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Rebalancing Growth in China: A Three-Handed Approach

  • Blanchard, Olivier J
  • Giavazzi, Francesco

Our paper is an attempt to define the contours of the right macroeconomic strategy for China. In a nutshell, we believe that the package includes a decrease in saving, with a focus on private saving, an increase in the supply of services, in particular health services, and an appreciation of the RMB. This is why we refer to this strategy as a 'three-handed approach': action on the fiscal and budgetary front, accompanied by currency revaluation. We start by asking how the Chinese economy got to where it is - what the strategy has been since the beginning of the reforms, and what the main characteristics of the economy are today. We then ask what is the desirable path for the future, and which are the main policy tradeoffs implied by such a path. Finally, we put the various pieces together to describe what we believe is a consistent policy package.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5403.

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Date of creation: Jan 2006
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Handle: RePEc:cpr:ceprdp:5403
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  1. Zhang, Xiaobo & Kanbur, Ravi, 2003. "Spatial Inequality In Education And Health Care In China," Working Papers 127256, Cornell University, Department of Applied Economics and Management.
  2. Eswar Prasad & Raghuram Rajan, 2005. "Controlled Capital Account Liberalization: A Proposal," IMF Policy Discussion Papers 05/7, International Monetary Fund.
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  4. Jonathan Gruber & Aaron Yelowitz, 1997. "Public Health Insurance and Private Savings," NBER Working Papers 6041, National Bureau of Economic Research, Inc.
  5. Jean-Fran├žois BRUN & Jean-Louis COMBES & Mary-Fran├žoise RENARD, 2001. "Are There Spillover Effects Between Coastal and Non-Coastal Regions in China ?," Working Papers 200113, CERDI.
  6. Rodrik, Dani, 2006. "What's So Special About China's Exports?," CEPR Discussion Papers 5484, C.E.P.R. Discussion Papers.
  7. Zhu, Nong, 2002. "The impacts of income gaps on migration decisions in China," China Economic Review, Elsevier, vol. 13(2-3), pages 213-230.
  8. Albert G. Z. Hu & Gary H. Jefferson & Qian Jinchang, 2005. "R&D and Technology Transfer: Firm-Level Evidence from Chinese Industry," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 780-786, November.
  9. Zhang, Kevin Honglin & Song, Shunfeng, 2003. "Rural-urban migration and urbanization in China: Evidence from time-series and cross-section analyses," China Economic Review, Elsevier, vol. 14(4), pages 386-400.
  10. Fang, Cheng & Zhang, Xiaobo & Fan, Shenggen, 2002. "Emergence of urban poverty and inequality in China: evidence from household survey," China Economic Review, Elsevier, vol. 13(4), pages 430-443, December.
  11. Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March.
  12. Derek C. Jones & Cheng Li & Ann L. Owen, 2003. "Growth and Regional Inequality in China During the Reform Era," William Davidson Institute Working Papers Series 2003-561, William Davidson Institute at the University of Michigan.
  13. Wagstaff, Adam & Pradhan, Menno, 2005. "Health insurance impacts on health and nonmedical consumption in a developing country," Policy Research Working Paper Series 3563, The World Bank.
  14. Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-80, Part I, M.
  15. Manning, Willard G. & Marquis, M. Susan, 1996. "Health insurance: The tradeoff between risk pooling and moral hazard," Journal of Health Economics, Elsevier, vol. 15(5), pages 609-639, October.
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