…based on comparisons with its more developed neighbours, Mr Lueth argues it is “a myth that the growth of China’s Asian peers slowed when they were at China’s level of development, as measured by GDP [gross domestic product] per capita”.
Taiwan managed to sustain growth rates of around 7 per cent a year for a decade after reaching China’s current level of GDP per head at purchasing power parity, around $11,000, in 1992. South Korea even managed 8 per growth for a period, having reached China’s current level in 1989.
“Taiwan and Korea still had a lot of growth left [at China’s current] level of development,” Mr Lueth says.
Singapore, however, soon trended down to growth of around 5 per cent (from 1979 onwards), while Japan plunged precipitously to 3 per cent (from 1969).
This analysis, then, would seem to suggest that, while a continuation of robust Chinese growth is far from guaranteed, it is not inevitable that it has to slow from here.
An alternative way of looking at the same data would be to analyse Asian growth with respect to what Mr Lueth calls the “technological frontier”. For instance, while China has reached the level of GDP per capita enjoyed by South Korea in 1989 (in PPP terms), it is further behind the US (the embodiment of the technological frontier) than Korea was in 1989 because the US economy has continued to expand in the past 28 years.
On a PPP basis, China’s GDP per capita was only 21.2 per cent of that of the US in 2014, according to LGIM.
Using this as the reference point, China could expect to see robust growth for the next 15-20 years if it followed the trail blazed by its neighbours…
That is from Steve Johnson at the FT. Please note I am presenting this material, not endorsing it.