Embed Size (px)
DESCRIPTION
To bring new perspectives on the outlook for China in 2010, the National Committee and the China Center for Economic Research (CCER) organized a half-day forum at the New York Stock Exchange on January 7 that featured forecast and analysis by leading Chinese economists. A capacity crowd of over 350 financial professionals and more than 45 journalists attended.The program featured keynotes by Justin Lin Yifu, the chief economist and vice president of the World Bank, and Qin Xiao, the chairman of the China Merchants Group, followed by two panel discussions by leading Chinese economists. They were welcomed by Duncan Niederauer, CEO of the NYSE Euronext, and introduced by National Committee President, Stephen A. Orlins.The second panel, moderated by Mr. Orlins, focused on the future of China’s economic model. Professor and Deputy Director Yao Yang of CCER expressed doubt that China will be able to move away from its export-led growth model because the country’s large and productive work force make it naturally suited for labor-intensive manufacturing. Over the past decade, despite rapid economic growth and significant gains in labor productivity, workers’ wage growth has not kept pace with overall economic growth. The household savings rate has remained stable while the corporate savings has risen rapidly. With households accounting for a shrinking portion of the country’s overall economic gains, Yao says it is unrealistic to expect Chinese consumers to overtake producers as the primary drivers of economic growth.This document includes slides from Yao Yang’s presentation. Video and audio of Yao Yang and other speakers from the program, as well as presentation slides, photos and additional information may be found at http://www.ncuscr.org/programs/chinas-economy-2010-forum-nyse
Citation preview
© 2008 NCUSCR • 71 West 23rd Street, Suite 1901 • New York, NY 10010-4102 • (212) 645-9677 • www.ncuscr.org
China’s Export-led Growth Model: Time to Change?
Slides accompanying remarks by
Yao Yang Deputy Director China Center for Economic Research (CCER)
Delivered at China’s Economy in 2010: Forecast and Views
January 7, 2010, at the New York Stock Exchange
To access video or audio of Yao Yang’s remarks, in addition to slide presentations and remarks by other speakers in this program, please visit: http://www.ncuscr.org/programs/chinas-economy-2010-forum-nyse
Yao Yang is a professor at the China Center for Economic Research (CCER) and the National School of Development (NSD) – both at Peking University. He currently serves as the deputy director of CCER and deputy dean of NSD in charge of academic affairs and the editor of the center’s house journal China Economic Quarterly. His research interests include economic transition and development in China. He has published widely in international and domestic journals, as well as several sole-authored and co-authored books on institutional economics and economic development in China, including Ownership Transformation in China (co-author, World Bank, 2005), Globalization and Economic Growth in China (co-editor, World Scientific, 2006), and CSR and Competitiveness in China (co-author, Foreign Languages Press, 2009). He is an associate editor of Agricultural Economics and serves in the editorial boards of several domestic and international journals. He is also a prolific writer for magazines and newspapers. Dr. Yao was awarded the 2009 Sun Yefang Economics Award – the highest economics award in China, the 2008 Pu Shan Award in International Economics and the 2008 Zhang Peigang Award in Development Economics. He was awarded the title of Best Teacher by the Peking University Student Union in 2006 and was named a Young Leader by the Nanfang People’s Weekly in 2008. Dr. Yao obtained his B.S. in geography in 1986 and his M.S. in economics in 1989, both from Peking University; his 1966 Ph.D. in agricultural and applied economics is from the University of Wisconsin-Madison.
China’s ExportChina’s Export--led Growth led Growth China s ExportChina s Export led Growth led Growth Model: Time to Change?Model: Time to Change?
Yang YaoNSD & CCERNSD & CCERPeking University
2010-1-15
1
China’s Economy in 2010: Forecast and Views, NYSE, Jan. 7, 2010
What is wrong with the Chinese What is wrong with the Chinese growth model?growth model?
2010-1-15 2
Source: China Statistical Yearbook, various years.
The Conventional wisdomThe Conventional wisdomThe Conventional wisdomThe Conventional wisdom
Savings explanation:g p◦ Chinese people save a lot, so◦ Domestic consumption is low and China has to
export a lot.
Exchange rate explanation:◦ China undervalues its currency so its products
are artificially competitive in the world market.◦ But between 2005 and 2008, China’s export
volumes and CA surplus both increased dramatically despite 20% revaluation of the RMB dramatically despite 20% revaluation of the RMB.
2010-1-15China’s Economy in 2010: Forecast and Views, NYSE, Jan. 7, 2010 3
LongLong--term factorsterm factorsLongLong term factorsterm factors
Industrial capacities pHuman capitalAccession to WTOAccession to WTODemographic and structural transformationtransformation◦ A large labor force in the countryside: 40% of
the national totalthe national total◦ Demographic dividends: High working-to-
dependent ratiodependent ratio
2010-1-15 4
Ratios of working population in the worldRatios of working population in the worldRatios of working population in the worldRatios of working population in the world
2010-1-15 5
Source: Bloom, David etc. "Demographic change, social security systems, and savings," Journal of Monetary Economics, 2007, 54(1), pp. 92-114.
Capital deepeningCapital deepeningCapital deepeningCapital deepening
Expansion of tradeExpansion of trade Low wage ratesLow wage ratesExpansion of tradeExpansion of trade
Hi h t t it lHi h t t it l
Low wage ratesLow wage rates+
High returns to capitalHigh returns to capital
More investmentMore investment
Share of laborShare of labor
More investmentMore investment
Share of capitalShare of capital Share of labor income in GDP
decreases
Share of labor income in GDP
decreases
Share of capital gains in GDP
increases
Share of capital gains in GDP
increases+
2010-1-15China’s Economy in 2010: Forecast and Views, NYSE, Jan. 7, 2010 6
High growth of labor productivity in manufacturingHigh growth of labor productivity in manufacturingHigh growth of labor productivity in manufacturingHigh growth of labor productivity in manufacturing
Accumulative growthAccumulative growth
Annual growth
Ann
Accum
ual growth (%
ulative growt %
)
th (%)
2010-1-15 7
Source: Lu and Liu, “The Growth of labor Productivity in Two Sectors and InternationalComparison.: China Economic Quarterly, 2007, Vol. 6, No. 2: 357-380.
1991－2006: • Labor prod. in manufacturing increased
by a rate of 13.6％by a rate of 13.6％1978-2006: ◦ Manufacturing wage increased by a rate of ◦ Manufacturing wage increased by a rate of
6.55%
ConsequencesConsequences◦ Profit rates increased fast◦ Share of labor income declined◦ Share of labor income declined
2010-1-15 8
Profit rates have increased fast since 1998
1820 利润总额/权益 利润总额/资产
总回报/权益 总回报/资产
141618
净利润/权益 净利润/资产净利润/固定资产净值
81012
246
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2010-1-15 9
Source: CCER Research Team. “An Estimation of Capital Returns.” CCER Working Paper No. C2007002.
Labor share in national income decreasesLabor share in national income decreasesLabor share in national income decreasesLabor share in national income decreases
2010-1-15 10
Source: China Statistical Yearbook, various years.
Di ib i f N i l I
0 8
Distribution of National Income: 1993－2007
0.6
0.7
0.8
0.3
0.4
0.5
Shar
e
Residents
Enterprises
0
0.1
0.2Government
0
2010-1-15 11
Source: Chong-En Bai, and Zhenjie Qian. “Who Are Taking Away Residents’ Income?” Social Sciences in China, 2009, No. 5.
Shares of national savings in GDPShares of national savings in GDPShares of national savings in GDPShares of national savings in GDP
0.5
0.35
0.4
0.45
0 2
0.25
0.3Enterprises
Government
R id
0.1
0.15
0.2 Residents
0
0.05
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
2010-1-15 12
Source: China Statistical Yearbook, various years.
ConclusionsConclusionsConclusionsConclusions
China’s export-led growth model is p gdeeply rooted in the international division of labor in which China is well prepared p pto export labor-intensive manufacturing goods.gTaking trade as given, rebalancing should be more focused on better use of China’s savings.
2010-1-15 13
