China’s Rebalancing: Recent Progress, Prospects and Policies

China’s Rebalancing: Recent Progress, Prospects and Policies
Author: Rui Mano
Publisher: International Monetary Fund
Total Pages: 17
Release: 2018-11-12
Genre: Business & Economics
ISBN: 1513510703

While China’s growth gathered momentum in 2017, rebalancing was uneven and decelerated along many dimensions reflecting the temporary factors behind the growth pickup. Going forward, rebalancing is expected to proceed as these temporary factors recede, but elevated income inequality and leverage will remain a challenge. The authorities are already pursuing several pro-rebalancing policies which could be expanded to support each dimension of rebalancing while reducing trade-offs between them.

Rebalancing in China—Progress and Prospects

Rebalancing in China—Progress and Prospects
Author: Ms.Longmei Zhang
Publisher: International Monetary Fund
Total Pages: 22
Release: 2016-09-06
Genre: Business & Economics
ISBN: 1475532938

China is transitioning to a greener, more inclusive, more consumer and service based, and less credit-driven economy. This paper defines a framework for assessing rebalancing, reviews progress, and discusses medium-term prospects. External rebalancing has advanced well, while progress on internal rebalancing has been mixed, with substantial progress on the supply side, moderate progress on the demand side, and limited progress on the credit side. Rebalancing on income equality and environment has also been mixed, with the energy intensity of growth falling and labor’s share of income rising, but income inequality and local air pollution remaining very high. Going forward, the high national saving is expected to fall owing to demographic change and a stronger social safety net, while the investment ratio is expected to fall similarly, with increasing competition and profit normalization as growth slows. The service sector will continue to gain importance, helping reduce the carbon intensity of output and increase labor’s share of national income and household consumption. Reducing the credit intensity of growth is likely to progress slowly unless decisive corporate restructuring and SOE reforms are implemented.

China 2049

China 2049
Author: David Dollar
Publisher: Brookings Institution Press
Total Pages: 444
Release: 2020-06-09
Genre: Political Science
ISBN: 0815738064

How will China reform its economy as it aspires to become the next economic superpower? It's clear that China is the world's next economic superpower. But what isn't so clear is how China will get there by the middle of this century. It now faces tremendous challenges such as fostering innovation, dealing with ageing problem and coping with a less accommodative global environment. In this book, economists from China's leading university and America's best-known think tank offer in depth analyses of these challenges. Does China have enough talent and right policy and institutional mix to transit from input-driven to innovation-driven economy? What does ageing mean, in terms of labor supply, consumption demand and social welfare expenditure? Can China contain the environmental and climate change risks? How should the financial system be transformed in order to continuously support economic growth and keep financial risks under control? What fiscal reforms are required in order to balance between economic efficiency and social harmony? What roles should the state-owned enterprises play in the future Chinese economy? In addition, how will technological competition between the United States and China affect each country's development? Will the Chinese yuan emerge as a major reserve currency, and would this destabilize the international financial system? What will be China's role in the international economic institutions? And will the United States and other established powers accept a growing role for China and the rest of the developing world in the governance of global institutions such as the World Trade Organization and the International Monetary Fund, or will the world devolve into competing blocs? This book provides unique insights into independent analyses and policy recommendations by a group of top Chinese and American scholars. Whether China succeeds or fails in economic reform will have a large impact, not just on China's development, but also on stability and prosperity for the whole world.

China’s Productivity Convergence and Growth Potential—A Stocktaking and Sectoral Approach

China’s Productivity Convergence and Growth Potential—A Stocktaking and Sectoral Approach
Author: Min Zhu
Publisher: International Monetary Fund
Total Pages: 46
Release: 2019-11-27
Genre: Business & Economics
ISBN: 1513515357

China’s growth potential has become a hotly debated topic as the economy has reached an income level susceptible to the “middle-income trap” and financial vulnerabilities are mounting after years of rapid credit expansion. However, the existing literature has largely focused on macro level aggregates, which are ill suited to understanding China’s significant structural transformation and its impact on economic growth. To fill the gap, this paper takes a deep dive into China’s convergence progress in 38 industrial sectors and 11 services sectors, examines past sectoral transitions, and predicts future shifts. We find that China’s productivity convergence remains at an early stage, with the industrial sector more advanced than services. Large variations exist among subsectors, with high-tech industrial sectors, in particular the ICT sector, lagging low-tech sectors. Going forward, ample room remains for further convergence, but the shrinking distance to the frontier, the structural shift from industry to services, and demographic changes will put sustained downward pressure on growth, which could slow to 5 percent by 2025 and 4 percent by 2030. Digitalization, SOE reform, and services sector opening up could be three major forces boosting future growth, while the risks of a financial crisis and a reversal in global integration in trade and technology could slow the pace of convergence.

Spillovers from China’s Growth Slowdown and Rebalancing to the ASEAN-5 Economies

Spillovers from China’s Growth Slowdown and Rebalancing to the ASEAN-5 Economies
Author: Allan Dizioli
Publisher: International Monetary Fund
Total Pages: 35
Release: 2016-08-09
Genre: Business & Economics
ISBN: 1475524269

After many years of rapid expansion, China’s growth is slowing to more sustainable levels and is rebalancing, with consumption becoming the main growth driver. This transition is likely to have negative effects on its trading partners in the near term. This paper studies the potential spillovers to the ASEAN-5 economies through trade, commodity prices, and financial markets. It finds that countries with closer trade linkages with China (Malaysia, Singapore, and Thailand) and net commodity exporters (Indonesia and Malaysia) would suffer the largest impact, with growth falling between 0.2 and 0.5 percentage points in response to a decline in China’s growth by 1 percentage point depending on the model used and the nature of the shock. The impact could be larger if China’s slowdown and rebalancing coincides with bouts of global financial volatility. There are also opportunities from China’s rebalancing, both in merchandise and services trade, and there is preliminary evidence that some ASEAN-5 economies are already benefiting from these trends.

People's Republic of China

People's Republic of China
Author: International Monetary Fund. Asia and Pacific Dept
Publisher: International Monetary Fund
Total Pages: 77
Release: 2017-08-15
Genre: Business & Economics
ISBN: 1484314727

This Selected Issues paper examines the drivers and prospects for high levels of savings in China. China has one of the highest levels of national savings in the world, which is at the heart of its external and internal imbalances. High and rising household savings have mainly resulted from demographic changes as a result of the one-child policy and the breakdown of the social safety net during the transition from a planned to a market economy. Demographic changes will put downward pressure on national savings. Policy efforts to strengthen the social safety net and reduce income inequality are also needed to reduce savings further and faster and to boost consumption.

China's Rise

China's Rise
Author: C. Fred Bergsten
Publisher: Peterson Institute
Total Pages: 292
Release: 2009
Genre: Business & Economics
ISBN: 0881324345

Helps the United States and the rest of the world better comprehend the facts and dynamics underpinning China's rise. This book analyzes the data on China's economy, foreign and domestic policy, and national security.

China’s Digital Economy: Opportunities and Risks

China’s Digital Economy: Opportunities and Risks
Author: Ms.Longmei Zhang
Publisher: International Monetary Fund
Total Pages: 24
Release: 2019-01-17
Genre: Business & Economics
ISBN: 1484389700

China’s digital economy has expanded rapidly in recent years. While average digitalization of the economy remains lower than in advanced economies, digitalization is already high in certain regions and sectors, in particular e-commerce and fintech, and costal regions. Such transformation has boosted productivity growth, with varying impact on employment across sectors. Going forward, digitalization will continue to reshape the Chinese economy by improving efficiency, softening though not reversing, the downward trend of potential growth as the economy matures. The government should play a vital role in maximizing the benefits of digitalization while minimizing related risks, such as potential labor disruption, privacy infringement, emerging oligopolies, and financial risks.

China's Changing Trade and the Implications for the CLMV

China's Changing Trade and the Implications for the CLMV
Author: Mr.Koshy Mathai
Publisher: International Monetary Fund
Total Pages: 84
Release: 2016-09-01
Genre: Business & Economics
ISBN: 1475531710

China’s trade patterns are evolving. While it started in light manufacturing and the assembly of more sophisticated products as part of global supply chains, China is now moving up the value chain, “onshoring” the production of higher-value-added upstream products and moving into more sophisticated downstream products as well. At the same time, with its wages rising, it has started to exit some lower-end, more labor-intensive sectors. These changes are taking place in the broader context of China’s rebalancing—away from exports and toward domestic demand, and within the latter, away from investment and toward consumption—and as a consequence, demand for some commodity imports is slowing, while consumption imports are slowly rising. The evolution of Chinese trade, investment, and consumption patterns offers opportunities and challenges to low-wage, low-income countries, including China’s neighbors in the Mekong region. Cambodia, Lao P.D.R., Myanmar, and Vietnam (the CLMV) are all open economies that are highly integrated with China. Rebalancing in China may mean less of a role for commodity exports from the region, but at the same time, the CLMV’s low labor costs suggest that manufacturing assembly for export could take off as China becomes less competitive, and as China itself demands more consumption items. Labor costs, however, are only part of the story. The CLMV will need to strengthen their infrastructure, education, governance, and trade regimes, and also run sound macro policies in order to capitalize fully on the opportunities presented by China’s transformation. With such policy efforts, the CLMV could see their trade and integration with global supply chains grow dramatically in the coming years.