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Groningen Growth and Development Centre

Faculty of Economics and Business
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The Economist: China is trying to protect its economy from Western pressure

Date:30 May 2022
PWT 10.0 TFP growth China
PWT 10.0 TFP growth China

On May 26 The Economist featured an article on China's attempts to mitigate its exposure to Western influence, using data from the Penn World Table version 10.0.

The article states that China increasingly relies on domestic production in tech and energy industries, becoming more self-sufficient. Secondly China is looking to decrease its dependence on Western partners for trade and finance, by forging trade alliances closer to home and promoting the use of the yuan abroad.

It is argued that these two policy objectives create contradictions. Promoting the use of the yuan abroad, is at odds with efforts to insulate China from global financial swings. China’s push for self-reliance could potentially depress its productivity growth. Indeed, based on the Penn World Table, graph 6 in the article shows that China's Total Factor Productivity (TFP) has hardly grown since the financial crisis (2007-2009).