China’s economic prospects: Can China achieve stable and high economic growth in coming decades?

Can China Achieve Stable and High Economic Growth in Coming Decades?

Abstract

This paper focuses on whether China can maintain stable and high economic growth in coming decades. Based on the latest data and used the expenditure approach and value-added approach, it investigates China’s growth potential by identifying contributory factors in the past and exploring their potential contributions in the future. This study projects that China will be able to keep a 5.5-6.5% annual growth rate on average through 2030 if it is able to avoid any potential financial or economic crisis and without a disaster like COVID-19; and after 2030 its growth will slow down to 4-5% in the following ten years. Its future development depends fully on increases of domestic consumption and investment, further shifts of labor from agriculture to other sectors, and productivity improvement. Exports are still important to its economy but net export’s contribution to GDP growth will be marginal and mostly negative. The urbanization rate will rise further and so push the economic advancement, but 8-10 years later, it will diminish gradually and its economic effect will be minimal. The service industry will constantly grow and its shares of GDP and employment in the whole economy will rise; however, China’s future relies more on its manufacturing industry, from the largest in the world now to become the strongest in the future. Based on challenges and problems China faces, this study proposes relevant actions and paths that China has to take in order to achieve stable, sustainable and inclusive development in coming decades.