Is There A Secret Growth Hormone Added To China’s Economy?

Fifty years ago, you might have heard some parents in the U.S. try to reprimand their children by saying: “eat your food, there’s starving children in China.”

But that was a long time ago. Like the asteroid that wiped out the dinosaurs millions of years ago, China’s economic growth is changing the world.

An undeveloped country, suffering from famine, became an economic superpower that took over the world’s production in less than fifty years.

China keeps growing faster than any other big country ever has.

What mysteries lie behind its success?

Three crucial factors have attributed to China’s economic miracle: a gigantic population, production efficiency and intensity and capital, in other words, its total factor productivity (TFP).

Let’s dig in and examine how these three factors have taken China’s GDP to unprecedented heights.

A country’s GDP per capita is that country’s GDP divided by its population. It’s an indicator for economic performance relative to size. Since China’s economic reforms in 1978, its annual GDP per capita growth rate has been steady at around 9 percent. That’s a remarkable performance, given that the World Banks already deems a 2 percent GDP per capita growth rate to be excellent. Read more…