It always comes down to productivity

A lot of very useful information in Revising Down the Rise of China by Roland Rajah and Alyssa Leng.  The subheading is "Despite being on track to become the world’s largest economy, China will struggle to avoid a future of significantly slower long-term growth."

The economic success of a country, company, region, family or individual is dependent ultimately on its productivity.  How well the entity is able to convert resources into desired outcomes (goods and services).  Some nations, companies, and individuals are very good at this.  Others, not so much.  

The measurement of productivity is challenging and even where well defined and measured, there can be long lag times between apparent prosperity and actual productivity achievement.  The CIA consistently, and dramatically, overestimated the Soviet and Comecon economies.  Their appearance of productivity did not match the reality of their productivity.

China has a somewhat similar situation.  They have always been known to have a material and worsening demographic challenge.  There has also long been a real question as to whether they would be able to sustain the economic growth rates achieved in the early relaxation of markets when there was no concomitant increase in political freedom.  These worries are encapsulated in the question "Will they get rich before they get old."

Rajah and Leng suggest that that boat might have sailed.  The whole article is worth reading but I was particularly interested in this graph. 

Click to enlarge.

There is still a remote chance to improve their productivity by unleashing the creativity which comes with political freedom.  They have a good (though misallocated) capital base.  No telling just how much productivity might be generated with increased freedom.  But I do not think this is a path the CCP will take.  

And if they don't, I suspect that Total Factor Productivity will continue seesawing downwards.