Structural Characteristics and Risks of China ’s Economic Transformation and Paths to Efficiency Improvement

Research Group for Frontier Theories of China Economic Growth

Abstract:  Based on the expanded growth accounting framework, this paper discussed the structural characteristics of China’s economic transformation and its related issues and came up with the following conclusions: (1) China’s economic growth has six structural characteristics — demographic transition, industrial productivity redistribution, income distribution adjustments, increasing urbanization, decreasing capital efficiency and little room for total factor productivity improvement. These factors together may cause a slowdown in economic growth. (2) The risk of economic slowdown in China’s economic transformation may be due to the readjustment of income distribution, excessive ineffective investment, increasing economic leverage ratio and fast growing service sector of industrial structure. (3) In response to the potential risks of China’s economic slowdown, improving capital efficiency should be the focus of our policy. To establish an inefficient-enterprise-clearing mechanism as well as deepening the reform of corresponding system is the only way to a steady economic growth in the future.
Keywords: structural characteristics, risks of the transition, uniformity in convergence, capital efficiency

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