China’s potential growth may become very low

To examine China’s potential growth over the period 2020-2040, we: Begin with demographic data, which are dominated by population ageing; Look at productivity gains. On the one hand, Chinese companies are clearly modernising and there is clear improvement in the education level of the population . B ut on the other hand, the catch-up of the productivity shortfall relative to OECD countries is slow, which may reflect structural shortcomings of the Chinese economy: overindebtedness and zombie firms, high weight of state-owned enterprises, inefficient investments. It is possible to build a scenario of very low potential growth in China (between 1.5% and 2%), which would have a major effect on global trade and global demand for commodities.