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

26 Pages Posted: 23 Jan 2015

See all articles by Jun Zhang

Jun Zhang

Fudan University - China Center for Economic Studies (CCES)

Liheng Xu

Fudan University - China Center for Economic Studies (CCES)

Fang Liu

Fudan University - China Center for Economic Studies (CCES)

Date Written: January–February 2015

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.

Keywords: Asian economies, convergence, economic growth, structural change, the Chinese economy

JEL Classification: O10, O40, O47

Suggested Citation

Zhang, Jun and Xu, Liheng and Liu, Fang, 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 (January–February 2015). China & World Economy, Vol. 23, Issue 1, pp. 21-46, 2015, Available at SSRN: https://ssrn.com/abstract=2554121 or http://dx.doi.org/10.1111/cwe.12098

Jun Zhang (Contact Author)

Fudan University - China Center for Economic Studies (CCES) ( email )

China

Liheng Xu

Fudan University - China Center for Economic Studies (CCES) ( email )

Shanghai
China

Fang Liu

Fudan University - China Center for Economic Studies (CCES) ( email )

Shanghai
China

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