Is China's Export-Oriented Growth Sustainable?

August 1, 2009

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Format: Chicago

Kai Guo, and Papa M N'Diaye. Is China's Export-Oriented Growth Sustainable?, (USA: International Monetary Fund, 2009) accessed November 21, 2024

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.

Subject: Demand elasticity, Economic theory, Export performance, Exports, Imports, International trade, Price elasticity, Prices

Keywords: China, China's export, Demand, Demand elasticity, Demand function, Export, Export base, Export performance, Export structure, Export-oriented growth, Exports, Exports contribution, Global, Growth model, Growth strategy, Imports, Machine tool, Machine tool export, Market share, Net export, Price, Price elasticity, Rebalancing, World goods export, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/172
Stock No:

WPIEA2009172
ISBN:

9781451873191
ISSN:

1018-5941

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