Key Factors of China’s Fast Economic Growth: Dynamics of China's Economic Expansion

Abstract

According to economist, increasing population growth rate is harmful for environment and causes many other challenges for economic growth and development of a country. In past, China was also facing the problem of high population growth rate. This study investigates the dynamics of China's economic expansion through an examination of key macroeconomic indicators such as population growth rate, trade openness, inflation, labor force participation rate, and gross fixed capital formation. Utilizing time series data from 1990 to 2022 sourced from World Development Indicators (WDI), ARDL model is used to analyze these relationships. Our short-term analysis indicates that labor force participation rate, gross fixed capital formation, inflation, and population growth rate have a positive impact on economic growth, while trade openness exerts a negative influence. In the long term, gross fixed capital formation does not significantly affect economic growth. The positive impact of population growth on economic growth aligns with the SDG target to achieve higher levels of economic productivity through diversification, technological upgrading, and innovation, including through a focus on high-value added and labor-intensive sectors.