Hung Tran
After several decades of spectacular growth, a variety of structural problems have become more challenging for China. Growth based on investment and export has slowed in recent years. Importantly, China’s population is aging rapidly with the labor force having already shrunk. As a consequence, total factor productivity growth has been slowing—to 1.1% per year in the past decade and a half, less than a third of the rate in the previous three decades. In addition, China is engaging in a strategic competition with the US and Europe, making for a difficult, and at times hostile, world environment for its economy compared with the previous period. Against this backdrop, Chinese leaders especially President Xi Jinping have tried to transform the Chinese economy from the old investment and export-based model to one driven by innovation—basically to improve productivity and compensate for the
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