Past: China's Growth (1978–2007)

• Rapid TFP Growth Post-Reform: Following China's reform and opening-up in 1978, Total Factor Productivity (TFP) grew rapidly, accounting for roughly 75% of non-agricultural growth.

• Early Estimates: Early studies, like Alwyn Young (2003), estimated TFP growth at 1.4% per year (1978–1998), contributing significantly to GDP growth.

• Revised Estimates: Brandt and Zhu (2010) provided updated data, showing an even higher TFP growth of 3.2% per year (1978–2007).

• Comparison to Mao Era: From 1952 to 1978, TFP growth was negative (-1%), and GDP growth was driven solely by capital and labor accumulation.

China's shrinking and aging population, driven by past population control policies, poses challenges to future economic growth.

• A declining labor force will require China to increasingly rely on Total Factor Productivity (TFP) gains to sustain growth.

• TFP growth has slowed significantly since 2008, dropping to 0.7% per year, down from faster rates during the reform era.

• The demographic shift and slower productivity gains suggest China may struggle to maintain past levels of rapid growth.

• Greater emphasis will need to be placed on innovation and efficiency to drive future economic expansion.

China's Investment-Driven Growth: Slowing Momentum

• High investment rates, especially in infrastructure and housing, have been central to China's rapid growth, peaking at 43% of GDP.

• This capital-intensive model is becoming unsustainable as the economy matures and the population ages.

• Diminishing returns on investment, particularly in housing and public infrastructure, are reducing their growth contributions.

• Future growth will increasingly rely on productivity improvements and a shift toward a more balanced, consumption-driven economy