Will Chinese growth slow after the Lewis turning point?

Abstract

The paper argues that China's economic growth will not necessarily slow after China reaches the Lewis turning point (LTP) when wages and subsequently costs of production, as a result of the exhaustion of the unlimited supplies of labor from rural areas, are increasing. Reaching the turning point leads to significant structural change signifying that China enters a new phase of development in which those endogenously determined factors such as human capital, innovation, R&D expenditure and technological progress begin to play more important roles than contributions made simply by inputs of physical capital, labor and resources in enhancing economic growth. To achieve the continual growth, certain conditions are needed in the transition toward and beyond the turning point including among others the institutional reform which enables China to further transform itself in order to embrace a new mode of economic growth driven predominantly by efficient, sustainable and equitable considerations. Show more