China’s Path to Sustainable and Balanced Growth
IMF Working Papers, November 15, 2024
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- China’s Path to Sustainable and Balanced Growth
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Bibliographic details
- Authors: Dirk V Muir, Natalija Novta, Anne Oeking
- Published: November 15, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400293467.001
Summary findings
- After decades of high growth, the Chinese economy is facing headwinds from slowing productivity growth and a declining workforce that are projected to lower potential growth substantially in the longer term.
- In the absence of major reforms, potential growth could slow to around 3.8 percent on average between 2025-30 and to around 2.8 percent on average over 2031-40.
- A reform scenario combining structural reforms to lift productivity growth and rebalancing growth toward more consumption could help China transition to “high-quality”—balanced, inclusive, and green—growth.
- Under the reform scenario, production function and general equilibrium modelling approaches indicate potential growth could remain at around 4.3 percent between 2025-40.
Projections and key statistics
- Potential growth (no major reforms):
- around 3.8 percent on average between 2025-30
- around 2.8 percent on average over 2031-40
- Potential growth (reform scenario):
- around 4.3 percent between 2025-40
Reform scenario and policy emphasis
- Core components of the reform scenario:
- structural reforms to lift productivity growth
- rebalancing China’s growth toward more consumption
- Intended outcomes:
- support transition to “high-quality” growth characterized as balanced, inclusive, and green
- sustain higher potential growth relative to the no-reform baseline
Methodology
- Modeling approaches used:
- production function modeling
- general equilibrium modeling
Subject areas and keywords highlighted
- Subject: Consumption, Global value chains, Globalization, National accounts, Production, Productivity, Total factor productivity
- Keywords: Consumption, demographic trends, General equilibrium modeling approach, Global, Global value chains, investment-led growth, Potential growth, Productivity, rebalancing, reform scenario, reforming China's economy, SOE productivity gap, Southeast Asia, structural reforms, tertiary sector, Total factor productivity
Dirk V Muir, Natalija Novta, and Anne Oeking. "China’s Path to Sustainable and Balanced Growth", IMF Working Papers 2024, 238 (November 15, 2024); DOI: https://doi.org/10.5089/9798400293467.001
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