China’s Growth: Can Goldilocks Outgrow Bears?

May 27, 2015

Preview Citation

Format: Chicago

Wojciech Maliszewski, and Longmei Zhang. China’s Growth: Can Goldilocks Outgrow Bears?, (USA: International Monetary Fund, 2015) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper analyzes the recent growth dynamics in China, evaluating both cyclical positions and long-term growth prospects. The analysis shows that financial cycles play a more important role than traditional inflation-based cycles in shaping the dynamics of growth. Currently, the ‘finance-neutral’ gap—our measure of the financial cycle—is large and positive, reflecting imbalances accumulated in the economy since the Global Financial Crisis. A period of slower growth is therefore both likely and needed in the near term to restore the economy to equilibrium. In the medium term, growth will slow as China moves closer to the technology frontier, but a steadfast implementation of reforms can ensure that China follows the path of the “Asia Tigers” and achieves successful convergence to high-income status.

Subject: Capacity utilization, Output gap, Potential output, Production, Productivity, Total factor productivity

Keywords: Asia and Pacific, Capacity utilization, China, Economic miracle, Global, Growth story, Inflation dynamics, Output gap, Output gap estimate, Output gap in China, Output gap measure, Potential growth, Potential output, Potential output gap, Production function approach, Productivity, TFP growth, Total factor productivity, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/113
Stock No:

WPIEA2015113
ISBN:

9781513504643
ISSN:

1018-5941

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