Template-Type: ReDIF-Article 1.0
Author-Name: Géza Rippel
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: rippelg@mnb.hu


Title: China – Rebalancing and Sustainable
Convergence

Abstract: The People’s Republic of China has experienced buoyant economic growth in the
past decades, managing a remarkable convergence to advanced economies. The
growth rate of GDP slowed down significantly after the outbreak of the global
crisis, due to both cyclical and structural factors. Serious imbalances inherited
from the pre-crisis growth model have emerged, challenging the sustainability of
rapid economic convergence. In the ‘new normal’, China has been rebalancing its
economy by emphasising household consumption, although the importance of the
private sector needs to be further strengthened. To avoid the middle-income trap,
China must raise productivity driven by domestic innovation, higher value added
production and a more flexible financial system. Shifting to a more balanced and
sustainable growth path requires the reduction of present imbalances, such as the
remarkable regional disparities and the weaknesses of the Chinese financial system.
This study highlights the criteria for successful convergence using the conclusions
of convergence theory and the experiences of East Asian countries.

Classification-JEL: O1, O47, O53
Keywords: China, economic convergence, middle-income trap, aggregate
productivity, economic structure
Pages: 50–72
Volume: 16
Issue: Sepcial Issue
Year: 2017
File-URL: http://english.hitelintezetiszemle.hu/letoltes/geza-rippel.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:16:y:2017:i:SpecialIssue:p:50-72