Friday, February 22, 2013

Can China not slow down?



I have told my students all the time that there is one thing on China’s side because Japan is already at the tech frontier, whereas China can still bring up per capita GDP even if working age population or total population shrinks. That could still bring China’s overall GDP to positive growth even with population shrinks, even if the huge gravity of shrinking working age population. But that also requires China to release its human capital to allow and facilitate its citizens to gain access to information and pursue their own ambitions. Currently a large part of this system is not there and the system is actually getting worse. So it is possible for China to get stuck at mid income as well. Lower income never means higher growth; it means potential for higher growth ;=).

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