China’s Growth: Can Goldilocks Outgrow Bears?

Abstract

The paper analyzes the recent growth dynamics in China, evaluating both cyclical positions and long-term growth prospects. The analysis shows that financial cycles play a more important role than traditional inflation-based cycles in shaping the dynamics of growth. Currently, the 'finance-neutral' gap-our measure of the financial cycle-is large and positive, reflecting imbalances accumulated in the economy since the Global Financial Crisis. A period of slower growth is therefore both likely and needed in the near term to restore the economy to equilibrium. In the medium term, growth will slow as China moves closer to the technology frontier, but a steadfast implementation of reforms can ensure that China follows the path of the "Asia Tigers" and achieves successful convergence to high-income status.

How severe will the growth slowdown in China caused by the structural change be? An evaluation based on experiences from Japan and South Korea

“…Lee (2016) comes to the same assessment and stresses the importance of economic reforms. Maliszewski and Zhang (2015) point out that China has so far followed the historical experience of the fast growing Asian tigers; however, they detected signs of declining productivity growth as well as overinvestment. Such factors are considered as a risk for China's growth and the authors therefore emphasize the need for reforms, and in particular an increase in the quality of institutions.…”

From financial repression to financial crisis? The case of China

“…When credit is poured into projects that are financially unviable, economic efficiency is damaged at the micro level and financial risk is accumulated at the macro level. At the micro level, China's economic situation has deteriorated in view of its declining, or even negative, TFP after 2009 (Lai ; Maliszewski and Zhang ; Wu ). At the macro level, China's debt has reached a stunning level.…”

Kína egyensúlykeresése – a növekedés és a stabilitás átváltási dilemmái

“…Ahogy a befektetések megtérülési rátája sokat esett az elmúlt években, a hozzájuk kapcsolódó hitelek visszafizetése problémásabbá vált. 6 Lásd részletesebben Alberola et al (2013), Albert et al (2015), Maliszewski -Zhang (2015) és IMF (2014).…”