UCL Research Papers

Will China Avoid Japanification? An Empirical Analysis of China’s Total Factor Productivity Growth Determinants at the National and Provincial Level 

Author

• • Mr Javier Torre de Silva zctpjto@ucl.ac.uk Email Mr Javier Torre de Silva. (compose email, opens in email app.)
  • Student
  • Economics
  • University College London View ROR record for University College London. (opens in new tab)

Abstract

This paper contributes to the literature on the “Japanification” of China by computing updated estimates of Total Factor Productivity (TFP) growth at the provincial level in China from 1992 to 2022 and by using a TWFE panel regression to analyse its key determinants, with the goal of establishing a comparison with the 1990s Japanese TFP growth collapse. This will help answer whether China is likely to face a similar scenario of long-term near-zero growth. We find that TFP growth in China has slowed, and the key determinants of this slowdown are convergence to the technological frontier and capital misallocation, which are the same as those highlighted in the literature on Japan. This points to a substantial risk of “Japanification”, but China and Japan retain sufficient differences such that certain policies could enable China to avoid a “Lost Decades” scenario.

Keywords: China, Japan, TFP Growth, Total Factor Productivity, Capital Misallocation, Japanification, Growth Accounting, Solow Residual

How to Cite: Torre de Silva, J. (2026) “ Will China Avoid Japanification? An Empirical Analysis of China’s Total Factor Productivity Growth Determinants at the National and Provincial Level  ”, UCL Journal of Economics. 5(1). doi: https://doi.org/10.14324/111.444.2755-0877.2240