“How severe will the growth slowdown in China caused by the structural change be? An evaluation based on the experiences from Japan and South Korea”

Michael Murach & Helmut Wagner

in: Journal of Chinese Economic and Business Studies, Vol. 15 (3), July 2017, pp. 269-287

Abstract:

China’s economy has been growing at a high rate for the past three decades. However, the current process of rebalancing from an investment- and manufacturing-led growth model toward a consumption- and service-led model is associated with decreasing growth rates. We show that China’s current state of structural change in terms of sectoral employment share is similar to the historical developments in Japan and South Korea. We derive plausible scenarios for future growth rates in China and (by isolating the allocation effect, i.e. the pure effect of structural change) look at the effects of tertiarization on economic growth in China for the period 2014−2030 by applying a simple simulation study.