China's Productivity Slowdown and Future Growth Potential

China’s economy grew by an impressive 10 percent per year over four decades. Productivity improvements within sectors and gains from resource reallocation between sectors and ownership groups drove that expansion. However, productivity growth has d...

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Main Authors:	Brandt, Loren, Litwack, John, Mileva, Elitza, Wang, Luhang, Zhang, Yifan, Zhao, Luan
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	PRODUCTIVITY GROWTH RESOURCE ALLOCATION STATE-OWNED ENTERPRISES LOCAL GOVERNMENT PRODUCTIVITY ECONOMIC GROWTH TOTAL FACTOR PRODUCTIVITY
Online Access:	http://documents.worldbank.org/curated/en/839401593007627879/Chinas-Productivity-Slowdown-and-Future-Growth-Potential http://hdl.handle.net/10986/33993

id	okr-10986-33993
recordtype	oai_dc
spelling	okr-10986-339932022-09-20T00:09:41Z China's Productivity Slowdown and Future Growth Potential Brandt, Loren Litwack, John Mileva, Elitza Wang, Luhang Zhang, Yifan Zhao, Luan PRODUCTIVITY GROWTH RESOURCE ALLOCATION STATE-OWNED ENTERPRISES LOCAL GOVERNMENT PRODUCTIVITY ECONOMIC GROWTH TOTAL FACTOR PRODUCTIVITY China’s economy grew by an impressive 10 percent per year over four decades. Productivity improvements within sectors and gains from resource reallocation between sectors and ownership groups drove that expansion. However, productivity growth has declined markedly in recent years. This paper extends previous macro and firm-level studies to show that domestic factors and policies contributed to the slowdown. The analysis finds that limited market entry and exit and lack of resource allocation to more productive firms were associated with slower manufacturing total factor productivity growth. Earlier reforms led to state-owned enterprises catching up to private sector productivity levels in manufacturing, but convergence stalled after 2007. Furthermore, the allocation of a larger share of credit and investment to infrastructure and housing led to lower returns to capital, a rapid buildup in debt, and higher risks to growth. China’s growth potential remains high, but its long-term growth prospects depend on reversing the recent decline in total factor productivity growth. 2020-06-25T15:51:02Z 2020-06-25T15:51:02Z 2020-06 Working Paper http://documents.worldbank.org/curated/en/839401593007627879/Chinas-Productivity-Slowdown-and-Future-Growth-Potential http://hdl.handle.net/10986/33993 English Policy Research Working Paper;No. 9298 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper East Asia and Pacific China
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	PRODUCTIVITY GROWTH RESOURCE ALLOCATION STATE-OWNED ENTERPRISES LOCAL GOVERNMENT PRODUCTIVITY ECONOMIC GROWTH TOTAL FACTOR PRODUCTIVITY
spellingShingle	PRODUCTIVITY GROWTH RESOURCE ALLOCATION STATE-OWNED ENTERPRISES LOCAL GOVERNMENT PRODUCTIVITY ECONOMIC GROWTH TOTAL FACTOR PRODUCTIVITY Brandt, Loren Litwack, John Mileva, Elitza Wang, Luhang Zhang, Yifan Zhao, Luan China's Productivity Slowdown and Future Growth Potential
geographic_facet	East Asia and Pacific China
relation	Policy Research Working Paper;No. 9298
description	China’s economy grew by an impressive 10 percent per year over four decades. Productivity improvements within sectors and gains from resource reallocation between sectors and ownership groups drove that expansion. However, productivity growth has declined markedly in recent years. This paper extends previous macro and firm-level studies to show that domestic factors and policies contributed to the slowdown. The analysis finds that limited market entry and exit and lack of resource allocation to more productive firms were associated with slower manufacturing total factor productivity growth. Earlier reforms led to state-owned enterprises catching up to private sector productivity levels in manufacturing, but convergence stalled after 2007. Furthermore, the allocation of a larger share of credit and investment to infrastructure and housing led to lower returns to capital, a rapid buildup in debt, and higher risks to growth. China’s growth potential remains high, but its long-term growth prospects depend on reversing the recent decline in total factor productivity growth.
format	Working Paper
author	Brandt, Loren Litwack, John Mileva, Elitza Wang, Luhang Zhang, Yifan Zhao, Luan
author_facet	Brandt, Loren Litwack, John Mileva, Elitza Wang, Luhang Zhang, Yifan Zhao, Luan
author_sort	Brandt, Loren
title	China's Productivity Slowdown and Future Growth Potential
title_short	China's Productivity Slowdown and Future Growth Potential
title_full	China's Productivity Slowdown and Future Growth Potential
title_fullStr	China's Productivity Slowdown and Future Growth Potential
title_full_unstemmed	China's Productivity Slowdown and Future Growth Potential
title_sort	china's productivity slowdown and future growth potential
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/839401593007627879/Chinas-Productivity-Slowdown-and-Future-Growth-Potential http://hdl.handle.net/10986/33993
_version_	1764479956120764416

China's Productivity Slowdown and Future Growth Potential

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