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Circumstances, Intents, Hardships and Risks when Transiting from a Production-Led Economy to one Focused on Consumer

Sarmiza Pencea

Revista de Economie Mondiala / The Journal of Global Economics, 2016, vol. 8, issue 2

Abstract: Chinese economy has grown rapidly and substantially for decades, without facing a serious crisis or destabilization and without suffering a correction, but this doesn’t mean that it has definitely avoided corrections. On the contrary, it might signify that a correction is possible anytime, risking to be the harsher the later it happens. China’s numerous achievements are undeniable, but some of the very mechanisms that have nourished its successes – mainly the distorted price system (relying on controlled, low prices for labour, capital, energy, land, natural resources, national currency, zero pollution costs, etc.) – are the ones which now hinder its further modernization and growth dynamism. Excessively forced to grow very fast, Chinese economy developed structural imbalances and economic bubbles in almost each of its systems. This paper looks at some of the most dangerous economic bubbles and their linkage, as well as at the challenges and risks posed by the Chinese economy transition from export-and-production-led growth, to consumption-driven development.

Keywords: China; economic bubbles; economic rebalancing; structural imbalances; new normality (search for similar items in EconPapers)
JEL-codes: O11 O18 O53 P21 P27 R31 R38 (search for similar items in EconPapers)
Date: 2016
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Revista de Economie Mondiala / The Journal of Global Economics is currently edited by Simona Moagar Poladian, PhD

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