China's Long-Term Growth Potential: Can Productivity Convergence Be Sustained?

Takatoshi Sasaki, Tomoya Sakata, Yui Mukoyama and Koichi Yoshino
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Takatoshi Sasaki: Bank of Japan
Tomoya Sakata: Bank of Japan
Yui Mukoyama: Bank of Japan
Koichi Yoshino: Bank of Japan

No 21-E-7, Bank of Japan Working Paper Series from Bank of Japan

Abstract: This study estimates the growth rate of China's economy until 2035 based on the assumption that productivity will continue converging to that of frontier economies and assesses the feasibility of such an outcome. Our estimates imply that the size of China's economy can potentially double by 2035 as long as the country follows the "catch-up" process achieved by other East Asian economies. However, given the circumstances that China faces, such as the need to maintain agricultural output levels, limits to the growth of its export-dependent manufacturing industry, and the aging of the population, the obstacles to following the other East Asian economies' catch-up process are substantial. To overcome these obstacles and proceed with catch-up, China will need to boost TFP growth by promoting innovation and making steady progress in addressing institutional and resource allocation issues.

Keywords: China; Catch-up Process (Convergence); Aging of the Population; Savings Rate; Total Factor Productivity (TFP) Growth (search for similar items in EconPapers)
JEL-codes: E21 E22 J11 O11 O47 (search for similar items in EconPapers)
Date: 2021-06-30
New Economics Papers: this item is included in nep-cna, nep-cwa, nep-eff, nep-fdg and nep-mac
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