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Productivity Growth of the Nontradable Sectors in China

Author

Listed:
  • Dong He
  • Wenlang Zhang
  • Gaofeng Han
  • Tommy Wu

Abstract

Little is known about the total factor productivity of the nontradable sectors in China. In this paper we estimate productivity growth of the nontradable sectors by studying the relative price movements of the nontradable sectors vis-à-vis the tradable sectors, i.e. changes in the internal real exchange rate. We find that prices of the nontradable sectors have risen significantly faster than those of the tradable sectors since China's accession to the WTO, and as a result China's internal real exchange rate has appreciated faster than the renminbi real effective exchange rate. We also find that the nontradable sectors have seen much lower productivity growth than the tradable sectors. We argue that it is important to raise China's productivity growth in the nontradable sectors through policy actions to achieve growth rebalancing and containing inflationary pressures in the medium run.

Suggested Citation

  • Dong He & Wenlang Zhang & Gaofeng Han & Tommy Wu, 2014. "Productivity Growth of the Nontradable Sectors in China," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 655-666, November.
    • Handle: RePEc:bla:rdevec:v:18:y:2014:i:4:p:655-666
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    Cited by:

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    2. Heiwai Tang & Fei Wang & Zhi Wang, 2014. "The domestic segment of global supply chains in China under state capitalism," Globalization Institute Working Papers 186, Federal Reserve Bank of Dallas.
    3. Philippe Bacchetta & Kenza Benhima & Yannick Kalantzis, 2014. "Optimal Exchange Rate Policy in a Growing Semi-Open Economy," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 62(1), pages 48-76, April.
    4. Kraal, Diane, 2019. "Petroleum industry tax incentives and energy policy implications: A comparison between Australia, Malaysia, Indonesia and Papua New Guinea," Energy Policy, Elsevier, vol. 126(C), pages 212-222.
    5. Dong He & Wenlang Zhang & Gaofeng Han & Tommy Wu, 2014. "Productivity Growth of the Nontradable Sectors in China," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 655-666, November.
    6. Xiaodong Zhu, 2012. "Understanding China's Growth: Past, Present, and Future," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 103-124, Fall.
    7. Kemp, Deanna & Worden, Sandy & Owen, John R., 2016. "Differentiated social risk: Rebound dynamics and sustainability performance in mining," Resources Policy, Elsevier, vol. 50(C), pages 19-26.
    8. Yanqun Zhang, 2017. "Productivity in China: past success and future challenges," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 24(1), pages 1-21, June.

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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