China's Medium- and Long-Term Growth Outlook and Constraints

Tomoyuki Fukumoto
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Tomoyuki Fukumoto: Professor, Faculty of Economics, Osaka University of Economics

Public Policy Review, 2025, vol. 21, issue 3, 1-33

Abstract: Since the Covid-19 crisis, the slowdown in the Chinese economy is becoming increasingly clear. This paper examines and assesses the following four factors as constraints to China’s economic growth: demographics, government’s economic management and innovation, real estate and financial risks, and the U.S.-China conflict and derisking. On the demographic side, the decline in the main population of homebuyers will reduce housing demand, and the aging of the population may have an impact on consumer spending. In terms of government economic management, the strengthening of government micromanagement is seen as a constant constraint on business activity and innovation. The real estate recession remains less likely to pose a risk of a financial crisis. The U.S.-China confrontation has transformed the trade structure, but it is far from decoupling. On the other hand, U.S. efforts to block China’s rise in advanced technologies such as semiconductors will likely cause delays in China’s technological catch-up, but its rise in mature technology fields will continue. Based on the above, this paper revises downward the basic scenario for China’s medium- to long-term growth set forth in Fukumoto (2022).

Keywords: convergence theory; peak China; medium- to long-term growth; demographics; household registration system; common prosperity; banking system; U.S.-China conflict; derisking (search for similar items in EconPapers)
JEL-codes: F40 G01 J11 J13 O12 O30 O40 R21 R31 (search for similar items in EconPapers)
Date: 2025
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