The Causes Of Variation In Growth Rate Of Chinese Potential Output

After nearly 30 years of rapid growth,the growth of China's economy starts to slow down and enters the “new normal”.As the understanding of internal logic of this process is conducive to correct understanding of current macroeconomic situation and would provide a theoretical basis for discretionary regulatory policies of the government,it is of all-important practical significance to understand the internal logic of this process through proper analytical methods.As a variable of medium-and long-term economic operation situation,potential output,which reflects total supply capacity,is a very important measurement index of long-term economic growth,as well as the key to grasping the economic trends of China.On the basis of measuring China's potential output with improved method,this article takes growth rate variation of Chinese potential output as the research object,establishes the analytical framework of effects of potential output's determinants combining the effects of system and mechanism,focuses on the effects of changes of physical capital,labor forces,human capital and technical progress and utilizes statistical data to conduct case study and empirical analysis,thus providing an answer for the slowdown of China's economic growth rate from the perspective of supply.The empirical result established under the analytical framework of conditional convergence indicates that,in the process of establishing socialist market economy system,while conditional convergence existed in China's capital allocation,the adjustment of capital-output ratio remained relatively stable at different periods of time,and the efficiency of market-oriented allocation of physical capital was improved.The reform of ownership enabled non state-owned enterprises to play an increasing significant role in market-oriented allocation,which exerted a prominent positive effect on the increase of potential output.However,the relatively low profit elasticity of capital of state-owned enterprises and the squeeze-out effects of state-owned enterprises' investments would correspondingly lower the growth rate of potential output.The level of financial development,which is measured by the scale of bank credit,the credit of non state-owned enterprises,total market capitalization and saving rate,also promoted the improvement of capital allocation efficiency to some extent.However,as direct financing market even failed to play its due role,such effect is limited.The contribution degree of regional flow of labor forces,which greatly promoted the increase of value of industrial output of China,experienced a typical inverted u-shape and declined slowly after it reached the peak in 2003.This is synchronous with the release of demographic dividend during the transformation of China's dual-economic structure.China's demographic transition brought about the transition of supply structure of labor forces from infinite supply to limited supply.Empirical study shows that,such transition had occurred around 2003.Now,due to the decline of demographic dividend,the constraint of labor supply has emerged,making the model of driving economic growth with investment growth become increasingly unsustainable.As the vertical effect of labor forces,human capital did not observably promote economic growth in the past 20 years.In some years,human capital even lowered economic growth.However,with the emergence of restricting effects of labor forces,the promoting effects of human capital on economic growth would start to emerge,making human capital become a resource for effectively solving of sluggish growth of input of capital and labor forces.In terms of human capital accumulation,the efficiency of market education system is higher than that of public education system.But,under mixed education system,government subsidies would bring about more accumulation than that under a single system.Although technical progress did not observably promote overall economic growth of China in the past 20 years,it had a relatively high consistency with industrial growth.The extensive growth pattern of utilizing high growth of investment to form capital accumulation made the direction of technical progress of China deflected to capital,thus hindering the exertion of the role of technical progress as the source of economic growth.However,because of the gradual decline of deflection and the emergence of restricting effects of labor input,the promoting effects of technical progress on the growth of potential output would be enhanced.The opening up of China promoted the level of economic globalization and regionalization of China.The technology diffusion effect formed by import and export trade and foreign direct investment had played an important role in promoting technical progress of China and boosting total factor productivity.However,the transformation of China's dual-economic structure,the flow of rural labor forces towards industrial sectors and the market separation between provinces and regions hindered the exertion of such effect.In the future,environment and resource restriction would be a significant restraining factor for the sustained growth of China's economy.The sustainability of economic growth can be improved by facilitating the decrease of marginal utility of natural resources through technical progress,enhancing environmental awareness and adopting stricter environmental standards.