Chinese Political and Economic Governance System and the Imbalance between Consumption and Investment
AbstractThe Chinese government has been pursuing economic growth under the guidance of "growth is a hard principle". In the context of the Chinese political and economic governance system, local governments have employed the overtaking strategy (placing primary emphasis on the development of capital and technology-intensive industries) and the real estate development strategy to push for economic growth and fiscal revenue growth. This has led to a repressed labor share and an elevated capital and government share in primary and secondary income distribution structure. Using the empirical strategy of Acemoglu et al. (2003), we confirm that the development strategies have shaped an imbalanced consumption-investment structure through primary and secondary income distribution as well as other channels. It suggests that the Chinese government will be able to accomplish China's transition from an investment-led growth model to a consumption-based growth model only if it modifies its political and economic governance system and removes the distortions in development strategies.
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Bibliographic InfoPaper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 232013.
Length: 41 pages
Date of creation: Nov 2013
Date of revision:
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More information through EDIRC
Overtaking Strategy; Real Estate Development Strategy; Biased Income Distribution Structure; Consumption-Investment Imbalances;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-01-10 (All new papers)
- NEP-MAC-2014-01-10 (Macroeconomics)
- NEP-PBE-2014-01-10 (Public Economics)
- NEP-TRA-2014-01-10 (Transition Economics)
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