{
  "title": "China's Economy in Transition: From External to Internal Rebalancing",
  "publication": "Books, November 7, 2013",
  "sourceUrl": "https://www.imf.org/en/publications/books/issues/2016/12/31/china-s-economy-in-transition-from-external-to-internal-rebalancing-40511",
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  "summary": "China's current account surplus has declined to around one-quarter the peak reached before the global financial crisis. While this is a major reduction in China's external imbalance, it has not been accompanied by a decisive shift toward consumption-based growth.",
  "sections": [
    {
      "heading": "Overview and key findings",
      "content": "- China's current account surplus has declined to around one-quarter the peak reached before the global financial crisis.\n- The decline in the external surplus has not been accompanied by a decisive shift toward consumption-based growth.\n- Compression of the external surplus has been accomplished through increasing fixed investment, so that investment is now an even higher share of China's national economy.\n- The increasing reliance on fixed investment as the main driver of growth raises questions about:\n  - the durability of the compression in the external surplus, and\n  - the sustainability of the current growth model that has lifted about 500 million people out of poverty over the last three decades.\n- The volume examines various aspects of the rebalancing process underway in China and highlights policy lessons for achieving stable, sustainable, and inclusive growth."
    },
    {
      "heading": "Analytical themes covered",
      "content": "- Dynamics of the current account and external imbalance adjustment.\n- Role of fixed investment versus consumption in growth composition.\n- Implications of a rising capital-to-output ratio and investment share for medium-term macroeconomic stability.\n- Relevance of real interest rates, interest rate liberalization, and saving rate dynamics for rebalancing.\n- Labor market and income distribution considerations in an internal rebalancing process.\n- Links between total factor productivity, production structure, and external trade patterns."
    },
    {
      "heading": "Policy implications and lessons (as emphasized by the volume)",
      "content": "- Rebalancing should aim to shift growth toward more consumption-driven and productivity-led sources rather than rely predominantly on higher fixed investment.\n- Policies that support stable, sustainable, and inclusive growth are central to maintaining the gains from decades of poverty reduction.\n- Attention to financial sector and interest rate policies (including interest rate liberalization) is important for reallocating resources efficiently.\n- Labor supply, personal income, and redistribution mechanisms are relevant to broadening domestic demand and inclusion.\n\n---\n\n\nSource: https://www.imf.org/en/publications/books/issues/2016/12/31/china-s-economy-in-transition-from-external-to-internal-rebalancing-40511"
    }
  ],
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    "Authors: Anoop Singh, Malhar S Nabar, Papa M N'Diaye",
    "Published: November 7, 2013",
    "Series: Books",
    "DOI: https://doi.org/10.5089/9781484303931.071",
    "China's current account surplus has declined to around one-quarter the peak reached before the global financial crisis.",
    "The decline in the external surplus has not been accompanied by a decisive shift toward consumption-based growth.",
    "Compression of the external surplus has been accomplished through increasing fixed investment, so that investment is now an even higher share of China's national economy.",
    "The increasing reliance on fixed investment as the main driver of growth raises questions about:",
    "The volume examines various aspects of the rebalancing process underway in China and highlights policy lessons for achieving stable, sustainable, and inclusive growth.",
    "Dynamics of the current account and external imbalance adjustment.",
    "Role of fixed investment versus consumption in growth composition.",
    "Implications of a rising capital-to-output ratio and investment share for medium-term macroeconomic stability.",
    "Relevance of real interest rates, interest rate liberalization, and saving rate dynamics for rebalancing.",
    "Labor market and income distribution considerations in an internal rebalancing process.",
    "Links between total factor productivity, production structure, and external trade patterns.",
    "Rebalancing should aim to shift growth toward more consumption-driven and productivity-led sources rather than rely predominantly on higher fixed investment.",
    "Policies that support stable, sustainable, and inclusive growth are central to maintaining the gains from decades of poverty reduction.",
    "Attention to financial sector and interest rate policies (including interest rate liberalization) is important for reallocating resources efficiently.",
    "Labor supply, personal income, and redistribution mechanisms are relevant to broadening domestic demand and inclusion."
  ],
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