by Ben Westmore, China Desk, OECD Economics Department The goal of the Chinese government to achieve a “moderately prosperous society in all respects” by 2020 is centred around improving social welfare throughout the population. One of the essential ingredients to doing this is a further reduction in economic inequality. As underlined in the OECD 2017 China Economic Survey, China’s income inequality as measured by the Gini coefficient has been on a declining trend since 2008 after having climbed to a very high level (Figure 1, Panel A). This reflects some regional income convergence, as the ce ..read more

by Michael Pettis, Peking University and Carnegie-Tsinghua Center for Global Policy, drafted by Shashwat Koirala, OECD Economics Department As a part of the Chief Economist Talks series, the OECD hosted Michael Pettis, Peking University and Carnegie-Tsinghua Center for Global Policy on May 25, 2020. This blog presents the takeaways from his presentation. More information regarding the OECD’s Chief Economist Talks, including previous speakers, can be found here. On May 22nd, 2020, China announced that it would not set a GDP growth target for the first time in decades, given the uncertainty spur ..read more

By Nigel Pain and Elena Rusticelli, OECD Economics Department Developments in China have a considerable impact on the global outlook, with China accounting for over one-quarter of projected global GDP growth in 2021-23, and around 12.5% of world trade in goods and services. Among the factors that could significantly pull growth down in China, vulnerabilities in the property sector loom large. The property sector has been a strong source of growth for the Chinese economy for many years, but this has been accompanied by rising leverage of developers and, more recently, households. Concerns about ..read more

by Patrick Lenain and Kosuke Suzuki, OECD Economics Department While the world is struggling to exit from the coronavirus crisis, the region Asia & Pacific is a notorious exception: many countries in the region have stopped the COVID-19 pandemic after the first wave, and they quickly returned on a path of growth in the second half of 2020 – a rare accomplishment. The OECD projects that the region’s recovery will continue in 2021 and 2022 (Table 1). The region’s current resilience is in sharp contrast with the late 1990s, when the Asian Financial Crisis hit it very hard (Figure 1). Governm ..read more

by Nigel Pain and Elena Rusticelli,  Greater international integration has modified the transmission channels and the impact that external shocks have on domestic economies via increased trade openness and exposure to global financial developments. One important change, discussed in the special chapter of the latest OECD Economic Outlook, is that growth prospects in OECD economies have become more sensitive to macroeconomic shocks in non-OECD countries. This reflects the rising share of the emerging market economies (EMEs) in global trade and finance. EMEs now account for one-fifth of wor ..read more

by Margit Molnar and Patrick Lenain, Country Studies Branch, OECD Economics Department A short-term slowdown? Although China’s economic growth has slowed, it is still very robust by international standards and contributes to worldwide economic expansion. Consumption is supported by steady employment growth and rising incomes. Households are spending increasingly on items such as e-commerce and shared services. Labour shortages keep wage growth relatively high. However, continuing trade frictions are undermining exports and creating uncertainties. Small and medium-size enterprises are dispropor ..read more

by Margit Molnar, Head of China Desk, OECD Economics Department On several measures, China has caught up with OECD economies in the area of innovation. On the input side, R&D spending as a percentage of GDP has reached 2% (Figure 1), on par with major European countries. This is more than in other middle-income countries such as Mexico, Turkey or Chile do, though still much less than in the leading innovators such as the US, Japan, or Korea. On the output side, measured by the number of patents, China has become a global leader, surpassing the United States in 2015. In that year, China’s ..read more

By Margit Molnar and Ben Westmore, China Desk, OECD Economics Department Growth in China has been slowing gradually, but GDP per capita remains on course to almost double between 2010 and 2020. As a result, the Chinese economy will remain the major driver of global growth for the foreseeable future. Patterns across the country vary, however: in some areas slowing investment has brought down growth, while in other, mainly less-developed ones, both investment and GDP are growing at or close to double-digit rates (Figure 1). Growth in recent years has been fuelled by fast-rising credit and has c ..read more

By Sean M. Dougherty, Head of the Mexico Desk, OECD Economics Department. China’s spectacular growth during the 1990s and early 2000s made it the envy of many other emerging economies. Yet more recently, relative labour costs have risen substantially, and economies such as Mexico’s, which lost export market share for some time, have made a partial comeback. However, Mexico’s increasing competitiveness masks one of the country’s fundamental concerns, which is weak productivity improvements. In a new working paper being released today, while the Global Forum on Productivity opens in Lisbon ..read more