China’s Middle-Income Trap – Productivity goes negative

Chinese productivity growth has gone into reverse for the first time since the Cultural Revolution tore the country apart in the 1970s, according to a new study…That means that despite dramatic rises in the cost of labor, energy, credit and property, the average Chinese company has actually been getting less bang for its buck since the global financial crisis – a classic sign of the “middle income trap” that many other emerging economies such as Brazil or Malaysia have found themselves stuck in after promising starts.

“The findings strongly suggest that the over-building, the over-capacity and the ‘advance’ of the less efficient state into private sector markets have increasingly dragged on China’s growth,” wrote the report’s author, Harry Wu, senior advisor at the Conference Board China Center for Economics and Business.

Chosen excerpts by Job Market Monitor. Read the whole story at Productivity goes negative as China slips toward middle-income trap: study | Reuters.