Structural Change in the Chinese Economy and Changing Trade Relations with the World

28 Pages Posted: 13 May 2019

See all articles by Robert Koopman

Robert Koopman

U.S. International Trade Commission

Eddy Bekkers

World Trade Organization (WTO)

Carolina Lemos Rego

World Trade Organization (WTO)

Date Written: May 2019

Abstract

This paper examines the impact of structural change in China, in particular a reduction in the savings rate, an increase in the share of skilled workers, and an increase in productivity in technologically advanced manufacturing sectors targeted by Made in China 2025. Baseline projections until 2040 are generated with the WTO Global Trade Model, a dynamic computable general equilibrium model. With the modelled structural changes the Chinese economy is projected to reorient its focus increasingly onto the domestic economy, raising the share of private household and government consumption in GDP, turning China's trade surplus into a trade deficit, reducing China's share in global exports, raising the share of services in both production and exports, shifting the destination markets of Chinese exports from developed to developing countries, and changing its pattern of comparative advantage away from sectors like light and heavy manufacturing to electronic and machinery equipment. The large bilateral trade surplus vis-a-vis the United States is projected to fall to almost zero.

Keywords: China, Dynamic CGE-Modelling, structural change

JEL Classification: F14, F43, I25

Suggested Citation

Koopman, Robert and Bekkers, Eddy and Lemos Rego, Carolina, Structural Change in the Chinese Economy and Changing Trade Relations with the World (May 2019). CEPR Discussion Paper No. DP13721, Available at SSRN: https://ssrn.com/abstract=3387310

Robert Koopman

U.S. International Trade Commission ( email )

500 E Street, SW
Washington, DC 20436
United States

Eddy Bekkers (Contact Author)

World Trade Organization (WTO) ( email )

Rue de Lausanne 154
Geneva 21, CH-1211
Switzerland

Carolina Lemos Rego

World Trade Organization (WTO) ( email )

Rue de Lausanne 154
Geneva 21, CH-1211
Switzerland

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