Capital accumulation, profit rates and cycles in China from 1952 to 2014: lessons from the evolution of Chinese industry

Par Rémy Herrera, Zhiming Long

Based on the construction of our own new statistical series of stocks of productive physical capital and of enterprises’ fixed assets, and on a rigorously-defined scope of the industrial sector, we calculated various indicators of profit rates at the micro- and macroeconomic levels for China from 1952 to 2014. Such indicators of profit rates are extremely rare in the literature – while there exist numerous studies on the rates of return of capital within the neoclassical mainstream. The results obtained by these two methods (micro and macro) are quite original and can be summarized as follows: i) a tendency of the profit rate to fall is observed over the long period, for the two levels of analysis. ii) At the macro level, short-term fluctuations in the profit rates show a succession of (often incomplete) cycles whose amplitude decreases with time. iii) More than a third of the period is affected by recessive years for the cyclical component of the profit rates. The largest declines are recorded, in descending order, after the rupture between China and the Soviet Union (1961-63), during the Cultural Revolution (1968), in the course of the 1950s, during the post-Mao transition (1976-77), when a neoliberal experiment was tried (1989-91), and with the spread of globalization crises (which affected China in 1998, 2001, 2009, then since 2012). iv) It is mainly the increasing organic composition of capital that tendentiously pushes down the macro rate of profit.
JEL Codes: C13, C22, C52, C82, E22, N15, O53, P31


  • China
  • economic growth
  • capital stocks
  • capital accumulation
  • profit rate
  • decomposition filters
  • cycles
  • long-term trend
  • short-term fluctuations
  • micro and macro analyses
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