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Rebalancing Growth in China: A Three-Handed Approach

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Author Info
Olivier Blanchard
Francesco Giavazzi

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Abstract

The present paper is an attempt to define the contours of the right macroeconomic strategy for China. In a nutshell, we believe that the package includes a decrease in saving, with a focus on private saving, an increase in the supply of services, in particular health services, and an appreciation of the RMB. This is why we refer to this strategy as a "three-handed approach": action on the fiscal and budgetary front, accompanied by currency revaluation. We start by asking how the Chinese economy got to where it is, what the strategy has been since the beginning of the reforms, and what the main characteristics of the economy are today. We then ask what is the desirable path for the future, and which are the main policy trade-offs implied by such a path. Finally, we put the various pieces together to describe what we believe is a consistent policy package. Copyright The official journal of The Institute of World Economics and Politics, Chinese Academy of Social Sciences (CASS) 2006.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1749-124X.2006.00027.x
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Publisher Info
Article provided by Institute of World Economics and Politics, Chinese Academy of Social Sciences in its journal China & World Economy.

Volume (Year): 14 (2006)
Issue (Month): 4 ()
Pages: 1-20
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Handle: RePEc:bla:chinae:v:14:y:2006:i:4:p:1-20

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Derek C. Jones & Cheng Li & Ann L. Owen*, 2003. "Growth and Regional Inequality in China During the Reform Era," William Davidson Institute Working Papers Series 2003-561, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  2. J. Gruber & A. Yelowitz, . "Public Health Insurance and Private Savings," Institute for Research on Poverty Discussion Papers 1135-97, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
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  3. Zhu, Nong, 2002. "The impacts of income gaps on migration decisions in China," China Economic Review, Elsevier, vol. 13(2-3), pages 213-230. [Downloadable!] (restricted)
  4. Kanbur, Ravi & Zhang, Xiaobo, 2003. "Spatial Inequality in Education and Health Care in China," CEPR Discussion Papers 4136, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  5. Brun, J. F. & Combes, J. L. & Renard, M. F., 2002. "Are there spillover effects between coastal and noncoastal regions in China?," China Economic Review, Elsevier, vol. 13(2-3), pages 161-169. [Downloadable!] (restricted)
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  6. Fang, Cheng & Zhang, Xiaobo & Fan, Shenggen, 2002. "Emergence of urban poverty and inequality in China: evidence from household survey," China Economic Review, Elsevier, vol. 13(4), pages 430-443, December. [Downloadable!] (restricted)
  7. Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March. [Downloadable!]
  8. Dani Rodrik, 2006. "What's So Special about China's Exports?," NBER Working Papers 11947, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Raghuram Rajan & Eswar Prasad, 2005. "Controlled Capital Account Liberalization: A Proposal," IMF Policy Discussion Papers 05/7, International Monetary Fund. [Downloadable!]
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  10. Wagstaff, Adam & Pradhan, Menno, 2005. "Health insurance impacts on health and nonmedical consumption in a developing country," Policy Research Working Paper Series 3563, The World Bank. [Downloadable!]
  11. Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-80, Part I, M. [Downloadable!] (restricted)
  12. Kuijs, Louis, 2005. "Investment and saving in China," Policy Research Working Paper Series 3633, The World Bank. [Downloadable!]
  13. Albert G. Z. Hu & Gary H. Jefferson & Qian Jinchang, 2005. "R&D and Technology Transfer: Firm-Level Evidence from Chinese Industry," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 780-786, 01. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Wim Suyker & Henri de Groot, 2006. "China and the Dutch Economy, Stylised facts and prospects," CPB Documents 127, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  2. Lane, Philip R. & Schmukler, Sergio, 2006. "The International Financial Integration of China and India," CEPR Discussion Papers 5852, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Eswar S. Prasad & Raghuram G. Rajan, 2006. "Modernizing China’s Growth Paradigm," IZA Discussion Papers 2248, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Eswar S. Prasad, 2007. "Is the Chinese Growth Miracle Built to Last?," IZA Discussion Papers 2995, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Philip Lane & Sergio Schmukler, 2007. "The Evolving Role of China and India in the Global Financial System," Open Economies Review, Springer, vol. 18(4), pages 499-520, September. [Downloadable!] (restricted)
  6. Zheng, Jinghai & Bigsten, Arne & Hu, Angang, 2006. "Can China’s Growth be Sustained? A Productivity Perspective," Working Papers in Economics 236, Göteborg University, Department of Economics. [Downloadable!]
    Other versions:
  7. Obstfeld, Maurice, 2006. "The Renminbi's Dollar Peg at the Crossroads," CEPR Discussion Papers 5771, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  8. Prema-chandra Athukorala, 2007. "The Rise of China and East Asian Export Performance: Is the Crowding-out Fear Warranted?," Departmental Working Papers 2007-10, Australian National University, Economics RSPAS. [Downloadable!]
    Other versions:
  9. Barry Eichengreen & Douglas A. Irwin, 2008. "International Economic Policy: Was There a Bush Doctrine?," NBER Working Papers 13831, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Jahangir Aziz, 2007. "Rebalancing China's Economy: What Does Growth Theory Tell Us?," IMF Working Papers 06/291, International Monetary Fund. [Downloadable!]
  11. Jahangir Aziz, . "Deconstructing China's and India's Growth: the Role of Financial Policies," Indian Council for Research on International Economic Relations, New Delhi Working Papers 224, Indian Council for Research on International Economic Relations, New Delhi, India. [Downloadable!]
  12. Céline Rochon & Geneviève Verdier & Leslie Lipschitz, 2008. "A Real Model of Transitional Growth and Competitiveness in China," IMF Working Papers 08/99, International Monetary Fund. [Downloadable!]
  13. Li Cui & Jahangir Aziz, 2007. "Explaining China's Low Consumption: The Neglected Role of Household Income," IMF Working Papers 07/181, International Monetary Fund. [Downloadable!]
  14. C Niranjan Rao, 2008. "The Role of Intellectual Property Rights in Information and Communication Technologies," Working Papers id:1742, esocialsciences.com. [Downloadable!]
  15. Morris Goldstein & Nicholas Lardy, 2006. "China's Exchange Rate Policy Dilemma," American Economic Review, American Economic Association, vol. 96(2), pages 422-426, May. [Downloadable!]
  16. Jahangir Aziz, 2008. "Deconstructing China’s and India’s Growth: The Role of Financial Policies," Working Papers id:1714, esocialsciences.com. [Downloadable!]
  17. Robert Lafrance, 2008. "China's Exchange Rate Policy: A Survey of the Literature," Discussion Papers 08-5, Bank of Canada. [Downloadable!]
  18. Lindbeck, Assar, 2006. "Economic-Social Interaction during China’s Transition," Working Paper Series 680, Research Institute of Industrial Economics. [Downloadable!]
  19. Willenbockel, Dirk, 2006. "Structural Effects of a Real Exchange Rate Revaluation in China: A CGE Assessment," MPRA Paper 920, University Library of Munich, Germany. [Downloadable!]
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