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China's March to Prosperity: Reforms to Avoid the Middle-income Trap

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  • Vincent Koen

    (OECD)

  • Richard Herd

    (OECD)

  • Sam Hill

    (OECD)

Abstract

China is well-placed to avoid the so-called “middle-income trap” and to continue to converge towards the more advanced economies, even though growth is likely to slow from near double-digit rates in the first decade of this millennium to around 7% at the 2020 horizon. However, in order to sustain vigorous growth and improve the well-being of most citizens, renewed reform momentum is required in a number of areas. The following ones are discussed in this paper: financial sector liberalisation; strengthening competition in markets for goods and services; education, research and innovation. Progress is also needed in other areas, notably in fostering more socially-inclusive forms of urbanisation and more environmentally-friendly growth. En marche pour la prospérité : Réformer pour poursuivre le rattrapage en Chine La Chine est bien placée pour ne pas rester un pays à revenu intermédiaire et continuer à converger vers les économies les plus avancées, même si la croissance est vraisemblablement amenée à ralentir, passant d’un rythme à deux chiffres pendant la première décennie de ce millénaire à environ 7% à l’horizon 2020. Toutefois, le maintien d’une croissance vigoureuse et améliorant le bien-être de la majorité des citoyens nécessite une accélération des réformes dans un certain nombre de domaines. Sont passés en revue dans ce document : la libéralisation du secteur financier ; renforcer la concurrence sur les marchés des biens et services ; l’éducation, la recherche et l’innovation. Des progrès sont également requis dans d’autres domaines, notamment pour promouvoir des formes d’urbanisation socialement plus inclusives et une croissance plus respectueuse de l’environnement.

Suggested Citation

  • Vincent Koen & Richard Herd & Sam Hill, 2013. "China's March to Prosperity: Reforms to Avoid the Middle-income Trap," OECD Economics Department Working Papers 1093, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1093-en
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    File URL: http://dx.doi.org/10.1787/5k3wd3c4219w-en
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    Keywords

    brevets; business climate; catching-up; China; Chine; cities; climat des affaires; competition; concurrence; convergence; convergence; credit; croissance économique; crédit; development; droits de propriété intellectuelle; développement; economic growth; education; financial sector; foreign exchange; innovation; innovations; intellectual property rights; international migration; investissement; investment; living standards; migration interne; niveau de vie; patents; productivity; productivité; rattrapage; recherche et développement; renminbi; renminbi; research and development; réserves de change; secteur financier; shadow banking; système bancaire parallèle; urbanisation; urbanisation; villes; éducation;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform

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