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China has an advantage that other countries in today's troubled global economy lack: a clear path forward.Fortunately, however, China has substantial room for gains in labor productivity, which is only 10-30 percent of the level in advanced economies. When the McKinsey Global Institute analyzed more than 2,000 Chinese companies in industries ranging from coal and steel to auto manufacturing and retail, it found opportunities to raise productivity by 20-100 percent by 2030 .Though the sector has grown rapidly and now accounts for about 50 percent of GDP, low-value-added businesses still dominate. On average, service businesses in China are just 15-30 percent as productive as their counterparts in OECD countries. In addition to streamlining existing operations (for example, by introducing self-checkout systems in retail businesses), China has opportunities to complement its manufacturing sector with high-value-added business services in areas such as design, accounting, marketing, and logistics.In manufacturing itself, China can do more to automate its factories. The Chinese auto industry is capable of building 40 million cars per year for a market that currently consumes 26 million.
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