By Zhang Junkuo, DRC & Wu Zhenyu, Research Institute of Finance, DRC

Research Report Special Issue, No.1, 2018 (Total 1568) 2018-1-3

Abstract: The proper analysis of China’s endeavor and economic potential to catch up the advanced economies is not only an academic project, but also an issue involving the formulation of China’s development goals and regulation policies. As a late mover, China’s per capita GDP is a fundamental determinant of growth potential. Previous academic studies based on the comparison of international experience have touched upon this point, but those study results neglected the expansion of technological frontier bolstered by the growth of first movers, and simply applied static laws to dynamic problems. International comparisons based on the absolute per capita GDP underestimated the growth potential of China, whereas the international comparison based on relative per capita GDP overestimated China’s growth potential. To make an objective analysis of China’s growth potential, we need to take into account the catching-up law, technological background changes and specific domestic and international environment. In the macroeconomic management, it’s necessary to deal properly with important relations between the real growth rate and potential growth rate, the traditional drivers and new drivers, as well as the relations between government and market.

Key words: growth potential, growth transformation in different periods, new growth driver