China’s Investment and GDP Growth Boom: When and How will it End?

Abstract

East and Southeast Asia, with nearly a third of the world’s population, has over the past half-century become the most rapidly growing region in the world. With the exception of the Philippines and Myanmar, all of the economies in the region have experienced at least one decade — and often several decades — of per capita GDP growth rates of 5 per cent a year and more. No other major part of the developing world has experienced anything comparable — whether it is South Asia (despite the recent high growth of India) or Sub-Saharan Africa, or most of Latin America. China’s high growth of the past three plus decades is extraordinary in the broader developing country context but is not unique in the East Asian context. Other economies, notably the Republic of Korea (1963–97) and Taiwan (1961–97), have grown somewhat longer at rates of 5 per cent per capita or more a year. Korea and Taiwan did not grow as rapidly as China during their high growth period, but Japan grew just as rapidly in the 1950s and 1960s although only for two not three plus decades (Table 2.1 and Figure 2.1). China’s experience is unique, however, in one respect in that it grew at a very fast 9 per cent rate for a long period starting from a lower per capita income than the other fast developers (Figure 2.2).