China's export-led growth is rooted in China's double transition of demographic transition and structural change from industrialization. Accession to the WTO has allowed China to fully integrate into the world system and capture the gains of its comparative advantage in abundant labor supply. Structural change has a dampening effect on the Balassa–Samuelson effect so as to sustain China's competiveness in the world market. The double transition will take 10 to 15 years to finish; in this time period, China will likely continue its fast export-led growth. Along the way, export-led growth has also created serious structural imbalances highlighted by underutilized savings, slow growth of residential income and domestic consumption, and a heavy reliance on investment. This linkage requires new thinking when global imbalances are to be tackled.

This content is only available as a PDF.
© 2011 The Earth Institute at Columbia University and the Massachusetts Institute of Technology
2011
You do not currently have access to this content.