So China is to slow down, just a little. The new growth target for the Chinese economy, endorsed at the National People's Congress taking place this week in Beijing, is 7.5pc annual growth, down from the 8pc target that has been in place since 2005.
The cutting of the target is important to us all, for it tells us something about the way the country's leadership sees the Chinese economy developing. It has to slow down in the years ahead. There are three intertwined stories: what is happening to the economy now, the shifts envisaged in the new five-year plan, and the long-term role of China in the world economy. A word about each.
When the developed world plunged into its recession, the Chinese authorities set in motion a huge investment programme, particularly in housing and infrastructure. We in the rest of the world felt the effects of this in soaring prices for energy and raw materials. But this programme created stresses, which showed up in inflation, and has left the country with an awful lot of unoccupied property. The country needs to cut back on investment and to switch to consumption.
The question is whether the country can engineer this shift towards consumption in a smooth manner. It is impossible to do more than observe that so far at least the country has managed to sustain its race for growth, and the general perception seems to be that it will indeed achieve the soft landing.
The second issue concerns the new five-year plan. There is the shift towards consumption and away from investment noted above, but also a shift towards service industries. In the parts of the country with the highest labour costs, around Shanghai, they are planning to switch to higher-valued-added services. The central point here is that China will gradually follow the path of the advanced world, moving from agriculture, to manufacturing, to services.
That leads to the third issue, China's place in a steady-state world. There are all sorts of predictions as to when it passes the US to become the world's largest economy. But demographic forces alone will determine that China becomes a more "normal" economy, growing much more slowly as the size of its working-age population plateaus and then declines.