Chinese Political and Economic Governance System and the Imbalance between Consumption and Investment
Hongsheng Fang and
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Julan Du: The Chinese University of Hong Kong and Hong Kong Institute for Monetary Research
Hongsheng Fang: Zhejiang University
Xiangrong Jin: Zhejiang University
No 232013, Working Papers from Hong Kong Institute for Monetary Research
The Chinese government has been pursuing economic growth under the guidance of "growth is a hard principle". In the context of the Chinese political and economic governance system, local governments have employed the overtaking strategy (placing primary emphasis on the development of capital and technology-intensive industries) and the real estate development strategy to push for economic growth and fiscal revenue growth. This has led to a repressed labor share and an elevated capital and government share in primary and secondary income distribution structure. Using the empirical strategy of Acemoglu et al. (2003), we confirm that the development strategies have shaped an imbalanced consumption-investment structure through primary and secondary income distribution as well as other channels. It suggests that the Chinese government will be able to accomplish China's transition from an investment-led growth model to a consumption-based growth model only if it modifies its political and economic governance system and removes the distortions in development strategies.
Keywords: Overtaking Strategy; Real Estate Development Strategy; Biased Income Distribution Structure; Consumption-Investment Imbalances (search for similar items in EconPapers)
JEL-codes: E62 E65 H20 H77 (search for similar items in EconPapers)
Pages: 41 pages
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-tra
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