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China's 2009–2050 Economic Growth: A New Projection Using the Marxian Optimal Growth Model
Abstract
According to Shen and Onishi, China's economy is predicted to reach zero-growth in 2040 and 2033, respectively. Both studies have attracted significant attention in academia. However, their theoretical models have two inadequacies. First, the Euler equations used to depict the dynamic path of the economy are not derived. Second, the labor growth rate is not incorporated into the model. These inadequacies make their empirical projections arbitrary under strict assumptions. Therefore, we derive the Euler equations of the model using dynamic formulations by incorporating the labor growth rate into our model. Using the Euler equations, we depict the path of the Chinese economy from 2009 to 2050. The result indicates that, in 2026, China's GDP would surpass US GDP. Moreover, around 2050, China's GDP is projected to be almost 2.22 times higher than US GDP, while the GDP per capita will be half the US GDP per capita.
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References
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