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The People’s Republic of China and Global Imbalances from a View of Sectorial Reforms

Author

Listed:
  • Hiro Ito

    (Asian Development Bank Institute (ADBI))

  • Ulrich Volz

Abstract

This paper examines the impact of sectorial reforms on current account imbalances, with a special focus on the People’s Republic of China (PRC). In particular, we investigate to what extent reforms pertaining to the financial sector, social protection, and healthcare may contribute to a rebalancing of the PRC’s persistent current account imbalances. Our forecasting results suggest that reforming the financial sector would be a significant contributor to the country’s rebalancing with an effect much larger than that of capital account liberalization. Strengthened provisions of social protection and publicly-funded healthcare are also found to contribute to a rebalancing of the PRC economy.

Suggested Citation

  • Hiro Ito & Ulrich Volz, 2012. "The People’s Republic of China and Global Imbalances from a View of Sectorial Reforms," Finance Working Papers 23353, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:financ:23353
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    File URL: http://www.eaber.org/node/23353
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    Keywords

    the PRC and Global Imbalances; financial sector; current account imbalances; Capital account liberalization; social protection; rebalancing;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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