1. China’s Growth:
The Making of an
Economic
Superpower
Linda Yueh
www.lindayueh.com
Twitter @lindayueh
Tuesday, 25 June 13

2. China’s Growth:
The Making of an Economic
• What has driven growth since 1979?
• Re-balancing challenges
Goal for next 30 years: Overcoming the
“middle income country trap”
2
Tuesday, 25 June 13

3. China vs G7
3
Tuesday, 25 June 13

4. Average income near “trap”
level
0
3,750
7,500
11,250
15,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
US$atPPP
Middle
Tuesday, 25 June 13

5. 5
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6. China’s impressive growth
6
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7. Growth drivers
7
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8. 8
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9. 9
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10. 10
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11. Contributions to growth
 Factor accumulation: 60-70%
• Capital accumulation: 50%
• Labour accumulation: 10-20%
 Total Factor Productivity (TFP): 30-40%
• Human capital: 11-15%
• Factor re-allocation: 8-15%
• Innovation: 16-17% minus “imitation” =
6-13%
11
Tuesday, 25 June 13

12. Re-balancing challenges
(1) Increase reliance on own market, less on
exports
(2) Raise consumption, reduce inefficient savings
(3) Grow private sector, reduce distortions from
state-owned sector
(4) Increase innovation, as imitation limits
reached
12
Tuesday, 25 June 13

13. 13
(1) Re-balancing towards
services
0%
25%
50%
75%
100%
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
ShareofGDP(%)
Primary Secondary Tertiary
Services
Industry
Agriculture
Tuesday, 25 June 13

14. 14
(2) Raise consumption as % GDP
30%
38%
45%
53%
60%
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Tuesday, 25 June 13

15. 15
(2) Address growth in
0%
15%
30%
45%
60%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Government Households Firms
ShareofGDP
Tuesday, 25 June 13

16. (3) Reduce state sector?
16
State-owned enterprises
Private firms
Tuesday, 25 June 13

17. (3) State-owned sector still
important for jobs
17
Tuesday, 25 June 13

18. (3) Notable productivity
differences
18
Tuesday, 25 June 13

19. (3) Also in return on assets
19
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20. (4) Signs of innovation
20
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21. 21
(5) China “going global”
Source: IMF.
Tuesday, 25 June 13

22. Salter-Swan Model linking interest
rate & exchange rate reforms
Tuesday, 25 June 13

23. 23
The next decades of reform
• 2020: Re-structuring the economy
• 2030: Productivity & innovation as growth
drivers
• 2040: Stable & strong institutional
foundations
Tuesday, 25 June 13

24. China’s Growth:
The Making of an
Economic
Superpower
Linda Yueh
www.lindayueh.com
Twitter @lindayueh
Tuesday, 25 June 13