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China’s Structural Reform and its Impact on Trade and Growth: an application of DPN GEM

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  • Pei, Jiansuo
  • Yang, Cuihong
  • Yao, Shunli

Abstract

Based on an innovative input-output table developed out of China’s global value chains project, we construct an ORANI-type China trade CGE model, known as DPN GEM, and applies it to study the impact of China’s structural reform on trade and growth. Policy scenarios are designed to consider the slowdown of US foreign outsourcing to China, and China’s efforts to steer the economy toward a new normal, which is characterised by a lower rate of investment and higher rates of consumption and innovation. It shows that, while the new growth model unambiguously raises household welfare with more domestic consumption, it is contractionary in terms of trade. Transition to the new normal may reduce the nominal GDP, but not necessarily the real GDP.

Suggested Citation

  • Pei, Jiansuo & Yang, Cuihong & Yao, Shunli, 2015. "China’s Structural Reform and its Impact on Trade and Growth: an application of DPN GEM," Conference papers 332568, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332568
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