Consideration on China’s New Normal Economic Growth

Abstract

Slowdown in economic growth is the defining characteristic of the ‘New Normal’ of the Chinese economy post-2008. Explanations of the slowdown have coalesced around the theses of demand deficiency and profitability decline. This paper dissects the theoretical reasoning and empirical backings of these theses, with a view to clarifying the structural-institutional conditions that underpin the economic performance. On that basis, the paper arrives at the judgement that, long term, whether or not China is able to sustain medium-speed growth or even to resume high-speed growth hinges on the rivalry between two models of economic transformation that have both been operating in the economy in recent years: namely, a production-oriented model versus a speculation-oriented model.