Factors Affecting the Outlook for Medium‐term to Long‐term Growth in China

Abstract China achieved average GDP growth of nearly 10 percent over the period 1978–2015. However, how long can such high levels of growth be sustained, especially when per capita GDP levels have reached middle‐income status, and the normal tendency of economies is to slow down as they mature? This paper reviews the recent literature on the determinants and outlook for real GDP growth in China and addresses some of the key issues, including identifying supply‐side factors that can support continued strong growth under favorable conditions, as well as risk factors that might cause growth to fall short. The paper reviews supply‐side determinants of growth using a growth accounting framework, and also assesses major demand‐side factors driving potential growth, including exports, capital formation and household consumption.