Procurement & Supply Chain Strategy Topics
China Center Chart of the Week: Chinese Total Factor Productivity growth appears to have flat-lined

This chart shows that Chinese TFP growth has been declining continuously: from 3.1 percent during the 2007-2011 period, to 0.6 percent in 2012, to zero growth in 2013.

This trend indicates that the sustained, high-level of fixed asset investment (FAI) growth in China in recent years has not been accompanied by efficiency gains in the overall economy. In other words, much of the FAI investment appears to not be productive. This means that investments are not generating standalone economic returns and/or not generating knock-on productivity gains in the broader economy – or possibly even generating negative productivity drags on the economy. Ghost cities, underutilized infrastructure, poor quality constructing, and industrial overcapacity all contribute to this outcome. 

China Center Publications (1 pgs)
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