[CEAMeS DP03] – “The Building Up of New Imbalances in China: The Dilemma with Rebalancing”

CEAMeS Discussion Paper No 3 | 2016

Helmut Wagner

also published as: 
SSRN Paper No. 2779510, May 2016

and in:
International Economics and Economic Policy, vol. 14 (2017)
(already published online Sept. 2016: in IEEP; DOI 10.1007/s10368-016-0360-4)

This paper offers a theoretical basis for the concept of rebalancing and applies it to China, where it is  currently a topical issue. Rebalancing here means the correction of economic and social imbalances  built up during industrialization. This correction is accompanied by a structural transformation to‐ wards a more inward‐ and consumption‐driven growth path, associated with growth slowdown. At‐ tempts to mitigate this growth slowdown by either retarding this structural reform process or by us‐ ing expansionary stimulus programmes as done over the past decade in China create new imbalances  that have to be corrected (rebalanced) again. Managing these multiple rebalancing tasks together is  a tremendous undertaking, as this paper shows.

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