SHANGHAI ¨C China¡¯s economic slowdown ¡ª from a nearly 10 percent annual output gain in 2007 to below 8 percent today ¡ª has fueled widespread speculation about the economy¡¯s growth potential.
While it is impossible to predict China¡¯s future growth trajectory, understanding the economy¡¯s underlying trends is the best way to derive a meaningful estimate.
Whereas short-term demand largely dictates an economy¡¯s real growth rate, its potential growth rate is determined on the supply side. Some economists ¡ª citing indicators like investment ratios, industrial value-added and employment ¡ª compare China to Japan in the early 1970s.
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