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Rapid Economic Growth in China: Implications for the World Economy

Author

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  • McKibbin, W.J.
  • Huang, Y.

Abstract

Rapid growth of the Chinese economy in the past decade and its potential for strong growth into the foreseeable future have caused anxieties in the rest of the world. Some commentators see Chinese growth wholly in terms of competition for trade and investment opportunities with other developing economies and a major cause of structural adjustments in the advanced industrialized economies. In particular there have been warnings of severe consequences for international agricultural markets. In this paper we use a dynamic general equilibrium model called the G-CUBED model (developed by McKibbin and Wilcoxen) to explore possible future paths of the Chinese economy based on projections of population growth, sectoral productivity growth, energy efficiency and technical change in the Chinese economy. This model captures not only the composition of the direct trade impacts of developments in the Chinese economy but also the implications of the endogenous flows of financial capital on macroeconomic adjustment in the world economy. The study focuses on the period from 1990 to 2020. Rather than being a problem for the world economy, we find strong growth in China is beneficial for the world economy directly through raising world incomes.

Suggested Citation

  • McKibbin, W.J. & Huang, Y., 1996. "Rapid Economic Growth in China: Implications for the World Economy," Papers 130, Brookings Institution - Working Papers.
    • Handle: RePEc:fth:brooki:130
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    Citations

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    Cited by:

    1. Godfrey Yeung, 2002. "WTO Accession, the Changing Competitiveness of Foreign-financed Firms and Regional Development in Guangdong of Southern China," Regional Studies, Taylor & Francis Journals, vol. 36(6), pages 627-642.
    2. Yang Shengming & Zhong Chuanshu & Yongzheng Yang & Feng Lei & Yiping Huang & Pei Changhong, 1997. "China and East Asia Trade Policy, Volume IV, Trade Reform and Liberalisation in China," Asia Pacific Economic Papers 271, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    3. Zhuang, Renan & Koo, Won W., 2007. "Implications of Growth in China for the U.S. and Other Countries," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 10257, Western Agricultural Economics Association.

    More about this item

    Keywords

    ECONOMIC POLICY ; ECONOMIC GROWTH ; ECONOMIC REFORM;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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