China's extraordinarily rapid economic growth since 1978, driven by market- oriented reforms, has set world records and continued unabated, despite predictions of an inevitable slowdown. In The State ...Strikes Back: The End of Economic Reform in China?, the renowned China scholar Nicholas R. Lardy argues that China's future growth prospects could be equally bright but are shadowed by the specter of resurgent state dominance, which has begun to diminish the vital role of the market and private firms in China's economy. Lardy's book is a timely sequel to his path-breaking Markets Over Mao: The Rise of Private Business in China (Peterson Institute for International Economics, 2014). This book mobilizes new data to trace how President Xi Jinping has consistently championed state-owned or controlled enterprises, encouraging local political leaders and financial institutions to prop up ailing, underperforming companies that are a drag on China's potential. As with his previous book, Lardy's perspective departs from conventional wisdom, especially in its contention that China could achieve a high growth rate for the next two decades—if it reverses course and returns to the path of market- oriented reforms.
China's Exchange Rate Policy Dilemma Goldstein, Morris; Lardy, Nicholas
The American economic review,
05/2006, Letnik:
96, Številka:
2
Journal Article
Recenzirano
This paper summarizes key aspects of China's exchange rate policy, outlines the problems it creates for both China and the global economy, and proposes a feasible policy compromise.
The global financial crisis and ensuing economic downturn has raised many questions concerning the future of global economic growth. Prior to the financial crisis, global growth was characterized by ...growing imbalances, reflected primarily in large trade surpluses in China, Japan, Germany, and the oil exporting countries and rapidly growing deficits, primarily in the United States. The global crisis raises the question of whether the previous growth model of low consumption, high saving countries such as China is obsolete. Although a strong and rapid policy response beginning in the early fall of 2008 made China the first globally significant economy to come off the bottom and begin to grow more rapidly, critics charged that China's recovery was based on the old growth model, relying primarily on burgeoning investment in the short run and the expectation of a revival of expanding net exports once global recovery gained traction. Critics, however, argued that as government-financed investment inevitably tapered off, the likelihood was that global recovery would not be sufficiently strong for China's exports to resume their former role as a major contributor to China's economic expansion. The prospect, in the eyes of these critics, is that China's growth will inevitably falter. This study examines China's response to the global crisis, the prospects for altering the model of economic growth that dominated the first decade of this century, and the implications for the United States and the global economy of successful Chinese rebalancing. On the first it analyzes the strengths and weaknesses of China's stimulus program. On the second it analyzes the nature of origins of the imbalances in China's economy and the array of policy options that the government has to transition to more consumption-driven growth. On the third successful rebalancing would mean that more rapid growth of consumption would offset the drag on growth from a shrinkage of China's external surplus. Successful rebalancing would mean China would no longer be a source of financing for any ongoing US external deficit. From a global perspective China would no longer be a source of the global economic imbalances that contributed to the recent global financial crisis and great recession.
Over the past five years China has emerged as the world's largest global surplus economy; indeed by 2007-08 the size of its surplus relative to its GDP was of a magnitude unprecedented for a large ...trading economy. This development is especially surprising since in the first twenty-five years of economic reform China's trade and current account surpluses were quite small by East Asian standards, averaging less than 2 percent of GDP. This study provides a comprehensive analysis of the key economic challenges facing the Chinese authorities in light of the still undervalued exchange rate, the large build-up of foreign exchange reserves, and more recently the sharp decline in economic growth. It analyzes the implications of China's exchange-rate policy for the effectiveness of monetary policy, the transition to a commercially oriented banking system, the evolving structure of output and demand, and the risk of protectionism abroad. The policy-options portion of the study takes account of the significant real effective appreciation of the renminbi over the past fifteen months and will contrast the pros and cons of a "stay-the-course" policy with that of a bolder, "three-stage" approach that would seek to maintain recent progress and to reduce even further the undervaluation of the renminbi.
Taiwan has a special status for the United States, as both a leading high-technology economic partner and a place of political and security concern. The authors look at both the quantitative and ...qualitative evidence on the potential effects of a US-Taiwan free trade agreement (FTA), both for maximizing US economic benefits and for securing a prosperous and secure future for Taiwan. Their analysis indicates that the direct economic benefits of a prospective FTA would be modest and that the FTA could be most valuable to the United States if it leads Taiwan toward greater regional integration.
China is playing a growing role in the world economy. It is one of the world's fastest growing countries and is the tenth largest exporter. China is also a significant recipient of foreign aid and a ...major borrower on international capital markets. Even more significantly, it is attracting vast amounts of foreign direct investment--over $11 billion in 1992 alone. * This study examines the implications of China's emergence as a major player in the world economy. Its integration into the international economic order poses major difficulties for the rest of the world. These problems include bringing China's mixed market/centrally planned economy into the GATT, adapting to competition from labor-intensive Chinese exports, encouraging further market-oriented reform, and accommodating its demand for international capital. But China's participation in the global economy also offers important opportunities for trade, investment, and international cooperation to promote world prosperity and stability. * Dr. Lardy anticipates that China will continue on a rapid growth path, thus magnifying the policy challenges and opportunities for its trading partners. He recommends a series of steps to facilitate China's full participation in the world economy.
