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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, if not several years after, allows inferences about future GDP growth. Short of some cataclysmic event, 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.

Suggested Citation

  • Carsten A Holz, 2005. "China’s Economic Growth 1978-2025: What We Know Today about China’s Economic Growth Tomorrow," Development and Comp Systems 0512002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpdc:0512002
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    Cited by:

    1. 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).
    2. Brondino, Gabriel, 2019. "Productivity growth and structural change in China (1995–2009): A subsystems analysis," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 183-191.
    3. Tafreschi, Darjusch, 2015. "The income body weight gradients in the developing economy of China," Economics & Human Biology, Elsevier, vol. 16(C), pages 115-134.
    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. Utlaut, Johannes Friederich & van Roye, Björn, 2010. "The effects of external shocks to business cycles in emerging Asia: A Bayesian VAR approach," Kiel Working Papers 1668, Kiel Institute for the World Economy (IfW Kiel).
    6. Alan R. Nankervis, 2013. "‘Building for the future?’ Government and industry responses to the challenges of talent management in China following the GFC," Asia Pacific Business Review, Taylor & Francis Journals, vol. 19(2), pages 186-199, April.
    7. Kaivo-oja, J. & Luukkanen, J. & Panula-Ontto, J. & Vehmas, J. & Chen, Y. & Mikkonen, S. & Auffermann, B., 2014. "Are structural change and modernisation leading to convergence in the CO2 economy? Decomposition analysis of China, EU and USA," Energy, Elsevier, vol. 72(C), pages 115-125.
    8. Eric Girardin & Konstantin A. Kholodilin, 2011. "How helpful are spatial effects in forecasting the growth of Chinese provinces?," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 30(7), pages 622-643, November.
    9. Ling Tang & Qin Bao & ZhongXiang Zhang & Shouyang Wang, 2015. "Carbon-based border tax adjustments and China’s international trade: analysis based on a dynamic computable general equilibrium model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(2), pages 329-360, April.
    10. Andrea Fracasso, 2015. "Economic Rebalancing and Growth: the Japanese experience and China’s prospects," DEM Discussion Papers 2015/07, Department of Economics and Management.
    11. Wang, Lili & Szirmai, Adam, 2008. "Regional Capital Inputs in Chinese Industry and Manufacturing, 1978-2003," MERIT Working Papers 2008-028, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    12. Jiang, Fuxiu & Kim, Kenneth A. & Nofsinger, John R. & Zhu, Bing, 2015. "Product market competition and corporate investment: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 35(C), pages 196-210.
    13. Bilge Erten, 2012. "Macroeconomic Transmission of Eurozone Shocks to Emerging Economies," International Economics, CEPII research center, issue 131, pages 43-70.
    14. Bao, Qin & Tang, Ling & Zhang, ZhongXiang & Wang, Shouyang, 2013. "Impacts of border carbon adjustments on China's sectoral emissions: Simulations with a dynamic computable general equilibrium model," China Economic Review, Elsevier, vol. 24(C), pages 77-94.
    15. Felipe, Jesus & Bayudan-Dacuycuy, Connie & Lanzafame, Matteo, 2016. "The declining share of agricultural employment in China: How fast?," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 127-137.
    16. repec:dgr:rugggd:gd-99 is not listed on IDEAS
    17. Carsten A. Holz & Aaron Mehrotra, 2016. "Wage and Price Dynamics in China," The World Economy, Wiley Blackwell, vol. 39(8), pages 1109-1127, August.
    18. Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2009. "The Illusion of Precision and the Role of the Renminbi in Regional Integration," Chapters, in: Koichi Hamada & Beate Reszat & Ulrich Volz (ed.), Towards Monetary and Financial Integration in East Asia, chapter 13, Edward Elgar Publishing.
    19. You, Jing & Huang, Yongfu, 2013. "Green-to-Grey China: Determinants and Forecasts of its Green Growth," MPRA Paper 57468, University Library of Munich, Germany, revised 16 Jul 2014.
    20. 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.
    21. 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.
    22. Lv, Yulan & Chen, Wei & Cheng, Jianquan, 2019. "Modelling dynamic impacts of urbanization on disaggregated energy consumption in China: A spatial Durbin modelling and decomposition approach," Energy Policy, Elsevier, vol. 133(C).
    23. 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.
    24. Bao, Qin & Tang, Ling & Zhang, ZhingXiang & Qiao, Han & Wang, Shouyang, 2012. "Impact of Border Carbon Adjustments on China’s Sectoral Emissions: Simulations with a Dynamic Computable General Equilibirum Model," Working Papers 249391, Australian National University, Centre for Climate Economics & Policy.
    25. He, Xiaobo & Sim, Nicholas C.S., 2015. "Does economic growth affect urbanization? New evidence from China and the Chinese National Congress," Journal of Asian Economics, Elsevier, vol. 36(C), pages 62-71.

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    More about this item

    Keywords

    economic growth; growth accounting; growth forecasts; development theories; human capital formation; education (all: China);
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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