ABSTRACT
Many observers even suspect that the slowdown may have been greater and China's stimulus plan between 2009 and 2010 may induce distortions that sacrifice the long-term growth for its short-term stabilization target. As China's per capita gross domestic product is only about one-fourth of that for the United States, its institutional quality keeps improving, and its economy continues to integrate with the rest the world, these all imply a substantial growth potential. The causes of China's slowdown in the aftermath of the 2008 financial crisis and its economic outlook have been subject to much contention. Some believe that this slowdown is merely a cyclical downturn that may be reversed. In order to reveal potential factors of productivity growth, the chapter examines three aspects, namely technical efficiency, the efficiency of factory utilization, and allocative efficiency. It includes counter-factual analysis to decomposition the causes of variations in China's productivity growth and recursively simulate the effects of policy-promoted investment booms on economic growth.
