Source: www.iie.com
Topic: China's Economic
Sort Desciption: chapter 1 1 China: Rebalancing Economic Growth Nicholas R. Lardy In December 2004 at the annual Central Economic Work Conference, Chinas top political leadership agreed to fundamentally alter the ...
Content Inside:
chapter
1
1
China: Rebalancing
Economic Growth
Nicholas R. Lardy
In December 2004 at the annual Central Economic Work Conference, Chinas top
political leadership agreed to fundamentally alter the countrys growth strategy by
rebalancing the sources of economic growth. In place of investment and export-
led development, they endorsed transitioning to a growth path that relied more on
expanding domestic consumption.1 Since 2004, Chinas top leadership, most
notably Premier Wen Jiaobao in his speeches to the annual meetings of the
National Peoples Congress in the spring of 2006 and 2007 and at the Central
Economic Work Conference in November-December 2006, have reiterated the
goal of strengthening domestic consumption as a major source of economic
growth.2
Chinas announced decision to rebalance the sources of economic growth is
laudable. It increases the likelihood of Chinas sustaining its strong growth of
recent years, achieving more rapid job creation, improving income distribution or
at least slowing the pace of rising income inequality, and reducing its outsized
increases in energy consumption of recent years. It also would help reduce global
economic imbalances and thus lessen the risk that China would be subject to
protectionist pressure, especially in Europe and the United States.
But at least through early 2007 Chinas policy initiatives have been relatively
modest, with only a slight change in Chinas underlying growth dynamic. As a
result, Chinas economic expansion remains disproportionately dependent on
rising investment expenditures and an expanding trade surplus. Chinas external
* An early version of this paper was published as China: Toward a Consumption-Driven Growth
Path , Institute for International Economics Policy Brief 06-6 (October 2006).
1
"Central Economic Work Conference Convenes in Beijing, December 3 to 5," Peoples Daily ,
December 6, 2004, http://www.people.com.cn.
2
Wen Jiaobao, "Report ...
china rebalancing economic growth lardy, rebalancing economic growth, nicholas r lardy 2007 china rebalancing economic growth, lardy china rebalancing