The effects of China’s growth slowdown on its provinces: Disentangling the sources

Since 2007, China's growth has fallen from around 10% to about 6%–7% per annum. This paper investigates the experience of this slowdown at the provincial level. We use a vector-autoregressive modelling approach and annual data from 1978 to decompose each province's growth into various factors. We find that (a) all provinces experienced the slowdown; (b) there is considerable variation in this experience across provinces; (c) national factors dominate the provincial slowdown while province-specific factors explain most of the interprovincial variation; (d) when the national factor is separated into supply and demand components, the supply component dominates.