Since the beginning of China’s economic transformation in the early 1970s, investment
has been a key driver of China’s growth and has contributed to substantial improvements
in living standards. Over three decades of average annual GDP growth of 10%, disposable
incomes have soared, lifting hundreds of millions of people out of extreme poverty.
The share of the population living in extreme poverty has declined from above 90%
in the early 1980s to less than 10% today. However, this growth model is no longer
sustainable. Returns on investment have declined, although they are still higher than
those of the Asian Tigers. Excess capacity is plaguing several sectors, and negative
externalities have been onerous, notably in terms of environmental degradation and
income inequality. A key objective of the 13th Five-Year Plan (2016-2020) is therefore
to move the economy towards a path of more balanced, sustainable and inclusive growth.