades of China’s reforms from 1978 to 2007, the last year before the financial crisis, China’s economic development was aided by tailwinds from the world economy. China skillfully utilized these to achieve annual economic growth of 9.9 percent – compared to the world’s 3.0 percent and advanced economies’ 2.7 percent.

But from 2008 tailwinds turned into headwinds. Even assuming the IMF’s latest estimate was achieved in 2013, growth in the advanced economies in the six years after 2007 averaged only 0.6 percent.  As advanced economies were traditionally China’s largest export markets this sharp deceleration necessarily had negative consequences for China’s previous growth model.

Given the scale of slowdown in advanced economies, China came through this rather well. China’s economic growth slowed only to an average 9.0 percent in 2007-2013. China’s growth lead over the high income economies actually increased – in 1978-2006 China grew an average 7.2 percent more rapidly than the advanced economies, while in 2007-2013 this increased to 8.4 percent.