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China’s economic growth and rebalancing

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  • Ettore Dorrucci

    ()
    (European Central Bank)

  • Gabor Pula

    ()
    (European Central Bank)

  • Daniel Santabárbara

    ()
    (Banco de España)

Abstract

In this paper we provide an overview of the growth model in China and its prospects, taking a medium-run to long-run perspective. Our main conclusions are as follows. First, the still prevailing producer-biased model of managed capitalism in China tends to engender, as an inherent byproduct, serious imbalances which cannot be unwound without a fundamental overhaul of the model itself. Second, given the lack of a critical mass of economic reforms thus far, imbalances may (re-)escalate once global and domestic economic conditions normalise. Third, the fundamental factors underpinning growth in China are likely to remain supportive, at least over the medium run. Although this could help mitigate the economic costs of imbalances for some time to come, it could also reduce the incentives for policymakers to enact much needed reforms. Fourth, delayed policy action and the persistence of the model of growth cum imbalances would increase the risk of China getting caught in the middle-income trap in the long run. Greater political will to redirect China’s growth model towards a more sustainable path is therefore needed.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/13/Fich/do1301e.pdf
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Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Occasional Papers with number 1301.

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Length: 58 pages
Date of creation: Apr 2013
Date of revision:
Handle: RePEc:bde:opaper:1301

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Keywords: economic growth; rebalancing; China; imbalances; middle-income trap;

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References

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  1. Yiping Huang & Kunyu Tao, 2011. "Causes of and Remedies for the People’s Republic of China’s External Imbalances : The Role of Factor Market Distortion," Macroeconomics Working Papers 23257, East Asian Bureau of Economic Research.
  2. Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2003. "An Essay on the Revived Bretton Woods System," NBER Working Papers 9971, National Bureau of Economic Research, Inc.
  3. Park , Donghyun & Park, Jungsoo, 2010. "Drivers of Developing Asia's Growth: Past and Future," ADB Economics Working Paper Series 235, Asian Development Bank.
  4. Emanuele Baldacci & Ding Ding & David Coady & Giovanni Callegari & Pietro Tommasino & Jaejoon Woo & Manmohan S. Kumar, 2010. "Public Expenditureson Social Programs and Household Consumption in China," IMF Working Papers 10/69, International Monetary Fund.
  5. Lee, Jong-Wha & Hong, Kiseok, 2010. "Economic Growth in Asia: Determinants and Prospects," ADB Economics Working Paper Series 220, Asian Development Bank.
  6. David Dollar & Shang-Jin Wei, 2007. "Das (Wasted) Kapital: Firm Ownership and Investment Efficiency in China," NBER Working Papers 13103, National Bureau of Economic Research, Inc.
  7. Olympia Bover, 2008. "The Spanish Survey of Household Finances (EFF): description and methods of the 2005 wave," Banco de Espa�a Occasional Papers 0803, Banco de Espa�a.
  8. Straub, Roland & Thimann, Christian, 2009. "The external and domestic side of macroeconomic adjustment in China," Working Paper Series 1040, European Central Bank.
  9. Gabor Pula & Daniel Santabárbara, 2012. "Is china climbing up the quality ladder?," Banco de Espa�a Working Papers 1209, Banco de Espa�a.
  10. Ettore Dorrucci & Gabor Pula & Daniel Santabárbara, 2013. "China’s economic growth and rebalancing," Banco de Espa�a Occasional Papers 1301, Banco de Espa�a.
  11. Sarai Criado & Adrian van Rixtel, 2008. "Structured finance and the financial turmoil of 2007-2008: and introductory overview," Banco de Espa�a Occasional Papers 0808, Banco de Espa�a.
  12. Muto, Ichiro & Fukumoto, Tomoyuki, 2011. "Rebalancing China’s economic growth: some insights from Japan’s experience," MPRA Paper 32570, University Library of Munich, Germany.
  13. Kumiko Okazaki & Masazumi Hattori & Wataru Takahashi, 2011. "The Challenges Confronting the Banking System Reform in China: An Analysis in Light of Japan's Experience of Financial Liberalization," IMES Discussion Paper Series 11-E-06, Institute for Monetary and Economic Studies, Bank of Japan.
  14. Fang Cai & Meiyan Wang, 2008. "A Counterfactual Analysis on Unlimited Surplus Labor in Rural China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(1), pages 51-65.
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Cited by:
  1. Dorrucci, Ettore & Pula, Gabor & Santabárbara, Daniel, 2013. "China's economic growth and rebalancing," Occasional Paper Series 142, European Central Bank.
  2. Chai Feng xia & Issam MF SALTAJI, 2013. "China Strategic Management On Economy Development," Internal Auditing and Risk Management, Athenaeum University of Bucharest, vol. 4(32), pages 61-70, December.
  3. Zeting LIU, 2014. "La politique industrielle et de l’innovation chinoise dans la transition vers la croissance verte CHINESE INDUSTRIAL AND INNOVATION POLICIES IN THE TRANSITION TOWARD GREEN GROWTH," Working Papers 280, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.

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