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China's economic growth and rebalancing

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  • Dorrucci, Ettore
  • Pula, Gabor
  • Santabárbara, Daniel

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 policy-makers 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. JEL Classification: C22, C51, C53, C59

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Bibliographic Info

Paper provided by European Central Bank in its series Occasional Paper Series with number 142.

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Date of creation: Feb 2013
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Handle: RePEc:ecb:ecbops:20130142

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Keywords: China; Economic Growth; imbalances; middle-income trap; rebalancing;

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References

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  1. 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, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(1), pages 51-65.
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  11. Pula, Gabor & Santabárbara, Daniel, 2011. "Is China climbing up the quality ladder? Estimating cross country differences in product quality using Eurostat's COMEXT trade database," Working Paper Series, European Central Bank 1310, European Central Bank.
  12. 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.
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Citations

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Cited by:
  1. Sarmiza Pencea, 2014. "“The New Season of Chinese Economic Miracle” and its Challenges," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(1), pages 56-64, May.
  2. 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, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation 280, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.
  3. Chai Feng xia & Issam MF SALTAJI, 2013. "China Strategic Management On Economy Development," Internal Auditing and Risk Management, Athenaeum University of Bucharest, Athenaeum University of Bucharest, vol. 4(32), pages 61-70, December.
  4. Ettore Dorrucci & Gabor Pula & Daniel Santabárbara, 2013. "China’s economic growth and rebalancing," Banco de Espa�a Occasional Papers 1301, Banco de Espa�a.

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