IDEAS home Printed from https://ideas.repec.org/p/tor/tecipa/tecipa-771.html
   My bibliography  Save this paper

China's Productivity Challenge

Author

Listed:
  • Xiaodong Zhu

Abstract

Total factor productivity (TFP) growth has been the primary driver of China's GDP growth. From 1978 to 2007, China experienced an average TFP growth rate of over 4% per year, thanks to economic reforms and decentralization that led to consistent policy and institutional changes initiated from local levels. However, since 2007, the Chinese government has shifted towards a top-down approach, prioritizing policy design at the national level and resource mobilization. While this approach yielded some short-term benefits, such as temporary growth recovery in 2010 following the global financial crisis and the rapid expansion of infrastructure projects, it came at a significant cost to economic efficiency. Without comprehensive bottom-up policy reforms, China's TFP growth rate between 2007 and 2022 averaged only 1% per year, significantly lower than the 4% achieved prior to 2007. The key challenge facing China now is whether it will revert to a decentralized decision-making process.

Suggested Citation

  • Xiaodong Zhu, 2024. "China's Productivity Challenge," Working Papers tecipa-771, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-771
    as

    Download full text from publisher

    File URL: https://www.economics.utoronto.ca/public/workingPapers/tecipa-771.pdf
    File Function: Main Text
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    China; Bottom-up Institutional Change; TFP; Growth; Centralization; Growth Slowdown;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tor:tecipa:tecipa-771. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: RePEc Maintainer (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.