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Great Turning: How Has the Chinese Economy Been Trapped in an Efficiency-and-Balance Tradeoff?

Author

Listed:
  • Ming Lu

    (Shanghai Jiao Tong University and Fudan University)

  • Kuanhu Xiang

    (Shanghai Jiao Tong University)

Abstract

Large-country development faces the challenge of meeting the dual goals of economic growth and regional development, while resolving the tension between these two objectives. Over the past decade, the Chinese government has attempted to use the allocation of construction land and fiscal transfer payments to encourage the industrial development of its underdeveloped areas. This paper shows that this attempt was accompanied by an overall economic slowdown and a decline in resource allocation efficiency, which not only undermines the international competitiveness of China's economy, but also creates an elevated risk of debt. The paper points out that the realization of China's dual goals of efficiency and regional balance will require increased labor mobility rather than a simple increase in the scale of policy driven resource relocation.

Suggested Citation

  • Ming Lu & Kuanhu Xiang, 2016. "Great Turning: How Has the Chinese Economy Been Trapped in an Efficiency-and-Balance Tradeoff?," Asian Economic Papers, MIT Press, vol. 15(1), pages 25-50, Winter/Sp.
    • Handle: RePEc:tpr:asiaec:v:15:y:2016:i:1:p:25-50
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    Citations

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    Cited by:

    1. Han, Libin & Lu, Ming & Xiang, Kuanhu & Zhong, Huiyong, 2021. "Density, distance and debt: New-town construction and local-government financial risks in China," Journal of Asian Economics, Elsevier, vol. 77(C).
    2. Mingzhi Zhang & Xiangyu Zhou & Chao Chen & Jianxu Liu & Jiaxi Li & Fuying Huan & Bowen Wang, 2023. "Enterprise Spatial Agglomeration and Economic Growth in Northeast China: Policy Implications for Uneven to Sustainable Development," Sustainability, MDPI, vol. 15(15), pages 1-17, July.
    3. Min Fang & Libin Han & Zibin Huang & Ming Lu & Li Zhang, 2022. "Place-based Land Policy and Spatial Misallocation: Theory and Evidence from China," Working Papers tecipa-729, University of Toronto, Department of Economics.
    4. Lu, Ming & Zhang, Xi, 2019. "Towards an intelligent country: China’s higher education expansion and rural children’s senior high school participation," Economic Systems, Elsevier, vol. 43(2), pages 1-1.
    5. Fan, Haichao & Lai, Edwin L.-C. & (Steffan) Qi, Han, 2019. "Trade liberalization and Firms’ export performance in China: Theory and evidence," Journal of Comparative Economics, Elsevier, vol. 47(3), pages 640-668.
    6. Ding Lu, 2017. "China's Growth Slowdown and Prospects for Becoming a High-Income Developed Economy," Asian Economic Papers, MIT Press, vol. 16(1), pages 89-113, Winter/Sp.
    7. Libin Han & Ming Lu, 2017. "Housing prices and investment: an assessment of China's inland-favoring land supply policies," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 22(1), pages 106-121, January.
    8. Yali Liu & Ming Lu & Kuanhu Xiang, 2018. "Balance through Agglomeration: A Race between Geography and Policy in China's Regional Development," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 26(6), pages 72-96, November.
    9. Wu, Guiying Laura & Feng, Qu & Wang, Zhifeng, 2021. "A structural estimation of the return to infrastructure investment in China," Journal of Development Economics, Elsevier, vol. 152(C).
    10. Ming Lu & Huiyong Zhong, 2018. "Eurozonization of the Chinese Economy: How Do Intergovernmental Transfers Affect Local Government Debt in China?," Asian Economic Papers, MIT Press, vol. 17(1), pages 1-18, Winter/Sp.
    11. Liang, Wenquan & Lu, Ming & Zhang, Hang, 2016. "Housing prices raise wages: Estimating the unexpected effects of land supply regulation in China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 70-81.
    12. Feng, Qu, 2020. "Common factors and common breaks in panels: An empirical investigation," Economics Letters, Elsevier, vol. 187(C).
    13. Binkai Chen & Ming Lu & Christopher Timmins & Kuanhu Xiang, 2019. "Spatial Misallocation: Evaluating Place-Based Policies Using a Natural Experiment in China," NBER Working Papers 26148, National Bureau of Economic Research, Inc.
    14. Hongwei Xu & Wenquan Liang & Kuanhu Xiang, 2022. "The Environmental Consequences of Place‐Based Policies in China: An Empirical Study Based on SO2 Emission Data," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(4), pages 201-229, July.
    15. Du, Lizhao & Wei, Mianjin & Zhang, Shaoxin & Pan, Junyu, 2023. "Unveiling the policy intervention effects of natural resource regulation on firm-level pollution emissions: Evidence from China's restrained land supply," Resources Policy, Elsevier, vol. 86(PA).

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