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Looking Inward for Transformative Growth in China

  • Rod Tyers


Export led growth has been very effective in modernising China’s economy and establishing a large high-saving middle class. Notwithstanding political opposition from trading partners, this growth strategy has also offered the rest of the world an improved terms of trade and cheaper finance. Yet it is believed by China’s government that this convenient strategy has run its course and the transition has begun to a model that “looks inward” for growth, to be driven by expanding consumption and home investment. This paper uses a numerical model of the Chinese economy with oligopoly behaviour to examine the available “inward” sources of transformative growth along with the policies needed to exploit them. Success will require the redistribution of the considerable rents now accruing to connections of key state owned enterprises, suggesting the potential for political resistance and the yet-avoidable possibility that China could fall into a “middle income trap”.

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Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2012-15.

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Length: 34 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:een:camaaa:2012-15
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  27. Rod Tyers & Ling Huang, 2009. "Combating China's Export Contraction: Fiscal Expansion or Accelerated Industrial Reform?," ANU Working Papers in Economics and Econometrics 2009-501, Australian National University, College of Business and Economics, School of Economics.
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