The limiting factors of China's economic growth : Growth aspects and denying status quo

Abstract

The thesis is a theoretical literature review examining the theories of economic development, growth, and convergence to discuss China's economic growth.

China's GDP growth is still driven by massive investment in the real estate and infrastructure sectors, even though these industries are overcapacity and the return on capital has plummeted. The stimulus strategy began in 2009 and rapidly increased China's corporate credit stock, resulting in the expansion of the shadow banking sector. Although economic growth has been rapid, Chinese institutions remain weak.

Between 1980 and 2015, salaries in China's industrial sector surged 14-fold. Since 2012, China's aging population and declining workforce have added to the upward pressure on wages. China's ability to compete in low-productivity industries has decreased, and the pressure to move to an innovation-oriented growth strategy is growing. Observed issues include rising income disparities, unrest, regional inequalities in development, legislation, corruption, and other issues in state administration, pollution, population aging, and unemployment. In terms of China's future economic development, how the government deals with these issues is critical.

There have not been any indications yet that China is moving toward the "new normal," which would entail sustainable but slower economic development. The Chinese Communist Party benefits from the economy expanding at its current rate