The Conference Board has released its updated global growth projections for 2017, and the next two five-year periods. Our projection for China shows a continuation of the “long soft fall” in GDP growth to 3.8 percent in 2017, down from 3.9 percent in 2016. For the next five years (2017-2021), the projected average annual growth rate is 3.2 percent, with a further slowing to 2.8 percent from 2022-2026.
The medium-term slowdown is largely driven by weakening investment growth. Although capital deepening (i.e., increasing capital per worker) will remain the dominant growth driver, capital returns will decline as a function of the rapid capital accumulation in the past two decades and the law of diminishing returns. Meanwhile, labor quantity has become a drag on growth, as the working-age population (15 to 64) began to decline in 2015 and will decline more rapidly henceforth.