By Liu Shijin, Liu Peilin and He Jianwu, Research Team on Issues about China's Productivity, Development Research Center of the State Council (DRC)

Research Report No 171, 2014 (Total 4,670)

Abstract:

Some scholars recently said that total factor productivity has made little contribution to China's rapid economic development and has played a less important role than it has in other East Asian economies. By literature review, empirical research and international comparison, the report gives an analysis of increased productivity contribution and future potential.

The research shows that China's total factor productivity has been rising rapidly since reform and opening-up, playing a very important role in the country's rapid economic growth. It finds that the contribution would be more noticeable if the improved technological level of input was considered. In recent years, the growth of total factor productivity is slowing, similar to what advanced economies experienced in similar stages, while fundamentally different from Latin American countries caught in the middle-income trap. While China's improved productivity was mainly the result of technological progress and flow of factors among different sectors, the focus should shift to original innovation and competition within the same sector.