McKinsey, the business consultancy, calculates that labor productivity in China is only 15-30% of the average for countries of the Organization for Economic Co-operation and Development, reports the Financial Times. That implies significant room for further catch-up growth before China reaches the global technological frontier where further gains become more difficult. In a report McKinsey warns the need to reform is urgent given that the old model continues to cause rising debt and falling returns on corporate investment. The report said China’s economy could be worth $5.6tn more by 2030 if it steers away from investment-led growth and embraces productivity reforms.
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