Expect a decade of solid Chinese growth, says economist

With projected expansion at 6-8% per year over the next decade, at this rate of growth China is set to leapfrog the US economy and become the world’s largest by 2030

The latest GDP estimates suggest that the Chinese economy grew by 6.6% during 2018, the slowest rate of expansion since 1990 - which has raised fears that growth may decelerate further in the coming years.

However, Justin Yifu Lin, currently at Peking University and former chief economist at the World Bank, said in a 21 January speech in Frankfurt that China has the potential to keep growing in the 6% to 8% range for the coming decade, and remains on track to become the world's largest economy by 2030.

Lin was speaking at SAFE (Sustainable Architecture for Finance in Europe), which is a cooperative venture between the Center for Financial Studies and Goethe University Frankfurt.

"Even after 40 years of extraordinary growth, China still has a huge potential for dynamic economic growth", said Lin.

He noted that China's per capita GDP in 2008 was around one fifth of the per capita accrued by the United States, at 21%, representing a similar percentage observed in Japan in 1951, which grew by 8-9% for another twenty years, and that China still has similar growth potential.

His presentation was entitled "The Economics of China's New Era", and Lin said that the reform process will continue into this new era. There is still scope for using existing technology to increase efficiency and create "dynamic economic growth", and the economy will continue to be boosted by construction and infrastructure spending. And with its high savings rate, China is well positioned to maintain high investment growth rates.

Lin forecasts that China will become classified as a high-income country by 2025. At present the World Bank definition of a high-income country is one with a per capita GDP of over US$12,056.

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Date

29 Jan 2019

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