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Carsten Holz, “China’s Economic Growth 1978-2025: What We Know Today about China’s Economic Growth Tomorrow”

March 21, 2011

Carsten Holz teaches economics and currently a visiting professor at USC. His research focuses on issues of economic development in China. These include financial sector reform, the profitability of state-owned enterprises, and Chinese economic growth. Recent and ongoing research covers economic fragmentation within China, productivity growth, growth prospects, and growth strategies.


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Dr. Carsten Holz is a visiting economics professor from Hong Kong University of Science & Technology. At USC, he is teaching two courses: (1) Economics of Transition: China and (2) East Asian Economics. Dr. Holz is primarily interested in the quality of Chinese statistics. Chinese data are difficult to decipher because they are often presented in a way that is incomprehensible and has little economic meaning today.

Right now, Dr. Holz is working on a book manuscript looking at data relating to productivity: GDP, employment, and capital. One past project that came out of the research of this book was predicting the future labor force using the population census and education data. He has also conducted research on the one child policy and state-owned enterprises.

According to Dr. Holz, Chinese inequality peaked approximately three years ago. As a rough rule of thumb, China has four percentage points GDP growth every year for every one percent of labor that moves out of agriculture. As the number of migrant workers increases, the population of medium-sized cities is exploding. It has long been the case in China that urban inequality and rural inequality are low. The enormous income gap is between urban populations and rural populations. When the urban/rural ratio hit 50/50, inequality in China peaked. Now, approximately forty percent of the Chinese population is in agriculture while sixty percent is not. As urbanization continues in China, the both the GDP and the average standard of living will increase.

Another factor driving growth in China is technological development. Dr. Holz notes that China is “catching up”, and though this is less predictable than urbanization, technological development results in about three to four percentage points of growth each year. Overall, Dr. Holz predicts that the Chinese economy will continue to grow at a rate of eight percent for the next ten to fifteen years.