The recent slowdown in China’s growth has caused concern about its long-term growth prospects. Evidence suggests that, before 2008, China’s growth miracle was driven primarily by productivity improvement following economic policy reforms. Since 2008, however, growth has become more dependent on investment and overall growth has slowed. If the recent reform plans can successfully address the country’s structural imbalances, China could maintain a solid growth rate that might help smooth its transition to high-income status.
The merging world is in the process of catching up with the developed world and China is in front. But even China is still a poor country compared with the developed world. There is still a long way to go in breadth and depth. So growth in emerging nations should remain strong for the foreseeable future, albeit with fits and starts, and so far China is leading the way.
What Western economists seem to miss is that China has adopted a different model than the West, even though there are superficial differences. Chinese leaders are no doubt aware that both the US and Britain adopted different growth models from the current neoliberal one. For example, emerging America, guided initially by Alexander Hamilton adopted the American system as opposed to the British system of the time and only switched to the British system after having become a developed nation.
Is China’s Growth Miracle Over?
Zheng Liu
ht Brad DeLong
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