- Mar. 26, 2019
- Mar. 22, 2019
- Mar. 13, 2019
Home > Research and Studies > Bank of Japan Working Paper Series, Review Series, and Research Laboratory Series > Bank of Japan Working Paper Series 2018 > (Research Paper) What Drives China's Growth?
November 13, 2018
This paper discusses the sustainability of China's rapid growth mainly based on the estimation of the corporate-level total factor productivity of Chinese listed firms. Since the 1980s, both capital accumulation and rapid technological progress -- measured as total factor productivity (TFP) -- have contributed to the high growth of the Chinese aggregate output. Should the prediction of the standard growth theory be correct, however, economic growth led by capital accumulation is not likely to be long lasting, hence we mainly focus on firm level TFP growth. As a result, we identify four channels that would continue to promote the TFP growth of the Chinese corporate sector at an aggregate level: (i) declining proportion of low-productivity state-owned enterprises, (ii) continuous influx of highly competent new start-ups, (iii) broad catching up trend among the laggards in the firm distribution, and (iv) innovation spawning R&D activities. These four channels would underpin the medium-term economic growth of the Chinese economy.
China, Total Factor Productivity, Catching up, R&D
We would like to thank Tomoyuki Fukumoto, Hibiki Ichiue, Ryo Kato, Tomohide Mineyama, Koji Nakamura, Yoshinori Nakata, Akira Otani, Tomohiro Sugo, and Toshinao Yoshiba as well as the staff of the Bank of Japan for their helpful comments. The opinions expressed here, as well as any remaining errors, are those of the authors and should not be attributed to the Bank of Japan.
Papers in the Bank of Japan Working Paper Series are circulated in order to stimulate discussion and comments. Views expressed are those of authors and do not necessarily reflect those of the Bank.
If you have any comment or question on the working paper series, please contact each author. When making a copy or reproduction of the content for commercial purposes, please contact the Public Relations Department (email@example.com) at the Bank in advance to request permission. When making a copy or reproduction, the source, Bank of Japan Working Paper Series, should explicitly be credited.