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Adjustment of Global Imbalances and Its Impact on China's Economy

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  • Jianhuai Shi

Abstract

The present paper discusses ways of adjusting the imbalances of the global economy and its impact on China's economy. The analysis in the paper shows that the cut of US fiscal deficits and the appreciation of the currencies of East Asia, including China's RMB, are necessary for a smooth adjustment of the global imbalances. The adjustments will have a positive impact on China's economy and will help China realize its external balance. The increase in public spending on the service sector along with the appreciation of RMB will help China realize the internal balance too. The adjustment of the global imbalances will create opportunities and an external pushing force for China in its industrial restructuring and shift in the model of economic growth. (Edited by Xinyu Fan)

Suggested Citation

  • Jianhuai Shi, 2006. "Adjustment of Global Imbalances and Its Impact on China's Economy," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(3), pages 71-85, May.
    • Handle: RePEc:bla:chinae:v:14:y:2006:i:3:p:71-85
    DOI: 10.1111/j.1749-124X.2006.00023.x
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    1. Maurice Obstfeld & Kenneth Rogoff, 2007. "The Unsustainable US Current Account Position Revisited," NBER Chapters, in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 339-376, National Bureau of Economic Research, Inc.
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