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Linda Yueh on prospects for the Chinese economy
The document discusses China's impressive economic growth and the challenges it faces in becoming a high-income country. It notes that China's growth has been driven primarily by factor accumulation like capital and labor, as well as increasing total factor productivity. However, China now needs to transition to innovation-driven growth and rebalance its economy away from exports and investment towards domestic consumption. It also needs to address distortions from state-owned enterprises and continue reforms to support sustainable growth over the next 30 years.
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Linda Yueh on prospects for the Chinese economy
- 1. China’s Growth: The Makingof an Economic Superpower Linda Yueh www.lindayueh.com Twitter @lindayueh Tuesday, 25 June 13
- 2. China’s Growth: The Makingof an Economic • What has driven growth since 1979? • Re-balancing challenges Goal for next 30 years: Overcoming the “middle income country trap” 2 Tuesday, 25 June 13
- 3. China vs G7 3 Tuesday,25 June 13
- 4. Average income near“trap” level 0 3,750 7,500 11,250 15,000 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 US$atPPP Middle Tuesday, 25 June 13
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- 6. China’s impressive growth 6 Tuesday,25 June 13
- 7. Growth drivers 7 Tuesday, 25June 13
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- 11. 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% 11 Tuesday, 25 June 13
- 12. Re-balancing challenges (1) Increasereliance 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 12 Tuesday, 25 June 13
- 13. 13 (1) Re-balancing towards services 0% 25% 50% 75% 100% 19781980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 ShareofGDP(%) Primary Secondary Tertiary Services Industry Agriculture Tuesday, 25 June 13
- 14. 14 (2) Raise consumptionas % GDP 30% 38% 45% 53% 60% 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Tuesday, 25 June 13
- 15. 15 (2) Address growthin 0% 15% 30% 45% 60% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Government Households Firms ShareofGDP Tuesday, 25 June 13
- 16. (3) Reduce statesector? 16 State-owned enterprises Private firms Tuesday, 25 June 13
- 17. (3) State-owned sectorstill important for jobs 17 Tuesday, 25 June 13
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- 19. (3) Also inreturn on assets 19 Tuesday, 25 June 13
- 20. (4) Signs ofinnovation 20 Tuesday, 25 June 13
- 21. 21 (5) China “goingglobal” Source: IMF. Tuesday, 25 June 13
- 22. Salter-Swan Model linkinginterest rate & exchange rate reforms Tuesday, 25 June 13
- 23. 23 The next decadesof reform • 2020: Re-structuring the economy • 2030: Productivity & innovation as growth drivers • 2040: Stable & strong institutional foundations Tuesday, 25 June 13
- 24. China’s Growth: The Makingof an Economic Superpower Linda Yueh www.lindayueh.com Twitter @lindayueh Tuesday, 25 June 13