The People's Republic of China and Global Imbalances from a View of Sectorial Reforms

38 Pages Posted: 6 Nov 2012

See all articles by Hiro Ito

Hiro Ito

Portland State University - Department of Economics

Ulrich Volz

University of London - School of Oriental and African Studies (SOAS) - Economics; Deutsches Institut für Entwicklungspolitik (DIE) - German Development Institute (DIE)

Date Written: November 5, 2012

Abstract

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

Ito, Hiro and Volz, Ulrich, The People's Republic of China and Global Imbalances from a View of Sectorial Reforms (November 5, 2012). ADBI Working Paper No. 393. Available at SSRN: https://ssrn.com/abstract=2171176 or http://dx.doi.org/10.2139/ssrn.2171176

Hiro Ito (Contact Author)

Portland State University - Department of Economics ( email )

Portland, OR 97207-0751
United States
503-725-3930 (Phone)
503-725-3945 (Fax)

HOME PAGE: www.econ.pdx.edu

Ulrich Volz

University of London - School of Oriental and African Studies (SOAS) - Economics

London, WC1E 7HU
United Kingdom

Deutsches Institut für Entwicklungspolitik (DIE) - German Development Institute (DIE) ( email )

Tulpenfeld 4
Bonn, 53113
Germany

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