China's Pattern of Growth: Moving to Sustainability and Reducing Inequality

By Louis Kuijs, Tao Wang. 2006

175 citations recorded by the source corpus.

The authors study the sources and pattern of China's impressive economic growth over the past 25 years and show that key issues currently of concern to policymakers-widening inequality, rural poverty, and resource intensity-are to a large extent rooted in China's growth strategy, and resolving them requires a rebalancing of policies. Using both macroeconomic level and sector data and analyses, the authors extend the growth accounting framework to decompose the sources of labor productivity growth. They find that growth of industrial production, led by a massive investment effort that boosted the capital/labor ratio, has been the single most important factor driving GDP and overall labor productivity growth since the early 1990s. The shift of labor from low-productivity agriculture has been limited, and, hence, contributed only marginally to overall labor productivity growth. The productivity gap between agriculture and the rest of the economy has continued to widen, leading to increased rural-urban income inequality. Looking ahead, the authors calibrate two alternative scenarios. They show that continuing with the current growth pattern would further increase already high investment and saving needs to unsustainable levels, lower urban employment growth, and widen the rural-urban income gap. Instead, reducing subsidies to industry and investment, encouraging the development of the services industry, and reducing barriers to labor mobility would result in a more balanced growth with an investment-to-GDP ratio that is consistent with the medium-term saving trend, faster growth in urban employment, and a substantial reduction in the income gap between rural and urban residents.

Subfields: Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/0a00c5dca6ea01f8f7a563dc1413606774b0eca4

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Political Science and International Relations

Citations in the corpus

Can China´s Growth be Sustained? A Productivity Perspective (2008, background): “9 Although the reallocation of labor from low-productivity to high-productivity activities would continue to contribute to economic growth, Kuijs and Wang (2006) find that since the early 1990s the shift of labor from low-productivity agriculture has been limited, and hence contributed only…”
The pattern of growth and poverty reduction in China (2009, methodology): “Additionally, the common origin and methodology of the primary data make this empirical 3 For further discussion on these points see the useful overview in Kuijs and Wang (2006).”
Space, scale and accents: Constructing migrant identity in Beijing (2007, background): “4 percent per annum, with a 6-fold increase from 1984 to 2004 (Kuijs and Wang 2005).”
Income inequality as a cause of the Great Recession?: A survey of current debates (2012, unknown): “…with this assessment, there is a broad consensus that structural measures need to be taken in order to increase consumption as a share of output (Kuijs and Wang, 2005; Blanchard and Giavazzi, 2006; Yongding, 2007; Prasad, 2009; Guo and N’Diaye, 2009; Huang and Tao, 2010; Reisen, 2010; Song et…”
How Will China's Saving-Investment Balance Evolve? (2006, unknown): “A number of largely microeconomic measures to rebalance the economic structure in the direction of less industry, more services is discussed in Kuijs and Wang (2005). These policies would bring down both saving and investment, but with an ambiguous impact on the saving-investment balance.”
Accounting for China's Growth (2010, background): “At the start of the reforms, China s capital to output ratio was 1.62, far below 1See, e.g., Blanchard and Giavazzi (2005); Kuijs and Wang (2005); Prasad and Rajan (2006); Aziz (2007); Lardy (2007) and Prasad (2009).”
The territorial dynamics of innovation in China and India (2012, unknown): “China and India partly adopted this sort of approach and continue to invest heavily in ‘innovation inputs’, such as R&D and higher education (Kuijs and Wang, 2006).”