Is China’s investment-tilted growth model sustainable?
China’s economy grew by 6.9 percent in 2015, marking its first dip below 7 percent annual growth in 25 years. The slowdown is not an anomaly. Chinese GDP growth has steadily declined in recent years, and is expected to fall further: the International Monetary Fund projects growth of 6.3 percent this year and 6 percent in 2017. To explore the long-term prospects for the world’s second-largest economy, the Initiative on Global Markets polled its Economic Experts Panel on whether China’s economic growth model is sustainable. More than 70 percent say it’s not—but many point out that, even if the model isn’t indefinitely tenable, China’s growth will continue in the immediate future.
Austan D. Goolsbee, Chicago Booth
“Must we relearn the same lesson in the same painful way again?”
Response: Strongly agree
Oliver Hart, Harvard
“As China becomes richer it will resemble other rich countries: growth rates will fall, wages and consumption will rise, and investment will fall.”
Response: Agree
Caroline Hoxby, Stanford
“Of course it is unsustainable in the very long run, but near- to mid-term sustainability is at least plausible.”
Response: Uncertain
Christopher Udry, Yale
“In the long run, growth has to slow as the process of structural change approaches completion. Consumption eventually converges near income.”
Response: Agree
To assess the extent to which economists agree or disagree on major public policy issues, Booth’s Initiative on Global Markets has assembled and regularly polls a diverse panel of expert economists, all senior faculty at the most elite research universities in the United States. The panel includes Nobel laureates and John Bates Clark medalists, among others. Questions are emailed individually to the panel members, and panelists may consult whatever resources they like before answering. Members of the public are free to suggest questions.
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