September 16, 2015
Is the China Growth Model Dead?

by Yukon Huang

Is the China growth model dead? This question has become topical as China’s growth rate has transitioned from its historic double-digit rates to its current 6-7 percent pace, with many arguing that the bottom might be as low as 3-4 percent growth before the end of this decade. In a technical sense, the China growth model is not dead — because there was never a unique China model in the first place. China follows the same growth model that all economies adhere to. The basic model was laid out by several Nobel Prize-winning economists, who explained that growth is primarily determined by growth in investment and labor along with productivity increases. The path that China has taken during its period of explosive economic growth is similar to the paths taken decades earlier by Japan and the Asian Tigers—high levels of investment, financed by high savings rates, and supported by incentives to promote industrial production and trade, along with the shift of workers from rural to urban-based activities. The principles driving growth have not changed

Read more at: http://carnegieendowment.org/2015/09/16/is-china-growth-model-dead/ihsg

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