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The Chinese growth trajectory from a Post Keynesian-Structuralist-Developmental perspective

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Information about The Chinese growth trajectory from a Post...
Economy & Finance

Published on October 15, 2014

Author: pkconference

Source: slideshare.net

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China's New Model session at 12th International Conference
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1. The Chinese growth trajectory from a Post Keynesian-Structuralist-Developmental perspective 12th International Post Keynesian Conference September 2014 Roberto Alexandre Zanchetta Borghi – razb2@cam.ac.uk PhD Student, Centre of Development Studies

2. Introduction • China’s growth miracle: 10% a year over the last 30 years • Which pattern has China followed? Does integration into international markets mean higher growth? • Post Keynesian-Structuralist-Developmental framework to understand sustained trajectories of economic growth • Aim of this paper: to offer an alternative perspective on China’s growth in the light of the Post Keynesian-Structuralist-Developmental framework • National account data and input-output analysis to depict China’s major demand-supply transformations

3. Presentation Structure • Section 1: the Post Keynesian-Structuralist-Developmental framework • Section 2: input-output methodology • Section 3: Chinese demand-supply transformations

4. 1. Post Keynesian-Structuralist-Developmental framework • (i) Central role played by demand, particularly investment: • Demand as the primary inducement to produce • Demand stimuli and multiplier effects • Investment at the core of economic growth • But prone to wide fluctuations • State interventionism

5. 1. Post Keynesian-Structuralist-Developmental framework • (ii) Compatible response of supply to assure demand to be domestically effective (i.e. higher level of domestic economic activity with lower exposure to BoP growth constraints): • Strengthening of interindustry linkages and consolidation of a diversified and integrated domestic productive structure • Structural composition of supply between sectors: manufacturing growth-enhancing properties • Dynamics of domestic and foreign supply

6. 1. Post Keynesian-Structuralist-Developmental framework • (iii) National policies to promote an international insertion that maintain and possibly upgrade the domestic productive structure with high investment levels: • Infant industry argument and regulation of trade and capital flows • Inward- / Outward-looking development strategy • Economic openness is about how it has been promoted • Exports as a source of necessary foreign exchange to assure imports for economic development

7. 2. Input-output methodology • Historical national account data: Chinese Statistical Yearbooks of the National Bureau of Statistics of China • WIOD: 1995-2009 Chinese input-output tables • 17-sectors industry-by-industry matrix: • (1) Agricultural Commodities; (2) Mineral Commodities; (3) Food and Beverages; (4) Textiles and Footwear; (5) Refined Oil and Fuels; (6) Chemicals and Plastics; (7) Metals and Non-Metallic Minerals; (8) Machinery; (9) Electrical Equipments; (10) Transport Equipments; (11) Other Manufacturing Activities; (12) Utilities; (13) Construction; (14) Trade; (15) Transport and Food Services; (16) Financial Services and Real Estate; (17) Public Administration, Education and Health

8. 2. Input-output methodology • Input-output indicators: • Output multipliers • Generator of value-added decomposed by final demand components • Hirschman-Rasmussen backward and forward linkages • Normalised pure backward, forward and total linkages • Fields of influence • Trade coefficients (export, import penetration and imported input coefficients)

9. 3. Chinese demand-supply transformations China – GDP annual growth rate by sector, 1978-2012 (%) Source: author’s elaboration based on 2013 Chinese Statistical Yearbook. 22 20 18 16 14 12 10 8 6 4 2 0 -2 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 GDP Primary Sector Secondary Sector Tertiary Sector

10. 3. Chinese demand-supply transformations China – Contribution share by sector to the GDP growth, 1979-2012 (%) Source: author’s elaboration based on 2013 Chinese Statistical Yearbook. Note: the sum of all three columns of each year equals 100%. 100 85 70 55 40 25 10 -5 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Primary Sector Secondary Sector Tertiary Sector

11. 3. Chinese demand-supply transformations China – GDP composition by expenditure, 1978-2012 (%) Source: author’s elaboration based on 2013 Chinese Statistical Yearbook. 60 50 40 30 20 10 0 -10 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rural Household Consumption Urban Household Consumption Government Consumption Gross Capital Formation Net Exports Total Household Consumption

12. 3. Chinese demand-supply transformations China – Generator of value-added by final demand components, 1995-2009 (%) Source: author’s elaboration based on WIOD Chinese tables. 100 90 80 70 60 50 40 30 20 10 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Household consumption Government expenditure Investment Exports

13. 3. Chinese demand-supply transformations China – Sectoral generator of value-added by final demand components, selected sectors, 1995-2009 (%) 100 Text. & Foot. 80 60 40 20 100 80 60 40 20 Source: author’s elaboration based on WIOD Chinese tables. 100 80 60 40 20 0 Agr. Commod. 0 100 80 60 40 20 0 Elect. Equip. 100 80 60 40 20 0 Met. & Non-Met. Miner. 0 Machinery 100 80 60 40 20 0 Construction

14. 3. Chinese demand-supply transformations China – Hirschman-Rasmussen backward and forward linkages, average 1995-2009 1.6 1.4 1.2 1.0 0.8 0.6 0.4 Mineral Commod. Utilities Ref. Oil & Fuels Chem. & Plastics Generally dependent sectors Met . & Non-Met. Miner. Other Manuf. Act. Transp. & Food Serv. Dependent on interindustry demand Fin. Serv. & Real Estate Trade Agric. Commod. Public Adm., Educ. & Health Machinery Food & Beverages Text. & Foot . Construct ion Transp. Equip. Elect . Equip. Dependent on interindustry supply Relatively independent sectors 0.4 0.6 0.8 1.0 1.2 1.4 1.6 BL FL Source: author’s elaboration based on WIOD Chinese tables. Note: circle size represents the output multiplier, so that the bigger the circle, the higher the multiplier.

15. China – Normalised pure total linkages, selected years Source: author’s elaboration based on WIOD Chinese tables. 3. Chinese demand-supply transformations 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Construction Met. & Non-Met. Miner. Electrical Equip. Chem. & Plastics Public Adm., Educ. & Health Transp. & Food Serv. Fin. Serv. & Real Estate Machinery Food & Beverages Agric. Commod. Textiles & Footwear Trade Transport Equip. Other Manuf. Act. Utilities Mineral Commod. Ref. Oil & Fuels 1995 2000 2005 2009

16. China – Fields of influence, selected years Source: author’s elaboration based on WIOD Chinese tables. 3. Chinese demand-supply transformations

17. 3. Chinese demand-supply transformations Export Coefficient and Percentage Share of Exports by the Two Main Export Sectors Imported Input Coefficient and Percentage Share of Imports by the Two Main Import Sectors 0.6 0.5 0.4 0.3 0.2 0.1 30 25 20 15 10 5 Source: author’s elaboration based on WIOD Chinese tables. 40 35 30 25 20 15 10 5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 % Exports 0.0 Export Coefficient Text. & Foot. (% Exp) Elect. Equip. (% Exp) Text. & Foot. (EC) Elect. Equip. (EC) 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 % Imports for Intermediate Consumption 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 Imported Input Coefficient Met. & Non-Met. Miner. (% Imp) Elect. Equip. (% Imp) Met. & Non-Met. Miner. (IIC) Elect. Equip. (IIC)

18. Concluding remarks • Chinese economy: gradual integration into international markets • Economic reforms according to Chinese needs • Post-1978 economic growth: strong industry and services growth • Domestic market as the main source of economic dynamism: profound changes in household consumption and high investment levels • Consolidation of both highly investment-oriented and export-oriented sectors in the domestic productive structure • Higher export levels enabling necessary imports, mostly directed to the productive process • Chinese growth pattern understood as an investment-cum-foreign exchange growth with diversification and deeper integration of industrial production

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