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Rebalancing Growth in China: A Three-Handed Approach

Olivier Blanchard () and Francesco Giavazzi ()

No 5403, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Our paper is an attempt to define the contours of the right macroeconomic strategy for China. In a nutshell, we believe that the package includes a decrease in saving, with a focus on private saving, an increase in the supply of services, in particular health services, and an appreciation of the RMB. This is why we refer to this strategy as a 'three-handed approach': action on the fiscal and budgetary front, accompanied by currency revaluation. We start by asking how the Chinese economy got to where it is - what the strategy has been since the beginning of the reforms, and what the main characteristics of the economy are today. We then ask what is the desirable path for the future, and which are the main policy tradeoffs implied by such a path. Finally, we put the various pieces together to describe what we believe is a consistent policy package.

Keywords: China; economic development; international economics (search for similar items in EconPapers)
JEL-codes: E2 O53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-mac and nep-tra
Date: 2006-01
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