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China’s macroeconomic trends in downward pressures: the ‘micro stimulus’ effects and steady growth

Author

Listed:
  • Yuanchun Liu
  • Yanbin Chen
  • Yanqing Jiang
  • Jinghai Zheng

Abstract

This study reports China’s macroeconomic trends in downward pressures and discusses the effects of the ‘micro stimulus’ on the growth performance of Chinese economy. It appears that economic growth rebounds significantly in the short term every time ‘micro stimulus’ is applied, but the economy slows down again once the stimulus dwindles. China’s economic growth thus exhibits a pattern of significant ‘stimulus-dependence’. When facing economic downturn, China has only resorted to stimulus policy to sustain growth. Not surprisingly, our findings indicate that ‘micro stimulus’ cannot realize the strategic intent of growth stabilization and structural adjustment, and may even lead to more structural chaos. One problem that can be attributed to the near-sighted strategy is the worsening productivity performance since the financial crisis of 2008. Therefore both improvement in social security systems and social programs designed for maintaining long run growth are needed in order to improve productivity performance on the one hand and to facilitate structural adjustments on the other.

Suggested Citation

  • Yuanchun Liu & Yanbin Chen & Yanqing Jiang & Jinghai Zheng, 2015. "China’s macroeconomic trends in downward pressures: the ‘micro stimulus’ effects and steady growth," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 13(3), pages 269-284, August.
    • Handle: RePEc:taf:jocebs:v:13:y:2015:i:3:p:269-284
    DOI: 10.1080/14765284.2015.1059592
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    References listed on IDEAS

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    1. Zheng, Jinghai & Bigsten, Arne & Hu, Angang, 2009. "Can China's Growth be Sustained? A Productivity Perspective," World Development, Elsevier, vol. 37(4), pages 874-888, April.
    2. Lawrence H Summers, 2014. "U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 49(2), pages 65-73, April.
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