David Dollar (Brookings Institution)

China has gotten COVID-19 under control and is poised to bounce back strongly with 8% growth in 2021. But in the medium term it faces daunting domestic and external challenges. On the domestic side, demographic shifts will result in a declining labor force and put a premium on geographic mobility, especially rural-urban migration. Also, over-reliance on investment has led to an alarming rise in debt to GDP, risking a financial crisis. To grow well while managing these issues of labor and investment will require more innovation as a source of growth. On the external side, the trade war with the U.S. is not likely to be resolved quickly with the new Biden administration. China’s recent agreements with Asian partners and Europe, however, provide new opportunities that complement domestic reforms.