China’s institutional impediments to productivity growth

ACRI’s Professor James Laurenceson discusses issues surrounding new estimates of productivity change in China calculated by Professor Harry X. Wu. He makes two points of reflection on a well-constructed and thought-provoking paper that presents a sombre view of China’s productivity performance. First, living standards are ultimately reflected in labour productivity and China’s labour productivity has continued to increase at a rapid rate. Second, total factor productivity (TFP) is notoriously difficult to measure and extremely low estimates sit uncomfortably with what else we know about China’s economy, such as the rise of a highly efficient private sector. Nonetheless, Professor Laurenceson agrees with Professor Wu that the need for China to promote TFP growth has become increasingly important. 

Note: This article was published in I. Day and J. Simon (eds), Structural Change in China: Implications for Australia and the World, Reserve Bank of Australia Conference Proceedings, March 17-18, 30-36. 

Author: James Laurenceson, Deputy Director and Professor, Australia-China Relations Institute, University of Technology Sydney.