Structural change, rebalancing, and the danger of a middle-income trap in China

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Title: Structural change, rebalancing, and the danger of a middle-income trap in China
Author: Wagner, Helmut
Organization: Suomen Pankki
Bank of Finland
Department / Unit: Siirtymätalouksien tutkimuslaitos (BOFIT)
Institute for Economies in Transition (BOFIT)
Series: BOFIT Policy Brief
ISSN: 2342-205X
Series year: 2018
Series number: 6/2018
Year of publication: 2018
Publication date: 20.6.2018
Pages: 25
Subject (yso): talouskasvu; rakennemuutos
Keywords: Bofit-kokoelma; Kiina
Other keywords: structural change; rebalancing; middle-income trap; development; China
Abstract: China is currently experiencing a structural change toward tertiarization and an implied growth slowdown associated with it. The paper investigates whether this growth slowdown is merely cyclical or a negative trend, and further what China is doing or should do to avoid falling into a “middle-income trap,” a problem many emerging economies have experienced in recent decades. The pitfalls of the current “soft” rebalancing policy in China are analyzed in the context of this development.
Table of contents: Abstract....3 1. Introduction....3 2. China’s recent growth slowdown and the fear of an MIT....3 2.1. Growth slowdown: The sum of multiple determinants and structural change....4 2.2. MIT concept....6 3. MIT as a result of ineffective rebalancing in China....8 3.1. The first wave of imbalances....8 3.2. The second wave of imbalances....9 3.3. Need for simultaneously reducing the old and new imbalances....10 3.4. MIT-concept vs. low-convergence concept....13 4. Growth slowdown (2010–2017) cyclical or trend? – revisited....15 5. How to avoid an MIT / slow convergence in China?....16 6. Concluding remarks and further research....18 7. References....20
Rights: https://helda.helsinki.fi/bof/copyright


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