Is China's Export-Oriented Growth Sustainable?

International Monetary Fund Working Paper No. 09/172

22 Pages Posted: 24 Sep 2009

See all articles by Kai Guo

Kai Guo

International Monetary Fund (IMF)

Papa N'Diaye

International Monetary Fund (IMF) - Asia and Pacific Department

Date Written: August 1, 2009

Abstract

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.

Keywords: Export-oriented growth, rebalancing.

JEL Classification: F14, F17, O57

Suggested Citation

Guo, Kai and N'Diaye, Papa, Is China's Export-Oriented Growth Sustainable? (August 1, 2009). International Monetary Fund Working Paper No. 09/172. Available at SSRN: https://ssrn.com/abstract=1478104 or http://dx.doi.org/10.2139/ssrn.1478104

Kai Guo

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Papa N'Diaye (Contact Author)

International Monetary Fund (IMF) - Asia and Pacific Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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