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Modernizing China's Growth Paradigm

Author

Listed:
  • Prasad, Eswar

    (Cornell University)

  • Rajan, Raghuram G.

    (University of Chicago)

Abstract

China has achieved tremendous economic progress in the last three decades, but there is much work to be done to make the economy resilient to large shocks, ensure the sustainability of its growth, and translate this growth into corresponding improvements in the economic welfare of its citizens. We discuss the complex challenges that Chinese policymakers face in striking the right balance in terms of speed and coordination of reforms. We argue that China’s current stage of development, along with its rising market orientation and increasing integration with the world economy, may make the incremental and piecemeal approaches to reforms increasingly untenable and, in some cases, could even generate risks of their own. The present favorable domestic and external circumstances provide an excellent window of opportunity for bolder reforms and for tackling some deep-rooted problems without causing much economic disruption.

Suggested Citation

  • Prasad, Eswar & Rajan, Raghuram G., 2006. "Modernizing China's Growth Paradigm," IZA Discussion Papers 2248, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp2248
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    References listed on IDEAS

    as
    1. Eswar Prasad & Shang-Jin Wei, 2007. "The Chinese Approach to Capital Inflows: Patterns and Possible Explanations," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 421-480, National Bureau of Economic Research, Inc.
    2. Olivier Blanchard & Francesco Giavazzi, 2006. "Rebalancing Growth in China: A Three‐Handed Approach," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(4), pages 1-20, August.
    3. Morris Goldstein & Nicholas R. Lardy, 2004. "What Kind of Landing for the Chinese Economy?," Policy Briefs PB04-07, Peterson Institute for International Economics.
    4. Mr. Eswar S Prasad & Mr. Qing Wang & Mr. Thomas Rumbaugh, 2005. "Putting the Cart Before the Horse? Capital Account Liberalization and Exchange Rate Flexibility in China," IMF Policy Discussion Papers 2005/001, International Monetary Fund.
    5. Ling Li, 1998. "Book Review: The China Miracle: Development Strategy and Economic Reform by Justin Yifu Lin, Fang Cai, and Zhou Li," Cato Journal, Cato Journal, Cato Institute, vol. 18(1), pages 147-150, Spring/Su.
    6. Marvin Goodfriend & Eswar Prasad, 2009. "A Framework for Independent Monetary Policy in China," Chapters, in: Gill Hammond & Ravi Kanbur & Eswar Prasad (ed.), Monetary Policy Frameworks for Emerging Markets, chapter 8, Edward Elgar Publishing.
    7. Lin, Justin Yifu & Cai, Fang & Li, Zhou, 1998. "Competition, Policy Burdens, and State-Owned Enterprise Reform," American Economic Review, American Economic Association, vol. 88(2), pages 422-427, May.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    policy complementarities; market-oriented economy; trade and financial integration; policy reforms;
    All these keywords.

    JEL classification:

    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • F3 - International Economics - - International Finance

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