Enhancing China’s Medium-Term Growth Prospects: The Path to a High-Income Economy

China's current growth model— which has delivered steady and robust growth for two decades and liftedsome 500 million individuals out of poverty—has become too reliant on credit and investment, and hasbegun to experience diminishing returns. Delays in advancing the government's reform agenda will meanthat vulnerabilities continue to grow and the probability of stalled convergence increases. On the other hand,with reforms to accelerate TFP growth and shift the economy away from its continued reliance on capitalaccumulation, China can grow at a healthy pace and maintain its convergence toward the level of highincome economies. Evidence from China's provinces indicates that there is room to improve productivityand sustain such a convergence toward the level of more prosperous economies.