Home > China > What 7.2% Means for China’s GDP

What 7.2% Means for China’s GDP

Chinese Premier Li KeQiang says only 7.2% growth in GDP is needed to sustain employment at current levels in China.

Two things to consider:

  • As this growth rate is about triple what is normal for developed economies, if this rate of growth is really necessary to meet employment targets, it’s a strong indication that there is still a very large number of people entering the non-agricultural workforce in China.  China’s population is growing very slowly now and will soon begin to decline very slowly. So the pressure on employment must be coming from either demographic changes or continuing big moves into the non-agricultural workforce. It’s hard to imagine how much longer this can happen with a slow-growing population.
  • Growth of 7.2% would add about $500 billion to China’s GDP. To reach the same level of nominal GDP growth, the US would have to have annual growth of 3.3%. In fact, growth of around 2.3% is more likely. If you project these two growth rates into the future, and assume China’s GDP was $6.99 trillion in 2013 and the US GDP was $15.06 trillion, in which year would China’s economy become larger than the US economy?

A bonus point on the midterm to the first student who gets the answer right in the comments!

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Categories: China
  1. 1995
    November 6, 2013 at 5:42 pm

    2030

  2. Zulfiqar Raza
    November 7, 2013 at 9:37 pm

    By 2030, the economy of China would be $23trillion and the economy of USA would be $22trillion.

  3. 0211
    November 8, 2013 at 12:43 am

    1995 is right… According with these numbers China’s economy will become larger than the US economy in 17 years.

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