A Study Of China’s Economic Growth In The Dual Economic Struture

After over 30 years of rapid growth, China’s economic and social development has scored remarkable achievements. However, the annual economic growth rate began to decline from more than 9% to 7.7% in 2012, even to 7.4% in 2014. There will be a continuous slowdown in economic growth and a growing pressure on sustainable development, and the "New Normal" of China’s economy begins to emerge gradually in 2015. Meanwhile, the urban-rural dual economic structure is one of the most striking features and prominent contradictions of China’s economy. Basing on the dual economic structure of China and the "New Normal Situation" of economy, our paper will study the driving forces of economic growth.Firstly, focusing on the research contents, the author will establish two amended Production Function Models. One is the Conventional model that doesn’t contain the factors of the dual economic structure, while the other does. In the Conventional Model, the output elasticity of the fixed assets investment, labor force, education and scientific research, no matter they are in rural or in urban areas, is being studied as an entirety. Meanwhile, the input of the fixed assets investment and labor force in urban and rural areas is studied respectively in the model that contains the factors of the dual economic structure, (Owing to the difficulties of data collection, the input in education and scientific research isn’t studied respectively.)Then, the differences and similarities of the two models are studied through the analyzing of their respective regressed output elasticity of the investment in capital, labor force, education and research. On this basis, the author studies, according to the Maximum Principle, the distribution of the whole social fixed assets investment and the investment in education, research and labor force between rural and urban areas, thus the maximum output of China’s GDP is achieved theoretically. Finally, based on the results of the empirical analysis and the comparative analysis, the author draws to a conclusion that it’s undoubtedly an important driving force of China’s economic growth to further bias the fixed assets investment towards the rural areas and increase the investment in education and research.