China's State Capitalism and Its Implications for Growth and Productivity

2019 Fiscal Year Final Research Report

• Project/Area Number: 17K03678
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Economic policy
• Research Institution: Hitotsubashi University
• Principal Investigator: Wu Harry Xiaoying 一橋大学, 経済研究所, 非常勤研究員 (90571464)
• Project Period (FY): 2017-04-01 – 2020-03-31
• Keywords: China’s state capitalism / Institution / Resource misallocation / Productivity

Outline of Final Research Achievements

With state-of-the-art methodology in growth accounting, this research project shows that market distortions have kept the Chinese economy operating with increasing costs and deteriorating productivity. China's growth dropped from over 10% per annum following its WTO entry to less than 6% over the period 2012-17. Meanwhile, China's total factor productivity or TFP growth, a critical measure of an economy's efficiency performance, turned from a rise of about 1.5% to a decline of 1.1% a year.
Our study suggests that severe resource misallocations that were attributable to various government interventions have crowded out more efficient private enterprises while exaggerating profits of state-owned or connected enterprises that have led to overinvestment in money-losing projects. This has been raising up the cost of Chinese manufacturing, hence putting the government in a great dilemma while struggling to upgrade its economy after 40 years of rapid growth.

Free Research Field

Economic growth and productivity measurement

Academic Significance and Societal Importance of the Research Achievements

中国はWTOの加盟が承認された2001年を契機に世界の生産工場として台頭し、その後の中国の急成長と世界経済との統合は、20年間におよぶ国際的なサプライチェーンの前例のない再構築を通して、世界の製造業の分野を大幅に変えた。この変化は世界のほぼすべての主要経済、特に米国、日本をはじめとするアジア全体およびEUの経済に大きな影響を与えることとなった。したがって、中国の生産性パフォーマンスをモニタリングすることは世界の政治経済の今後の変化を予測および理解するために役立つ可能性がある。