The Real Source of China’s Economic Growth

Peng Yizhong , Tong Jian and Wu Min

Center for Industrial and Business Organization, Dongbei University of Finance and Economics, Shenyang, China
School of Economics and Management, Tsinghua University, Beijing, China
School of International Business, Dongbei University of Finance and Economics

Abstract:  In this paper, the authors have made the following findings after the fitting of China’s economic growth rate series using an improved STR model: since 1949, great changes have taken place in China’s economic growth pattern but factor input remains to be the major source of China’s economic growth, as reflected by the extensive pattern of economic growth; with the exception of capital, the marginal output of all other production factors has been on the increase, which suggests that the efficiency of China’s factor allocation has been continuously improved; the marginal output of capital has been on the decline, which explains that the dependency on investment for economic growth has led to excessive investment; reform and opening up and reform of marketization have substantially increased the sustainability of China’s economic growth. In addition, the authors have investigated the internal momentum of China’s growth transformation and developed relevant policy recommendations.

Keywords:  economic growth pattern, transformation, STR model, sustainability

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