China’s Long March towards Sustainable Growth? Ari Van Assche Department of International Business 1
China: Engine of the World Economy Contribution to global GDP growth, 2007-2016, selected countries, % 50 40 30 20 10 0 China United India Indonesia Japan Brazil 2 States Data Source: IMF World Economic Outlook
Two Types of Growth Perspiration Inspiration 3
Favorable Demographics… Population share of working age (15-64), % 75 70 65 60 55 50 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 China Canada Data Source: United Nations Population Division
High Savings Rate… Gross Savings as % of GDP, G7 countries, 2015 60 50 40 30 20 10 0 China Japan France Canada United Italy United 5 States Kingdom Data Source: World Bank
FDI attractor… China's foreign direct investment inflows and outflows, 1980-2015, $million 160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000 0 1980 1985 1990 1995 2000 2005 2010 2015 Data Source: UNCTAD 6 Inward Outward
Favorable Demographics Reversed Population share of working age (15-64), % 75 70 65 60 55 50 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 China Canada 7 Data Source: United Nations Population Division
Favorable Demographics Reversed Population share of working age (15-64), % 75 70 65 60 55 50 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 China Canada 8 Data Source: United Nations Population Division
China’s Not so Cheap Workers 9
Avoiding the Middle Income Trap? • PIGS: Portugal, Ireland, Greece, Spain • OTHER: Mauritius, Equitorial Guinea, Israel, Puerto Rico • ASIAN TIGERS: Hong Kong, Singapore, Taiwan, South Korea, Japan 10 Source: World Bank (2012)
WHY CHINA CAN’T INNOVATE (HBR, 2014) “The problem is not the innovative or intellectual capacity of the Chinese people, which is boundless, but the political world in which their schools, universities, and businesses need to operate, which is very much 11 bounded.”
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