The release of February’s economic data confirmed that Chinese growth is slowing down. Consumer inflation fell to 3.2 per cent last month, the lowest since June 2010. Weaker industrial production, retail sales and export data all support the same pattern. China’s days of double digit growth are, at least for this century, probably over. The data releases following a “forecast” from outgoing premier Wen Jiabao that gross domestic production growth would be “only” 7.5 per cent this year, an estimate that seemed to surprise many observers. Does this mean China’s glory days are numbered and reforms including currency reform are over? Not at all.

Much of China’s slowing is neither unexpected nor undesired. Premier Wen’s forecast was not news to those who follow developments in the country closely. In the 12th five-year plan released about a year ago, the leadership had already said that it expected real GDP growth of 7.5 per cent. It was seen at the time as confirmation that Beijing was no longer pursuing as fast a rate of GDP growth as possible. While such assumptions are only a vague gauge of policy intentions, they are nevertheless a broad signal of what the leadership desires to achieve. While actual GDP growth has consistently exceeded expected growth for many years, this didn’t stop Beijing from lowering their stated and assumed target.

A number of factors explain this plan. First, it has been clear since 2008 that the days of massive Chinese export growth to the west were over. Second, this can’t be replaced by generous government investment spending. Third, rapid GDP growth has become self-defeating, placing considerable strains on China’s resources and environment, forcing up commodity prices, bringing inflationary pressures and rising wealth inequality. Too fast GDP growth had outlived its purpose. Fourth, inflation is threatening social stability as low income urban citizens see their real wealth eroded. All of this meant lower economic growth has become not only necessary but desirable.

But let’s get things in perspective. A real growth rate of 7.5 per cent, if it occurs, along with four per cent inflation will still see China’s GDP, in US dollar terms, close to doubling in five years so long as the currency doesn’t nosedive. By early next decade China’s economy would near $15tn and be on track to surpass the US. For the rest of the world, 7.5 per cent growth in China is effectively the same as US growth of around four per cent. As I have become fond of saying, China today creates the equivalent of another Greek economy every eleven and a half weeks, and one-tenth of another eurozone economy every year.

Seen in these terms, lower GDP growth is not a hindrance to reforms, it is an essential ingredient. Softer but more balanced, sustainable and higher quality growth requires reforms, including of the renminbi. To complicate matters, currency reform does not equal currency appreciation. The renminbi is going to become more volatile like other currencies. It will go up as well as down against the dollar, partly because China’s current account surpluses are coming to an end, but also because it is opening up its capital account. In recent weeks, policymakers have published detailed guidelines and in some ways, a timetable for all sorts of reforms. Many of them can’t be achieved without currency reform. This includes better-quality GDP albeit at a slower rate.

By 2015 there is a good chance that the renminbi will be part of the ‘special drawing rights’ basket, the International Monetary Fund’s key accounting tool that lies at the heart of the world’s monetary system. The value of the renminbi will go up before then, and it will also go down. Just as with teenagers, it’s all part of growing up.

The writer is chairman of the asset management division of Goldman Sachs and former chief economist at the investment bank