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High Quality Development versus Productivity Reinvigoration (No.93, 2018)


By Zhang Wenkui, Enterprise Research Institute, DRC

Research Report, No.93, 2018 (Total 5368) 2018-5-28

Abstract: The central government put forward the task that we should form an index system and a policy system to promote the high quality development. This paper argues that high quality should be mainly reflected in two aspects: higher efficiency of production and greater inclusive growth. Therefore, total factor productivity (TFP) should be one of the core indicators. Viewing from the perspective of TFP, the way to improving the quality of development in China will not be smooth. In recent years, the growth rate of TFP in China has declined significantly. If the current performance is not changed, by 2035, China’s TFP will only account for 48% of the United States, far below the level of Japan in 1980 and South Korea in 1991. If China’s TFP wants to exceed the figure of 60% of the United States, the average annual growth rate of TFP in China from 2015 to 2035 must reach 2.5% or even 2.7%, and the contribution rate of TFP to economic growth must exceed over 50% when economic growth really slides down to 5% after a decade. This is a goal hard to be achieved. We must brook no delay to promote TFP. In the absence of new leading manufacturing industries, the promotion of more flow and redistribution of factors among enterprises will be beneficial to the realization of this goal, and the market mechanism of the survival of the fittest will play a due role.

Key words: development quality, TFP (Total Factor Productivity), economic growth