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The Future is in the Past: Projecting and Plotting the Potential Rate of Growth and Trajectory of the Structural Change of the Chinese Economy for the Next 20 Years

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  • Jun Zhang
  • Liheng Xu
  • Fang Liu

Abstract

Based on the convergence hypothesis and referring to the experience of East Asian high-performing economies from 1950 to 2010, this paper projects and plots the potential growth rate of the Chinese economy over the next 20 years. It predicts that the potential growth rate of per capita GDP adjusted by purchasing power parity averages at 6.02 percent from 2015 to 2035, while the potential GDP growth rate of 2015 would still be above 8 percent, which implies that the realized rate of growth has not reached its potential since 2012. Besides, based on the per capita GDP projected and on cross-country comparison, the paper plots the trajectory of structural change of the Chinese economy from 2015 to 2035. The result shows that: (i) the value-added share of primary industry will drop more rapidly than the employment share; (ii) the value-added share of secondary industry will decline and employment share will present an inverted U shape whose turning point will probably come between 2020 and 2025; (iii) both the value-added and employment share of tertiary industry will increase continuously.

Suggested Citation

  • Jun Zhang & Liheng Xu & Fang Liu, 2015. "The Future is in the Past: Projecting and Plotting the Potential Rate of Growth and Trajectory of the Structural Change of the Chinese Economy for the Next 20 Years," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(1), pages 21-46, January.
    • Handle: RePEc:bla:chinae:v:23:y:2015:i:1:p:21-46
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    References listed on IDEAS

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    Cited by:

    1. Glawe, Linda & Wagner, Helmut, 2020. "China in the middle-income trap?," China Economic Review, Elsevier, vol. 60(C).
    2. Murach, Michael & Wagner, Helmut, 2017. "How severe will the growth slowdown in China caused by the structural change be? – An evaluation based on experiences from Japan and South Korea," CEAMeS Discussion Paper Series 8/2017, University of Hagen, Center for East Asia Macro-economic Studies (CEAMeS).
    3. Murach, Michael & Wagner, Helmut & Kim, Jungsuk & Park, Donghyun, 2018. "Avoiding the middle-income trap: Korean lessons for China?," CEAMeS Discussion Paper Series 14/2018, University of Hagen, Center for East Asia Macro-economic Studies (CEAMeS).
    4. Michael Murach & Helmut Wagner, 2017. "How severe will the growth slowdown in China caused by the structural change be? An evaluation based on experiences from Japan and South Korea," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 15(3), pages 269-287, July.
    5. Pingyao Lai, 2015. "Growth Slowdown in China since 2008: Will There Be a Hard Landing in the Near Future?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(3), pages 42-58, May.
    6. M. Albert & C. Jude & C. Rebillard, 2015. "The Long Landing Scenario: Rebalancing from Overinvestment and Excessive Credit Growth. Implications for Potential Growth in China," Working papers 572, Banque de France.
    7. Guanghua Wan & Peter J. Morgan & Justin Yifu Lin & Guanghua Wan & Peter J. Morgan, 2016. "Factors Affecting the Outlook for Medium-term to Long-term Growth in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 24(5), pages 20-41, September.
    8. Dieppe, Alistair & Gilhooly, Robert & Han, Jenny & Korhonen, Iikka & Lodge, David, 2018. "The transition of China to sustainable growth – implications for the global economy and the euro area," Occasional Paper Series 206, European Central Bank.

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