Wage-led demand as a rebalancing strategy for economic growth in China

Bruno Jetin and Luis Reyes-Ortiz ()
Additional contact information
Luis Reyes-Ortiz: KEDGE Business School [Marseille]

Post-Print from HAL

Abstract: Rebalancing growth in favor of domestic consumption has been an objective of Chinese policy makers for over two decades. However, until recently little progress has been achieved. This article argues that the nature of the demand regime is a major reason for the limited rebalancing operated thus far. Until the great recession (2008-09), Chinese growth was profit-led, which means that an increase in the profit share of income had a positive effect on investment and net exports that exceeded the negative effect on consumption. We show that after the great recession, China's demand regime turned wage-led, which means that an increase in the wage share results in a positive effect on households' consumption which exceeds the negative effect on investment and net exports. The conclusion is that a pro-labor policy may now contribute to rebalance China's growth and make it less dependent on exports, overinvestment and carbon-intensive industries.

Keywords: China; Income distibution; Rebalancing growth; Macroeconomics; Time series analysis (search for similar items in EconPapers)
Date: 2019-07-03
New Economics Papers: this item is included in nep-cna and nep-mac
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03193667
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Envisioning the Economy of the Future and the Future of Political Economy, AFEP-IIPPE International Conference, Jul 2019, Lille, France. pp.341-366, ⟨10.1080/01603477.2020.1774392⟩

Downloads: (external link)
https://shs.hal.science/halshs-03193667/document (application/pdf)

Related works:
Journal Article: Wage-led demand as a rebalancing strategy for economic growth in China (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03193667

DOI: 10.1080/01603477.2020.1774392

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().