Question

read Zhu (2012) Understanding China’s Growth: Past, Present, and Future (free pdf online)

answer discussion questions

1. What distinct periods of China’s economic growth does the article describe? What are

the distinct characteristics of China’s economic performance during each of these

periods?

2. Why was China unable to maintain its world economic power in the 1500-1950s?

3. Why did China’s economic growth and performance differ in 1952-1978 vs post-1978

period?

4. What were the sources of China’s productivity growth after 1978?

5. In your opinion, can China sustain rapid economic growth rates well into the future?

Explain why yes/no and how this may happen.

article from link https://www.aeaweb.org/articles?id=10.1257/jep.26.4.103

Answer 1

1) The article describes the following distinct periods of China's economic growth:

1800-1950 :- China was one of the poorest countries of the world.

1952- 1978 :- China's GDP was 1/40th of US level and   1/10th of Brazilian level   

since 1978 :- China's GDP is 1/5th of US level and at the same level as Brazil.

2) China was unable to maintain its world economic power in the 1500-1950s because then china had not started economic reform.

3) This is because China decomposed the sources of growth into capital deepening, labour deepening and productivity growth. Along with this China started economic reform since 1978.

4) The sources of china's growth since 1978 were:- capital deepening, labour deepening and productivity growth. Also sky high rates of savings and investments helped China to boost up.

5) Yes, in my opinion China can sustain rapid economic growth rates well into the future. This is because gradual and persistent institutional change and policy reforms have reduced distortions and improved economic incentives which will further lead to productivity growth.