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China’s Economic Growth 1978-2025: What We Know Today about China’s Economic Growth Tomorrow

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  • Carsten A. Holz

    (Hong Kong University of Science & Technology)

Abstract

Views of the future China vary widely. While some believe that the collapse of China is inevitable, others see the emergence of a new superpower that increasingly poses a threat to the U.S. This paper examines the economic growth prospects of China over the next two decades. Extrapolating past real GDP growth rates into the future, the size of the Chinese economy surpasses that of the U.S. in purchasing power terms between 2012 and 2015; by 2025, China is likely to be the world's largest economic power by almost any measure. The extrapolations are supported by two types of considerations. First, China’s growth patterns of the past 25 years since the beginning of economic reforms match well those identified by standard economic development and trade theories (structural change, catching up, and factor price equalization). Second, decomposing China’s GDP growth into growth of labor and other variables, the near-certain information available today about the quantity and quality of Chinese laborers through 2015 and possibly several years after allows inferences about future GDP growth. Short of some cataclysmic event, and given a continuation of the generally sound economic policies of the past, demographics alone suggests China’s continued economic rise. If talent is randomly distributed in the world population and if agglomeration of talent is important, then the odds are strongly in China’s favor.

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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0507001.

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Length: 50 pages
Date of creation: 03 Jul 2005
Date of revision:
Handle: RePEc:wpa:wuwpdc:0507001

Note: Type of Document - pdf; pages: 50
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Web page: http://128.118.178.162

Related research

Keywords: economic growth; growth accounting; growth forecasts; development theories; human capital formation; education (all: China);

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References

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  1. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
  2. Woo, W.T., 1993. "The Art of Reforming Centrally-Planned Economies: Comparing China, Poland and Russia," Papers 93-09, California Davis - Institute of Governmental Affairs.
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  4. Angus Maddison, 2006. "DO OFFICIAL STATISTICS EXAGGERATE CHINA's GDP GROWTH? A REPLY TO CARSTEN HOLZ," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 121-126, 03.
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Cited by:
  1. Qin Bao & Ling Tang & Zhongxiang Zhang & Han Qiao & Shouyang Wang, 2012. "Impacts of Border Carbon Adjustments on China's Sectoral Emissions: Simulations with a Dynamic Computable General Equilibrium Model," CCEP Working Papers 1202, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  2. Bonatti, Luigi & Fracasso, Andrea, 2013. "Regime switches in the Sino-American co-dependency: Growth and structural change in China," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 1-32.
  3. Yin-wong Cheung & Menzie D. Chinn & Eiji Fujii, 2006. "The Illusion of Precision and the Role of the Renminbi in Regional Integration," Working Papers 182006, Hong Kong Institute for Monetary Research.
  4. Ling Tang & Qin Bao & ZhongXiang Zhang & Shouyang Wang, 2013. "Carbon-based Border Tax Adjustments and China’s International Trade: Analysis based on a Dynamic Computable General Equilibrium Model," Working Papers 2013.17, Fondazione Eni Enrico Mattei.
  5. Bilge Erten, 2012. "Macroeconomic transmission of eurozone shocks to emerging economies," Working Papers 2012-12, CEPII research center.
  6. Bonatti, Luigi & Fracasso, Andrea, 2013. "Hoarding of international reserves in China: Mercantilism, domestic consumption and US monetary policy," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 1044-1078.

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