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Haste Makes Waste: Policy Options Facing China after Reaching the Lewis Turning Point

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  • Fang Cai

Abstract

This paper provides a framework for assessing the health of China's macro economy and the sustainability of economic growth by combining supply-side and demand-side factors and by considering their relationship at different stages of development. As the Chinese economy passed through its Lewis turning point, weakened supply-side factors caused its growth to slow. The increasing concern regarding the economic slowdown has induced both the central and local governments to implement various stimulus plans through instruments of macroeconomic, industrial and regional policies. By examining where the imbalances of the Chinese economy really lie and investigating the determinants of the current slowdown and of the enhancement of the potential growth rate, the present paper suggests that the best path of action for the Chinese Government is not to stimulate growth through demand-side factors but to increase the potential growth rate through reforms in certain key areas.

Suggested Citation

  • Fang Cai, 2015. "Haste Makes Waste: Policy Options Facing China after Reaching the Lewis Turning Point," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(1), pages 1-20, January.
    • Handle: RePEc:bla:chinae:v:23:y:2015:i:1:p:1-20
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    File URL: http://hdl.handle.net/10.1111/cwe.12097
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    Cited by:

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    2. Linxiu Zhang & Weiliang Su & Tor Eriksson & Chengfang Liu, 2016. "How Off-farm Employment Affects Technical Efficiency of China's Farms: The Case of Jiangsu," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 24(3), pages 37-51, May.
    3. Pingyao Lai, 2015. "Growth Slowdown in China since 2008: Will There Be a Hard Landing in the Near Future?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(3), pages 42-58, May.
    4. Feng Li & Guangdong Li & Weishan Qin & Jing Qin & Haitao Ma, 2018. "Identifying Economic Growth Convergence Clubs and Their Influencing Factors in China," Sustainability, MDPI, vol. 10(8), pages 1-21, July.
    5. Kayser, Dirk, 2016. "Solar photovoltaic projects in China: High investment risks and the need for institutional response," Applied Energy, Elsevier, vol. 174(C), pages 144-152.
    6. Ramirez Camargo, Luis & Valdes, Javier & Masip Macia, Yunesky & Dorner, Wolfgang, 2019. "Assessment of on-site steady electricity generation from hybrid renewable energy systems in Chile," Applied Energy, Elsevier, vol. 250(C), pages 1548-1558.

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