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ents need to stop selling land as a source of revenue to finance local government costs, such as infrastructure development. For labor, there are two major problems to address: ? The hukou system restricts mobility ? Labor force participation rates need to increase, particularly amongst older workers. Entitlement to social services, including health services and education, should be delinked from the hukou system. The retirement age should be extended, which will also relieve some of the pressure on pensions. Innovation is seen as a key ponent of future growth. To promote innovation, private sector Ramp。LESSON 2 China 2030 A Report by the World Bank and the Development Research Center of the State Council of the People’s Republic of China Over the last three decades, China has ? Averaged 10% GDP growth per year ? Lifted over 500 million people out of poverty ? Bee the second largest economy in the world ? Bee the world’s largest manufacturer and exporter ? Bee home to 2 of the top 10 banks in the world, 61 panies on the latest Global Fortune 500 list, the world’s second largest highway work, the world’s 3 longest sea bridges, 6 of the world’s ten largest container ports. But GDP growth is expected to slow from around % now to about 5% in 20262030. This is for several reasons: ? Much of the growth from transferring resources out of agriculture and into industry has already been achieved ? The capitallabor ratio will rise, signaling a smaller contribution to growth of continued capital accumulation ? The old age dependency ratio ( of persons 65/ of persons 1564) will double in the next two decades ? The labor force will start to shrink by 2020 ? Total factor productivity will decline as gains from first generation policy reforms and absorption of foreign technologies are exhausted. It is also expected th