China is benefiting from the “Lewisian” rents, basically it is transferring a huge pool of unskilled and unproductive agricultural labour to the slightly more productive industrial sector, paying low salaries compared to the rest of the world, but better salaries than those received by the peasants. Additionally, globalisation means that they are able to export industrial goods worldwide, whilst benefiting from capital inflows that support investment in capital goods, increasing demand for the unskilled workforce. Once this pool is depleted (and this could take a while), China would need new growth drivers.

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