The Future of Chinese Growth
Columbia Business School - Finance and Economics
January 24, 2011
China’s real GDP has grown at an average annual rate of 10% for the last 30 years. A period of such super-growth is historically most unusual and now is likely nearing an end. The devices that have stimulated growth in the past – heavy capital investment and a massive focus on exports – face constraints: capital investment faces diminishing returns, and exports are undermined by wage inflation. Both constraints are visible in China today. China needs to stimulate domestic consumption of its prodigious output, but this is easier said than done. A push to do so will damage the export model well before it succeeds in building a replacement.
Number of Pages in PDF File: 27
Keywords: China, growth, exports, value destruction, crisis, NPL
JEL Classification: E21, E22, F14, F43, G21
Date posted: July 7, 2010 ; Last revised: June 28, 2011