The People's Republic of China and Global Imbalances from a View of Sectorial Reforms
38 Pages Posted: 6 Nov 2012
Date Written: November 5, 2012
This paper examines the impact of sectorial reforms on current account imbalances, with a special focus on the People’s Republic of China (PRC). In particular, we investigate to what extent reforms pertaining to the financial sector, social protection, and healthcare may contribute to a rebalancing of the PRC’s persistent current account imbalances. Our forecasting results suggest that reforming the financial sector would be a significant contributor to the country’s rebalancing with an effect much larger than that of capital account liberalization. Strengthened provisions of social protection and publicly-funded healthcare are also found to contribute to a rebalancing of the PRC economy.
Keywords: global imbalances, PRC, current account balance, budget deficit, financial liberalization, social sector reform
JEL Classification: F32, F41
Suggested Citation: Suggested Citation