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China’s Growth: The Making of an Economic Superpower

China’s Growth: The Making of an Economic Superpower. Linda Yueh www.lindayueh.com Twitter @lindayueh. China’s Growth: The Making of an Economic Superpower. What has driven growth since 1979? Re-balancing challenges Goal for next 30 years: Overcoming the “middle income country trap”.

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China’s Growth: The Making of an Economic Superpower

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  1. China’s Growth:The Making of an Economic Superpower Linda Yueh www.lindayueh.com Twitter @lindayueh

  2. China’s Growth:The Making of an Economic Superpower • What has driven growth since 1979? • Re-balancing challenges Goal for next 30 years: Overcoming the “middle income country trap”

  3. China vs G7

  4. Average income near “trap” level

  5. China’s impressive growth

  6. Growth drivers

  7. Contributions to growth  Factor accumulation: 60-70% • Capital accumulation: 50% • Labour accumulation: 10-20%  Total Factor Productivity (TFP): 30-40% • Human capital: 11-15% • Factor re-allocation: 8-15% • Innovation: 16-17% minus “imitation” = 6-13%

  8. Re-balancing challenges (1) Increase reliance on own market, less on exports (2) Raise consumption, reduce inefficient savings (3) Grow private sector, reduce distortions from state-owned sector (4) Increase innovation, as imitation limits reached (5) Continued opening, include firms “going global”

  9. (1) Re-balancing towards services Services Industry Agriculture

  10. (2) Raise consumption as % GDP 14

  11. (2) Address growth in savings Share of GDP

  12. (3) Reduce state sector? Private firms State-owned enterprises

  13. (3) State-owned sector still important for jobs

  14. (3) Notable productivity differences

  15. (3) Also in return on assets

  16. (4) Signs of innovation

  17. (5) China “going global” Source: IMF.

  18. Salter-Swan Model linking interest rate & exchange rate reforms

  19. The next decades of reform 2020: Re-structuring the economy 2030: Productivity & innovation as growth drivers 2040: Stable & strong institutional foundations

  20. China’s Growth:The Making of an Economic Superpower Linda Yueh www.lindayueh.com Twitter @lindayueh

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