Capital accumulation and cycles in China. An analysis based on industrial profit rates (1952-2014)

Abstract

Based on originally-constructed statistical series of stocks of productive physical capital and of fixed assets of the industrial sector, we calculate indicators of profit rates at the micro and macroeconomic levels for China from 1952 to 2014. The results obtained by these two methods (micro and macro) are quite similar: i) a tendency of the profit rate to fall is observed over the long period. ii) At the macro level, the short-term fluctuations in the profit rates show a succession of 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, in 1961-63, 1968, the 1950s, 1976-77, 1989-91, then in 1998, 2001, 2009, and 2012). iv) It is mainly the increasing organic composition of capital that tendentiously pushes down the macro rate of profit.