At present, the overall recovery trend of China’s economy is relatively weak, showing a new characteristic of downward-trend growth rate with higher volatility. The irregularity of economic growth trends significantly weakens the significance of monitoring the real-time dynamics of economic growth, and researchers begin to pay more attention to the structural changes of trend variables such as the long-term potential growth rate.

Starting from the econometric theory, this paper elaborates on the advantages and disadvantages of various estimation methods of long-term potential growth rate, then builds an econometric evaluation system to select the optimal method for estimating the long-term potential growth rate, and finally identifies the tail risk sources of long-term potential growth rate by employing a GAR model. The main conclusions are as follows: First, using traditional H-P filter, band-pass filter, and wavelet analysis to estimate the potential growth rate will face large measurement errors, and the maximum deviation is up to 2-5 percentage points, which will seriously affect estimation accuracy. Second, the essence of selecting an optimal method for estimating the long-term potential growth rate is to make a trade-off among forecasting capability, economic causal inference capability, and measurement stability. As long as the weight of forecasting capability is no more than 0.8, a singular spectrum with 4(2) type is the dominant choice for estimating China’s long-term potential growth rate. Third, the tail risk estimation results of long-term potential growth rate show that long-term demand shortage leads to the recent downward trend in the long-term potential growth rate, but its overall level is still in a reasonable range.

The policy implications of this paper are that: First, during periods of frequent economic fluctuations, it is necessary to grasp the basic state, core features, and equilibrium level of the macro economy. Second, the measurement of potential variables should focus not only on the complexity of estimation process, but also on the application value and economic significance of potential variables, so as to select an optimal potential measurement method regarding to the practical situation. Third, on the one hand, the weak recovery characteristic of the economy still needs more time to ease; on the other hand, China’s economy still owns a medium-high growth potential, and the basic trend of steady and positive development remains unchanged. Thus, we should follow the natural law of economic development and ensure a healthy and orderly economic recovery.