China’s Economic Outlook in 2020 and Beyond

Near-term China investment decisions and US trade and economic policymaking are influenced by competing views of China’s longer-term outlook. Yet economic models of China’s long-term growth are shaky, debatable and hence few in number. Official statements from China’s leadership about long-term expectations, and more importantly about the composition of long-term economic growth, are even more scarce. The International Monetary Fund (IMF) compiles the World Economic Outlook (WEO) projecting a medium-term outlook for its member economies, including China, although that only looks out about five years. A highlight of interest in the WEO for China is the role of current account surpluses. These projections in turn guide some arguments about whether China’s currency, the renminbi, is undervalued. But Beijing doesn’t systematically offer its own competing prediction of the longer-term numbers.

However a projection of China’s growth through 2030, in five year increments, is included in a major new World Bank report titled China 2030, written in partnership with China’s Development Research Center of the State Council (DRC). A leading Chinese business paper, 21st Century Business Herald, reports that China’s Ministry of Finance praised the study highly, and that it is fully supported by outgoing President Hu Jintao and incoming Premier Li Keqiang. Table 1 below reproduces the projections.

Table 1 China: Projected growth pattern assuming steady reforms and no major shock


Indicator

1995–2010

2011–15

2016–20

2021–25

2026–30


GDP growth (percent per year)

9.9

8.6

7

5.9

5

Labor growth

0.9

0.3

–0.2

–0.2

–0.4

Labor productivity growth

8.9

8.3

7.1

6.2

5.5

Structure of economy (end of period percent)

Investment/GDP ratio

46.4

42.0

38.0

36.0

34.0

Consumption/GDP ratio

48.6

56.0

60.0

63.0

66.0

Industry/GDP ratio

46.9

43.8

41.0

38.0

34.6

Services/GDP ratio

43.0

47.6

51.6

56.1

61.1

Share of employment in agriculture

38.1

30.0

23.7

18.2

12.5

Share of employment in services

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