China Center Chart of the Week: Not so fast! Why China’s economy will continue to slow

­The chart shows The Conference Board’s most recent medium- and long-term projections for trend growth in real GDPfor China, broken down by contributions from labor, capital and productivity. In our baseline scenario, China will grow at an average 5.5 percent over the next six years and slow further to an average 3.7 percent from 2019-2025. While one percentage point of the slowdown will occur due to slower growth in capital formation, the bulk of the slowdown will emanate from reduced total factor productivity, or said another way, the economy’s overall efficiency. The projection is based on assumptions about the reasonable utilization of China’s factor endowments; it does not factor in potential shocks or innovation influences that could see growth go down or up, respectively. 

This members-only Chart shows that ­the improvement in the high-frequency data over the last two months may obfuscate the underlying trends unfolding in the economy. Please download the full document for more details.

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