– particularly in the central and western regions of the country ( berkelmans and wang 2012 ) ( graph 3 ). nevertheless, the pace of urbanisation is likely to slow over time. graph 3 growth of the capital stock is also likely to slow, in part because there has already been a substantial rise in the capital stock as a share of labour, but also because households are likely to want to consume an increasing share of the country ’ s rising income. even so, the capital stock per worker is only a small fraction of the us level so there is clearly scope for continued rapid growth in china ’ s capital stock. perhaps the greatest source of uncertainty though is the speed with which the level of productivity in china will approach that of the advanced economies. history suggests that as a country draws a little closer to the “ productivity frontier ” it often becomes more difficult to sustain the same pace of productivity growth. it tends to get a little harder to pursue the reforms that help to drive productivity growth. those reforms that yield the best returns, and are the easiest to pursue, have already been done ; the low hanging fruit has already been picked. 2 in a similar vein, it is easier to emulate – and even improve upon – a range of production processes that have long been in use somewhere else in the world. but it is harder to adopt newer, more advanced, technologies and efficient ways of organising production processes across a wide range of activities, including the provision of services ( which account for a substantial share of economic activity in advanced economies ). still, by lardy ( 2012 ) and the world bank ( 2012 ) emphasise further reforms of banking and financial markets more generally, hukou reform and liberalisation of energy prices. bis central bankers ’ speeches any reasonable estimate, china remains a long way from the productive frontier. so there is considerable scope for it to continue to catch up with the advanced economies. 3 a range of estimates for potential output growth have been constructed based on predictions of these three elements of production. the oecd ( 2012 ) predict that potential output growth for china will decline from around 10 per cent seen during the 2000s, to 9½ per cent in 2013, and then gradually to 5 per cent by 2025. 4 last year, the chinese authorities themselves lowered the official growth target from 8 to 7½ per cent, though the economy had for years consistently overshot even the higher target. another way we can try to gauge the potential output of the economy is to

i have spoken on previous occasions about some of the options here and the need for australia to be a great place for businesses to expand, invest, innovate and hire people. it is important that as a country we focus on this, not only to deal with our current challenges but also our future ones. i want to conclude by reminding you that the foundations of the australian economy are strong and that at some point the pandemic will pass. we have handled the health crisis better than many other countries and our economy is also faring better than many others. public balance sheets in australia https : / / www. rba. gov. au / speeches / 2020 / sp - gov - 2020 - 07 - 21. html 12 / 13 21 / 07 / 2020 covid - 19, the labour market and public sector balance sheets | speeches | rba are also in a strong position and they have been used to deliver unprecedented monetary and fiscal support to the australian economy. these measures are helping to provide an important bridge to the days when the recovery is well entrenched and we are making renewed progress towards full employment. thank you for listening and i am happy to answer your questions. endnotes [ * ] i would like to thank ellis connolly for assistance in the preparation of this talk. for a fuller discussion of these measures see debelle g ( 2020 ), ‘ the reserve bank's policy actions and balance sheet ’, speech to the economic society of australia, 30 june. available at : < https : / / www. rba. gov. au / speeches / 2020 / sp - dg - 2020 - 06 - 30. html >. see bartsch e, j boivin, s fischer and p hildebrand ( 2019 ), ‘ dealing with the next downturn : from unconventional monetary policy to unprecedented policy coordination ’, suerf policy note, issue no 105. available at : < https : / / www. suerf. org / policynotes / 8209 / dealing - with - the - next - downturn - from - unconventional - monetary - policy - tounprecedented - policy - coordination >. the board also reviewed the experience of other advanced economies with unconventional monetary policy measures at its august 2019 meeting. see lowe p ( 2019 ), ‘ unconventional monetary policy : some lessons from overseas ’, address to australian business economists dinner, 26 november. available at : < https : / / www. rba. gov. au / speeches /