International historical experience indicates that rapidly growing developing countries eventually slow down as income levels rise. Analysis of this experience indicates that the People's Republic of China (PRC) is approaching per capita income levels at which growth typically slows.
The fact that the PRC has grown at unprecedented levels, maintained a highly competitive exchange rate, sustained consumption at a small share of GDP, and is now facing rapid population aging, suggest the possibility of a growth slowdown in the future.
As slowing growth is not a mechanical phenomenon, there are policy options to delay its impact. In this context, several recommendations are proposed to prolong the period of rapid growth in the PRC, focusing on reforms to address the three highest risk factors: exchange rate undervaluation, low consumption and rapid population aging.