China’s Potential Economic Growths during 2015-2025 under Different Scenarios

Li Ping and Lou Feng

Institute of Quantitative and Technical Economics, Chinese Academy of Social Sciences, Beijing, China

Abstract:  China has entered a crucial period of further growth and restructuring that will last until 2025. Based on a review of the major factors affecting China’s potential economic growth, this paper has created an integrated economic system model consisting of system dynamics, econometrics, and input-output for the forecast of China’s economic size and structure by 2025. Analysis shows that prior to 2025, China will be able to maintain a potential annual economic growth rate of 5.7%-7.2%. Faced with an international environment of a possible slowdown of advanced economies and diminishing demographic dividends, China needs to further expedite its urbanization process, enhance R&D and education spending, increase total factor productivity (TFP), vigorously develop the tertiary sector, and expand consumption in order to achieve the optimistically estimated growth of 6.6%-7.4% during the period of 2015-2025. Economic growth should be accompanied by the upgrade of industry structure and improvement of investment and consumption structures.

Keywords: China’s economy, structural transition, potential economic growth rate

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