Research On Long-term Trend Of China's Economic Growth And Its Change Characteristics In The New Normal

In 2012,China entered a new normal of economic development,and the economy shifted from high-speed development to medium-high-speed development.Regarding the structural downturn of China's economic growth,the central government proposed "structural reforms on the supply side" in 2015,focusing on solving problems in the process of economie development and transformation from the supply side.However,in recent years,faced with the difficulties of the"three-phase superposition" and the international unfavorable factors such as China-US trade friction,the contradictions in the process of China's economic transformation have been increasingly prominent,and the difficulty in comprehensively deepening the reform process has been increasing.Therefore,it is important to accurately and objectively decompose and measure the long-term trend of China's economic growth and analyze the characteristics of the phased changes in the long-term trend growth rate under the new normal,especially for policy authorities' policy development.On the basis of foreign research,a lot of Chinese scholars have made many attempts to measure the trend of China,s economic growth.At present,the domestic measurement of the long-term trend of economic growth mainly adopts the production function method based on the concept of potential output and the univariate statistical trend decomposition method,but both methods have certain problems.Firstly,when measuring based on the production function method,the subjectivity of production function selection and the variability of factor trend calculations make the production function method need to be improved.Then,based on the univariate statistical trend decomposition method,the lack of support from economic theory has become a major problen in this approach.Compared to the general method applied by domestic scholars,the KPSW theory based on the study of King,Plosser,Stock and Watson(1991)has three advantages in the long-term trend decomposition calculation of economic growth.Firstly,since the theory is based on the cointegration economic system,the decomposed long-term trend of economic growth can make rational use of the cointegration relationship between economic variables and add useful information of multivariate.Secondly,the theory first needs to identify the structural shock on a certain economic basis,and then accumulate the long-term impact effect before the trend can be measured,so the long-term economic trend has a strong economic meaning.Thirdly,the theory can also consider the effects of structural breaks.Therefore,under the KPSW theory,this paper first identifies and analyzes the structural shocks of the constructed Chinese economic variable system.Based on this,the long-term trend and cyclical component of China's economic growth since the reform and opening up have been decomposed.Then,this paper also attempts to construct an economic variable system with a data interval of 1952-2018 and set 1978 as a structural break point to investigate the trend decomposition effect with structural break.Finally,this paper gives a detailed description and connotation of the characteristics of the phased changes in the long-term trend growth rate of the new economic normal period after 2012.The main findings of this paper are as follows:Firstly,the first long-term shock is regarded as an "investment shock,and the second long-term shock is regarded as a "trade shock,when identifying the structural shock of a variable system.And this paper finds out the first long-term shock has a positive long-term impact on output,consumption,and investment while having a negative long-term impact on net exports.The second long-term shock has no long-term impact on investment,but has a positive long-term impact on output,consumption and net export.Secondly,this paper uses the multivariate BN decomposition and BQ decomposition to decompose the long-term trend of China's economic growth.It is found that the long-term trend growth rate,stochastic trend and cyclical component obtained from the idea of BQ decomposition are in good accordance with the characteristics of China's economic development since the reform and opening up.However,the trend and cyclical component obtained based on multivariate BN decomposition are relatively in poor performance.Thirdly,this paper attempts to use 1978 as a structure break point to perform multivariate BN decomposition with structure breaks.It is found that the long-term trend growth rate of the output is better than the result of multivariate BN decomposition without structure breaks in the first variable system.At the same time,the multivariate BN decomposition with structural breaks has obtained a fixed output growth rate with differences before and after 1978,which can provide a certain reference for assessing the contribution of reform and opening up to China,s economic growth.Fourthly,based on the results of BQ decomposition,the paper first finds the long-term trend growth rate in the new normal is only 7.07%,and this caused that the average output growth rate is ouly 6.90%.Then,from the perspective of the two random trends that constitute the long-term trend of output,this paper finds that the growth rates of the two random trends are relatively downward and their fluctuations are significantly reduced after entering the new normal,but the long-term trend and the change in its growth rate are dominated by the first random trend.Fifthly,this paper believes that the phased downward shift of the long-term trend growth rate in the new normal is determined by the long-term supply factor.Based on the supply factor,the study believes that the decline of capital accumulation rate,the disappearance of demographic dividend,the appearance of human capital mismatch problem and the reduction of technological progress are the main reasons for the continuous decline in the growth rate of output long-term trend and the continuous decline in the actual output growth rate in the new normal.The main innovation of this article is that,firstly,this article identified the structural shocks and analyzed the economic impact of structural shock before decomposing output into trend and cycle,so the decomposition of output trend and cycle has a certain economic basis.Secondly,this article explores the changing characteristics of the long-term trend of economic growth from multiple perspectives,especially from the perspective of the two random trends that constitute the long-term trend.Thirdly,this paper attempts to use the multivariate BN decomposition with structural breaks to decompose the long-term trend of output since the founding of China.This method is relatively rare in domestic academic research,so the application in this article will be a meaningful attempt.