China through 2020 : A Macroeconomic Scenario

This paper sketches a macroeconomic scenario for China for 2010-20. Growth accounting exercise finds that, with both the working population and total factor productivity on course to decelerate, potential gross domestic product (GDP) growth is like...

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Bibliographic Details
Main Author:	Kuijs, Louis
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2017
Subjects:	ACCOUNTING ACCOUNTING FRAMEWORK AGRICULTURE ALLOCATION OF CAPITAL BANK LENDING BANK OFFICE BENCHMARK CAPITAL ACCUMULATION CAPITAL CONTROLS CAPITAL INFLOWS CAPITAL STOCK CENTRAL BANK COMMODITY COMMODITY PRICES COMPETITIVENESS CURRENT ACCOUNT SURPLUS DATA AVAILABILITY DEFLATORS DEMOGRAPHIC DEMOGRAPHIC CHANGES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISPOSABLE INCOME DIVIDEND DIVIDEND POLICY DOMESTIC ECONOMY DOMESTIC PRICES ECONOMIC ACTIVITY ECONOMIC CRISIS ECONOMIC DEVELOPMENTS ECONOMIC GROWTH ECONOMIC OUTLOOK ECONOMIC POLICIES ECONOMIC REFORMS ECONOMIC TRANSFORMATION ECONOMIES OF SCALE ELASTICITY EMERGING MARKET EMERGING MARKETS ENVIRONMENTAL IMPACT EQUIPMENT EXCHANGE RATE EXCHANGE RATE REGIMES EXCHANGE RATES EXPENDITURE EXPORT GROWTH EXPORTS EXPOSURE EXTERNAL ASSETS EXTERNAL DEFICITS EXTERNAL TRADE FINANCIAL CRISIS FINANCIAL SECTOR FINANCIAL STABILITY FINANCIAL SYSTEM FIXED CAPITAL FORECASTS FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN SHARE FUTURE PRICE GDP GDP PER CAPITA GLOBAL ECONOMIC PROSPECTS GLOBAL ECONOMICS GLOBAL ECONOMY GLOBAL MARKET GLOBAL RECESSION GOVERNMENT FINANCES GOVERNMENT SPENDING GROSS FIXED CAPITAL FORMATION GROWTH ACCOUNTING GROWTH PROJECTIONS HOUSEHOLD INCOME HUMAN CAPITAL INCOMES INFLATION INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKET INVENTORY JOB CREATION LABOR MARKET LABOR SUPPLY LAND REFORM LESS DEVELOPED COUNTRIES LIBERALIZATION LIQUIDITY LIVING STANDARDS LOCAL GOVERNMENT MACROECONOMIC MANAGEMENT MACROECONOMIC VARIABLES MANUFACTURING INDUSTRY MARKET DATA MARKET INTEGRATION MARKET SHARE MORTGAGES NATIONAL SAVING NET EXPORTS OUTPUT GAP POTENTIAL OUTPUT POWER PARITY PRICE CHANGES PRICE INCREASES PRODUCTION FUNCTION PRODUCTIVITY GROWTH PRODUCTIVITY INCREASES PURCHASING PURCHASING POWER RAPID GROWTH REAL ESTATE REAL ESTATE INVESTMENT REAL EXCHANGE RATE REAL GDP RELATIVE PRICES RESERVES RETURNS SAVING RATE SHARE OF INVESTMENT SHARE OF LABOR SIDE EFFECTS SPREAD SUPPLY CHAINS SURPLUS LABOR SURPLUSES TAX TAXATION TFP TOTAL FACTOR PRODUCTIVITY TRACK RECORD TRADE BALANCE TRADING URBANIZATION WAGE GROWTH WAGES WEALTH WORLD DEVELOPMENT INDICATOR WORLD ECONOMY WORLD TRADE WTO
Online Access:	http://documents.worldbank.org/curated/en/313501468025446322/China-through-2020-a-macroeconomic-scenario http://hdl.handle.net/10986/28149

Description
Summary:	This paper sketches a macroeconomic scenario for China for 2010-20. Growth accounting exercise finds that, with both the working population and total factor productivity on course to decelerate, potential gross domestic product (GDP) growth is likely to moderate in the coming 10 years, despite still sizeable capital deepening. Actual GDP should grow broadly as fast as potential GDP, continuing the track record since the late 1990s. With some rebalancing expected, the share of consumption in GDP is likely to bottom out and to rise somewhat through 2015 while the share of investment edges down. Robust economic growth in China would support imports. Meanwhile, given the outlook for the world economy, the share of exports in GDP may decline in 2010-2015 despite good competitiveness. As a result, the trade surplus may diminish relative to the size of China's economy. Even so, the external surplus will continue to rise in US dollar terms, especially the current account. In 2020 China's GDP per capita will be broadly comparable to the current level in Latin America, Turkey, and Malaysia. Adjusted for purchasing power, in 2020 China's GDP per capita will be one-fourth of the US level and China's total economy larger than that of the US. The pace of catch up in current prices and market exchange rates will depend on the extent of real exchange rate (RER) appreciation. Past experience internationally suggests that, with a large portion of labor employed in agriculture, RER appreciation may be modest in the coming decade. However, demographic changes may speed up the tightening of the labor market and trend RER appreciation. Reflecting this uncertainty, two scenarios are presented, suggesting China may become the largest economy on this metric sometime between 2020 and 2030.

China through 2020 : A Macroeconomic Scenario

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