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China’s economic growth and rebalancing

Author

Listed:
  • Ettore Dorrucci

    () (European Central Bank)

  • Gabor Pula

    () (European Central Bank)

  • Daniel Santabárbara

    () (Banco de España)

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 policymakers 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.

Suggested Citation

  • Ettore Dorrucci & Gabor Pula & Daniel Santabárbara, 2013. "China’s economic growth and rebalancing," Occasional Papers 1301, Banco de España;Occasional Papers Homepage.
  • Handle: RePEc:bde:opaper:1301
    as

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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/13/Fich/do1301e.pdf
    File Function: First version, April 2013
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    References listed on IDEAS

    as
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    2. Dorrucci, Ettore & Pula, Gabor & Santabárbara, Daniel, 2013. "China's economic growth and rebalancing," Occasional Paper Series 142, European Central Bank.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Wei-hsin Yu & Chi-Tsun Chiu, 2016. "Growing Pains: Changes in Psychological Well-Being in Urban China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(3), pages 1349-1382, December.
    2. Géza Rippel, 2017. "China – Rebalancing and Sustainable Convergence," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 16(Sepcial I), pages 50-72.
    3. Tingting Li & Hualou Long & Shuangshuang Tu & Yanfei Wang, 2015. "Analysis of Income Inequality Based on Income Mobility for Poverty Alleviation in Rural China," Sustainability, MDPI, Open Access Journal, vol. 7(12), pages 1-17, December.
    4. Gauvin, Ludovic & Rebillard, Cyril, 2013. "Towards Recoupling? Assessing the Impact of a Chinese Hard Landing on Commodity Exporters: Results from Conditional Forecast in a GVAR Model," MPRA Paper 65457, University Library of Munich, Germany.
    5. 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.
    6. repec:gam:jsusta:v:7:y:2015:i:12:p:16362-16378:d:60411 is not listed on IDEAS
    7. Sarmiza Pencea, 2014. "“The New Season of Chinese Economic Miracle” and its Challenges," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(1), pages 56-64, May.
    8. M. Albert & C. Jude & C. Rebillard, 2015. "The Long Landing Scenario: Rebalancing from Overinvestment and Excessive Credit Growth. Implications for Potential Growth in China," Working papers 572, Banque de France.
    9. David Haugh & Alexandre Kopoin & Elena Rusticelli & David Turner & Richard Dutu, 2016. "Cardiac Arrest or Dizzy Spell: Why is World Trade So Weak and What can Policy Do About It?," OECD Economic Policy Papers 18, OECD Publishing.
    10. Dorrucci, Ettore & Pula, Gabor & Santabárbara, Daniel, 2013. "China's economic growth and rebalancing," Occasional Paper Series 142, European Central Bank.
    11. Harashima, Taiji, 2016. "The Impending Long March of the Chinese Economy," MPRA Paper 73275, University Library of Munich, Germany.
    12. K. Buysse & E. Vincent, 2015. "Factors explaining emerging economies’ growth slowdown," Economic Review, National Bank of Belgium, issue ii, pages 61-79, september.
    13. repec:ath:journl:tome:32:v:4:y:2013:i:32:p:61-70 is not listed on IDEAS
    14. repec:wbk:wbpubs:28422 is not listed on IDEAS

    More about this item

    Keywords

    economic growth; rebalancing; China; imbalances; middle-income trap;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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