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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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  1. Muto, Ichiro & Fukumoto, Tomoyuki, 2011. "Rebalancing China’s economic growth: some insights from Japan’s experience," MPRA Paper 32570, University Library of Munich, Germany.
  2. 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.
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  13. Dorrucci, Ettore & Pula, Gabor & Santabárbara, Daniel, 2013. "China's economic growth and rebalancing," Occasional Paper Series 142, European Central Bank.
  14. Park , Donghyun & Park, Jungsoo, 2010. "Drivers of Developing Asia's Growth: Past and Future," ADB Economics Working Paper Series 235, Asian Development Bank.
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Cited by:
  1. Ettore Dorrucci & Gabor Pula & Daniel Santabárbara, 2013. "China’s economic growth and rebalancing," Banco de Espa�a Occasional Papers 1301, Banco de Espa�a.
  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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