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China’s growth adjustment: moderation and structural changes

Author

Listed:
  • Gang Fan
  • Liping He
  • Xiaoyun Wei
  • Liyan Han

Abstract

The recent slowdown in the Chinese economy is interpreted in two dimensions: a long-run, structural shift toward a moderation in China’s earlier high growth pace, and a short-run, mainly cyclical, adjustment to the earlier economic overheating. Main causes of the long-run shift are export deceleration, rising wage compensation, and higher energy import dependence, which all tend to lead Chinese investment growth and economic growth to scale down now and in the future, though possibly continuing on a fairly high pace around 8 %. On the other hand, the short-run one is a correction process, often complicated by external shocks. When policy over-reacts, the process of growth moderation—the long-run shift—would be possibly delayed. A more prudent macroeconomic policy should help China to carry through the task of growth adjustment. The process also bears significant implications for structural changes and rebalancing: convergence between consumption growth and investment growth; convergence between import and export growths; convergence in economic growth between China’s inland and coastal regions. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Gang Fan & Liping He & Xiaoyun Wei & Liyan Han, 2013. "China’s growth adjustment: moderation and structural changes," Economic Change and Restructuring, Springer, vol. 46(1), pages 9-24, March.
    • Handle: RePEc:kap:ecopln:v:46:y:2013:i:1:p:9-24
    DOI: 10.1007/s10644-012-9135-2
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    References listed on IDEAS

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    1. Sai Ding & John Knight, 2011. "Why has China Grown So Fast? The Role of Physical and Human Capital Formation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(2), pages 141-174, April.
    2. Robert B. Barsky & Lutz Kilian, 2004. "Oil and the Macroeconomy Since the 1970s," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 115-134, Fall.
    3. Ding, Sai & Knight, John, 2009. "Can the augmented Solow model explain China's remarkable economic growth? A cross-country panel data analysis," Journal of Comparative Economics, Elsevier, vol. 37(3), pages 432-452, September.
    4. Du, Limin & Yanan, He & Wei, Chu, 2010. "The relationship between oil price shocks and China's macro-economy: An empirical analysis," Energy Policy, Elsevier, vol. 38(8), pages 4142-4151, August.
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    Cited by:

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    4. Nusair, Salah A. & Olson, Dennis, 2019. "The effects of oil price shocks on Asian exchange rates: Evidence from quantile regression analysis," Energy Economics, Elsevier, vol. 78(C), pages 44-63.

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    More about this item

    Keywords

    Return to investment; Growth adjustment; Soft landing; Re-balancing; O11; E6; N1; E24;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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