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China's Growth in Transition: Implications for the Thai Economy

Author

Listed:
  • Nasha Ananchotikul

    (Bank of Thailand)

  • Pornpinun Chantapacdepong

    (Bank of Thailand)

  • Chotima Sitthichaiviset

    (Bank of Thailand)

Abstract

China has rapidly emerged as a global economic superpower and is expected to remain the main growth driver in the next phase of the global economy. Questions often raised are: How long can China’s extraordinary growth be sustained? What direction the Chinese economy is heading towards and what does it imply about opportunities and risks for other countries, including Thailand from our point of interest? From a review of China’s growth pattern and an in-depth analysis of sources of growth, we put forward that, in the short to medium term, China’s potential output growth will remain strong driven mainly by continued capital deepening. In the longer term, however, factor market distortions, misallocation of resources, and the demographic shift in China will increasingly become the key bottlenecks to China’s sustainable growth. Realizing these growth limitations, the Chinese leaders have recently shifted the growth paradigm by resorting to technology leapfrogging in lifting productivity and moving up the value chain. This will significantly change the future pattern of production and exports in China. The Thai economy has greatly benefited from the rising of the Chinese economy through various trade channels. But in order for Thailand to continue to reap these benefits, a sole reliance on the same export pattern will not be enough. Thailand should learn from China’s success in productivity and industrial upgrading and technological advancement, as serious efforts in this direction are much needed for Thailand to escape the middle income trap.

Suggested Citation

  • Nasha Ananchotikul & Pornpinun Chantapacdepong & Chotima Sitthichaiviset, 2011. "China's Growth in Transition: Implications for the Thai Economy," Working Papers 2011-02, Monetary Policy Group, Bank of Thailand.
  • Handle: RePEc:bth:wpaper:2011-02
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    File URL: https://www.bot.or.th/Thai/MonetaryPolicy/ArticleAndResearch/DiscussionPaper/dp022011.pdf
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    Keywords

    consumption; China's Growth in Transition;

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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