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What Does the Lewis Turning Point Mean for China? A Computable General Equilibrium Analysis

Author

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  • Huang Yiping

    (China Center for Economic Research)

  • Jiang Tingsong

Abstract

We apply a computable general equilibrium framework to assess likely impacts of the Lewis turning point on China and the rest of the world. Modeling results suggest that China will probably transition from an abnormal economy to a normal economy with somewhat lower growth but higher inflation, which requires significant revision to the macroeconomic policy framework. China would lose competitiveness in laborintensive activities, its current account surplus should fall but overinvestment risk could rise. These changes in China should help improve other counties current accounts and boost lowcost countries production. The Lewis turning point, however, does not provide automatic solutions to some of the key challenges, such as service sector development and innovation capability. China will need to make serious policy efforts to avoid the socalled middle income trap.

Suggested Citation

  • Huang Yiping & Jiang Tingsong, 2010. "What Does the Lewis Turning Point Mean for China? A Computable General Equilibrium Analysis," Macroeconomics Working Papers 22718, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:macroe:22718
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    Cited by:

    1. Vandana Chandra & Justin Yifu Lin & Yan Wang, 2013. "Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries," Asian Development Review, MIT Press, vol. 30(1), pages 52-84, March.
    2. Zhuan Xie & Xiaobo Zhang, 2015. "The patterns of patents in China," China Economic Journal, Taylor & Francis Journals, vol. 8(2), pages 122-142, May.
    3. Longfeng Ye & Peter E. Robertson, 2017. "Migration and Growth in China: A Sceptical Assessment of the Evidence," Economics Discussion / Working Papers 17-03, The University of Western Australia, Department of Economics.
    4. Garnaut, Ross, . "Australia and resources in the Asian century," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3).
    5. Ye, Longfeng & Robertson, Peter E., 2019. "Hitting the Great Wall: Structural change and China's growth slowdown," China Economic Review, Elsevier, vol. 56(C), pages 1-1.

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    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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