China’s investment-driven global growth role underestimated, study finds
A new report from a Chinese think tank reveals that traditional measures don’t accurately reflect the investment gap between China and the US, nor its wider economic implications. Released on Sunday, the study argues that China's contribution to global growth and the effects of its economic transitions are frequently underestimated. The think tank notes that investment goods in China are about 37% the cost of those in the US and calculates a purchasing power parity of 2.6 yuan for every US dollar, which exceeds both market values and typical estimates. The authors suggest that as China moves towards more modern sectors, rising prices may help align the yuan’s worth with its true economic fundamentals, bolstering its strength as a currency.
Key facts
- China’s investment-driven role in global growth is underestimated according to a new study.
- Standard metrics understate China’s physical investment gap with the US.
- The analysis was published on Sunday by a Chinese think tank.
- China’s contribution to global growth and spillover effects are insufficiently understood.
- Investment goods in China cost about 37% of US levels.
- Investment purchasing power parity is calculated at 2.6 yuan per US dollar.
- The yuan’s valuation is expected to strengthen as China’s economy recovers.
- The study comes as Beijing seeks to expand its economic and financial influence.
Entities
Institutions
- Chinese think tank
Locations
- China
- United States