How the Chinese Economy Grows II

Capital is a key driver of growth and China’s fantastic saving rate and incredible attraction of foreign capital in FDI meant China had money to drive this growth and still does. It is true that countries that save grow more than countries that do not.  However, my last post did not touch on this. The reason is that this is a trailing factor in the Chinese story.  So, yes banking reform would help, but lack of it has not held back staggering year on year growth. Think if they had that too.

Productivity growth is premium. Take a look at what the IMF discovered in their article on Why is China Growing So Fast? The book they review is from 1997, but I think you can sense that the same productivity growth is still coming to China as investment moves inland gradually, while seaboard companies still have much to do to improve as well.

Tomorrow, I will talk about how our companies grow like China in 6 easily seen levels.

Thoughts?

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Posted in: China, Chinese Culture, Market Entry

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