Social Sciences in China (Chinese Edition)

No. 4, 2023

Prospects for Economic Growth under the Long-Range Objectives of Socialist Modernization: Based on the Measurement of the Potential Economic Growth Rate

(Abstract)

Zhang Xiaojing and Wang Yong

The importance of economic growth in achieving the long-range objectives of socialist modernization has attained further prominence. Within the framework of growth accounting plus human capital, we examine the impact on China’s potential economic growth rate of the “three new factors:” the acceleration of population ageing, the impact of the COVID-19 pandemic and the technological decoupling of China and the US. The findings of our assessment of the “reform dividend” of supply-side structural reform policies show that in the baseline scenario, China will have an average annual growth rate during the 14th Five-Year Plan period of more than 5 percent, resulting in a GDP per capita of US$24,300 in 2035, that is, China will have reached the medium-sized developed country level of US$24,200 per capita. Once the “three new factors” are taken into account, the potential growth rate in the same period decreases by one percentage point per year compared to the baseline scenario, and China’s GDP per capita in 2035 will be US$22,800, which is US$1,500 lower than the baseline scenario and below the level of medium-sized developed countries. The incorporation of supply-side structural reforms will raise the potential economic growth rate by around one percentage point per year over the next thirty years, effectively offsetting the adverse effects of the “three new factors” and enabling China to steadily achieve its vision of socialist modernization.