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Rebalancing China’s economic growth: some insights from Japan’s experience

Author

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  • Muto, Ichiro
  • Fukumoto, Tomoyuki

Abstract

One of the greatest challenges China faces is how to reshape its heavily investment-driven mode of economic growth. By investigating how the rebalancing of Japan’s economic growth mode was realized in the 1970s, we indicate that it is essential in the rebalancing to correct the distortions in the factor cost (labor cost and capital cost) in a harmonious way. In addition, we refer to Japan’s experience to indicate that achieving domestic rebalancing does not necessarily lead to external rebalancing.

Suggested Citation

  • Muto, Ichiro & Fukumoto, Tomoyuki, 2011. "Rebalancing China’s economic growth: some insights from Japan’s experience," MPRA Paper 32570, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:32570
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    File URL: https://mpra.ub.uni-muenchen.de/32570/1/MPRA_paper_32570.pdf
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    References listed on IDEAS

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    1. Zhang, Xiaobo & Yang, Jin & Wang, Shenglin, 2011. "China has reached the Lewis turning point," China Economic Review, Elsevier, vol. 22(4), pages 542-554.
    2. Knight, John & Deng, Quheng & Li, Shi, 2011. "The puzzle of migrant labour shortage and rural labour surplus in China," China Economic Review, Elsevier, vol. 22(4), pages 585-600.
    3. Huang, Yiping & Tao, Kunyu, 2011. "Causes of and Remedies for the People’s Republic of China’s External Imbalances: The Role of Factor Market Distortion," ADBI Working Papers 279, Asian Development Bank Institute.
    4. Marcos D. Chamon & Eswar S. Prasad, 2010. "Why Are Saving Rates of Urban Households in China Rising?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 93-130, January.
    5. Yoshikawa, Hiroshi, 1995. "Macroeconomics and the Japanese Economy," OUP Catalogue, Oxford University Press, number 9780198233268.
    6. Chong-En Bai & Chang-Tai Hsieh & Yingyi Qian, 2006. "The Return to Capital in China," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(2), pages 61-102.
    7. Fang Cai & Meiyan Wang, 2008. "A Counterfactual Analysis on Unlimited Surplus Labor in Rural China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(1), pages 51-65.
    8. Jahangir Aziz & Li Cui, 2007. "Explaining China’s Low Consumption; The Neglected Role of Household Income," IMF Working Papers 07/181, International Monetary Fund.
    9. Yiping Huang & Bijun Wang, 2010. "Cost Distortions and Structural Imbalances in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(s1), pages 1-17.
    10. Ichiro Muto & Miyuki Matsunaga & Satoko Ueyama & Tomoyuki Fukumoto, 2010. "On the Recent Rise in China's Real Estate Prices," Bank of Japan Review Series 10-E-3, Bank of Japan.
    11. Louis Kuijs & Tao Wang, 2006. "China's Pattern of Growth: Moving to Sustainability and Reducing Inequality," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(1), pages 1-14.
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    Citations

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    Cited by:

    1. Guonan Ma & Robert McCauley & Lillie Lam, 2013. "The Roles of Saving, Investment and the Renminbi in Rebalancing the Chinese Economy," Review of International Economics, Wiley Blackwell, vol. 21(1), pages 72-84, February.
    2. Luke Deer & Ligang Song, 2012. "China's Approach to Rebalancing: A Conceptual and Policy Framework," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 20(1), pages 1-26, January.
    3. Yigang Wei & Patrick T. I. Lam & Yat Hung Chiang & Barbara Y. P. Leung, 2014. "The effects of monetary policy on real estate investment in China: a regional perspective," International Journal of Strategic Property Management, Taylor & Francis Journals, vol. 18(4), pages 368-379, December.
    4. Dorrucci, Ettore & Pula, Gabor & Santabárbara, Daniel, 2013. "China's economic growth and rebalancing," Occasional Paper Series 142, European Central Bank.
    5. Andrea Fracasso, 2015. "Economic Rebalancing and Growth: the Japanese experience and China’s prospects," DEM Discussion Papers 2015/07, Department of Economics and Management.
    6. repec:bla:chinae:v:25:y:2017:i:1:p:32-57 is not listed on IDEAS
    7. repec:ilo:ilowps:470934 is not listed on IDEAS
    8. Nicholas R. Lardy & Nicholas Borst, 2013. "A Blueprint for Rebalancing the Chinese Economy," Policy Briefs PB13-2, Peterson Institute for International Economics.
    9. Gunther Schnabl, 2017. "Exchange Rate Regime, Financial Market Bubbles and Long-term Growth in China: Lessons from Japan," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 25(1), pages 32-57, January.
    10. Sun Xuegong, . "China: Searching for a New Development Modal," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
    11. van Treeck, Till. & Sturn, Simon., 2012. "Income inequality as a cause of the Great Recession? : A survey of current debates," ILO Working Papers 994709343402676, International Labour Organization.
    12. Damien Cubizol, 2017. "Rebalancing in China: a taxation approach," Working Papers 1732, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    13. Notermans Ton, 2015. "The EU's Convergence Dilemma," Baltic Journal of European Studies, De Gruyter Open, vol. 5(1), pages 36-55, February.

    More about this item

    Keywords

    China; Japan; Rebalancing; Factor Cost Distortion; Current Account Imbalance;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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