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China’s Export-led Growth Model: Time to Change? Yang Yao NSD & CCER Peking University 01/12/10 China’s Economy in 2010: F...
What is wrong with the Chinese growth model? 01/12/10 Source:  China Statistical Yearbook , various years.
The Conventional wisdom <ul><li>Savings explanation: </li></ul><ul><ul><li>Chinese people save a lot, so </li></ul></ul><u...
Long-term factors <ul><li>Industrial capacities  </li></ul><ul><li>Human capital </li></ul><ul><li>Accession to WTO </li><...
Ratios of working population in the world 01/12/10 Source: Bloom, David etc. &quot;Demographic change, social security sys...
Capital deepening 01/12/10 China’s Economy in 2010: Forecast and Views,  NYSE, Jan. 7, 2010 Share of labor income in GDP d...
High growth of labor productivity in manufacturing 01/12/10 Source: Lu and Liu,  “The Growth of labor Productivity in Two ...
<ul><li>1991 - 2006:  </li></ul><ul><li>Labor prod. in manufacturing increased by a rate of 13.6 % </li></ul><ul><li>1978-...
<ul><li>Profit rates have increased fast since 1998 </li></ul>01/12/10 Source: CCER Research Team.  “An Estimation of Capi...
Labor share in national income decreases 01/12/10 Source:  China Statistical Yearbook , various years.
01/12/10 Source:  Chong-En Bai, and Zhenjie Qian. “Who Are Taking Away Residents’ Income?”  Social Sciences in China , 200...
Shares of national savings in GDP 01/12/10 Source:  China Statistical Yearbook , various years.
Conclusions <ul><li>China’s export-led growth model is deeply rooted in the international division of labor in which China...
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Yao Yang Chinese Growth Model Nyc Forum

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  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • International Symposium on the Chinese Economy: The Next Thirty Years
  • Transcript of "Yao Yang Chinese Growth Model Nyc Forum"

    1. 1. China’s Export-led Growth Model: Time to Change? Yang Yao NSD & CCER Peking University 01/12/10 China’s Economy in 2010: Forecast and Views, NYSE, Jan. 7, 2010
    2. 2. What is wrong with the Chinese growth model? 01/12/10 Source: China Statistical Yearbook , various years.
    3. 3. The Conventional wisdom <ul><li>Savings explanation: </li></ul><ul><ul><li>Chinese people save a lot, so </li></ul></ul><ul><ul><li>Domestic consumption is low and China has to export a lot. </li></ul></ul><ul><li>Exchange rate explanation: </li></ul><ul><ul><li>China undervalues its currency so its products are artificially competitive in the world market. </li></ul></ul><ul><ul><li>But between 2005 and 2008, China’s export volumes and CA surplus both increased dramatically despite 20% revaluation of the RMB. </li></ul></ul>01/12/10 China’s Economy in 2010: Forecast and Views, NYSE, Jan. 7, 2010
    4. 4. Long-term factors <ul><li>Industrial capacities </li></ul><ul><li>Human capital </li></ul><ul><li>Accession to WTO </li></ul><ul><li>Demographic and structural transformation </li></ul><ul><ul><li>A large labor force in the countryside: 40% of the national total </li></ul></ul><ul><ul><li>Demographic dividends: High working-to-dependent ratio </li></ul></ul>01/12/10
    5. 5. Ratios of working population in the world 01/12/10 Source: Bloom, David etc. &quot;Demographic change, social security systems, and savings,&quot; J ournal of Monetary Economics , 2007, 54(1), pp. 92-114.
    6. 6. Capital deepening 01/12/10 China’s Economy in 2010: Forecast and Views, NYSE, Jan. 7, 2010 Share of labor income in GDP decreases Expansion of trade High returns to capital More investment Share of capital gains in GDP increases Low wage rates + +
    7. 7. High growth of labor productivity in manufacturing 01/12/10 Source: Lu and Liu, “The Growth of labor Productivity in Two Sectors and International Comparison.: China Economic Quarterly, 2007, Vol. 6, No. 2: 357-380. Accumulative growth Annual growth Annual growth (%) Accumulative growth (%)
    8. 8. <ul><li>1991 - 2006: </li></ul><ul><li>Labor prod. in manufacturing increased by a rate of 13.6 % </li></ul><ul><li>1978-2006: </li></ul><ul><ul><li>Manufacturing wage increased by a rate of 6.55% </li></ul></ul><ul><li>Consequences </li></ul><ul><ul><li>Profit rates increased fast </li></ul></ul><ul><ul><li>Share of labor income declined </li></ul></ul>01/12/10
    9. 9. <ul><li>Profit rates have increased fast since 1998 </li></ul>01/12/10 Source: CCER Research Team. “An Estimation of Capital Returns.” CCER Working Paper No. C2007002.
    10. 10. Labor share in national income decreases 01/12/10 Source: China Statistical Yearbook , various years.
    11. 11. 01/12/10 Source: Chong-En Bai, and Zhenjie Qian. “Who Are Taking Away Residents’ Income?” Social Sciences in China , 2009, No. 5.
    12. 12. Shares of national savings in GDP 01/12/10 Source: China Statistical Yearbook , various years.
    13. 13. Conclusions <ul><li>China’s export-led growth model is deeply rooted in the international division of labor in which China is well prepared to export labor-intensive manufacturing goods. </li></ul><ul><li>Taking trade as given, rebalancing should be more focused on better use of China’s savings. </li></ul>01/12/10
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