China’s economic growth and rebalancing

Ettore Dorrucci (), Gabor Pula and Daniel Santabárbara
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Ettore Dorrucci: European Central Bank

No 1301, Occasional Papers from Banco de España

Abstract: In this paper we provide an overview of the growth model in China and its prospects, taking a medium-run to long-run perspective. Our main conclusions are as follows. First, the still prevailing producer-biased model of managed capitalism in China tends to engender, as an inherent byproduct, serious imbalances which cannot be unwound without a fundamental overhaul of the model itself. Second, given the lack of a critical mass of economic reforms thus far, imbalances may (re-)escalate once global and domestic economic conditions normalise. Third, the fundamental factors underpinning growth in China are likely to remain supportive, at least over the medium run. Although this could help mitigate the economic costs of imbalances for some time to come, it could also reduce the incentives for policymakers to enact much needed reforms. Fourth, delayed policy action and the persistence of the model of growth cum imbalances would increase the risk of China getting caught in the middle-income trap in the long run. Greater political will to redirect China’s growth model towards a more sustainable path is therefore needed.

Keywords: economic growth; rebalancing; China; imbalances; middle-income trap (search for similar items in EconPapers)
JEL-codes: E21 E22 E25 F14 F43 O11 O53 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2013-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: China's economic growth and rebalancing (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:opaper:1301

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