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Is China's Export-Oriented Growth Sustainable?

Author/Editor: Guo, Kai | N'Diaye, Papa
Authorized for Distribution: August 1, 2009
Electronic Access: Free Full Text (PDF file size is 927KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper assesses the sustainability of China's export-oriented growth over the medium to longer term. It shows that maintaining the current export-oriented growth would require significant gains in market share through lower prices in a range of industries. This, in turn, could be achieved through a combination of increases in productivity, lower profits, and higher implicit or explicit subsidies to industry. However, the evidence suggest that it will prove difficult to accommodate such price reductions within existing profit margins or through productivity gains. Moving up the value-added chain, shifting the composition of exports, diversifying the export base, and increasing domestic value added of exports could give room to further export expansion. However, experiences from Asian economies that had similar export-oriented growth suggest there are limits to the global market share a country can occupy. Rebalancing growth toward private consumption would provide a large impetus to output growth and reduce the need for gaining further market share.
 
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Series: Working Paper No. 09/172
Subject(s): China, People's Republic of | Cross country analysis | Economic growth | Export markets | Export performance | Export prices | Export sector | Exports | Fiscal reforms | Global competitiveness | Industrial sector | Private consumption | Productivity
Author's keyword(s): Export-oriented growth | rebalancing.
 
English  
    Published:   August 1, 2009        
            Format:   Paper
    Stock No:   WPIEA2009172   Pages:   21
    Price:   US$18.00
       
     
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