TY - JOUR
T1 - Dissecting the China Puzzle
T2 - Asymmetric liberalization and cost distortion
AU - Huang, Yiping
PY - 2010/12
Y1 - 2010/12
N2 - We attempt to explain the China Puzzle, the coexistence of accelerating economic growth, and a worsening growth outlook. The root cause lies in China's unique liberalization approach, that is, the combination of a complete liberalization of product markets and continued distortions in factor markets. Repressed costs of labor, capital, land, and resources artificially raise the profits of production, increase the returns to investment, and improve the international competitiveness of Chinese products. The asymmetric liberalization approach not only promoted economic growth, but also caused structural risks. It also contributed to global imbalances as well as regional integration. Therefore, future reform policies should focus on the liberalization of the factor markets and the elimination of cost distortions.
AB - We attempt to explain the China Puzzle, the coexistence of accelerating economic growth, and a worsening growth outlook. The root cause lies in China's unique liberalization approach, that is, the combination of a complete liberalization of product markets and continued distortions in factor markets. Repressed costs of labor, capital, land, and resources artificially raise the profits of production, increase the returns to investment, and improve the international competitiveness of Chinese products. The asymmetric liberalization approach not only promoted economic growth, but also caused structural risks. It also contributed to global imbalances as well as regional integration. Therefore, future reform policies should focus on the liberalization of the factor markets and the elimination of cost distortions.
KW - Asymmetric market liberalization
KW - China puzzle
KW - Cost distortion
KW - Imbalance
UR - http://www.scopus.com/inward/record.url?scp=78649558187&partnerID=8YFLogxK
U2 - 10.1111/j.1748-3131.2010.01172.x
DO - 10.1111/j.1748-3131.2010.01172.x
M3 - Article
SN - 1832-8105
VL - 5
SP - 281
EP - 295
JO - Asian Economic Policy Review
JF - Asian Economic Policy Review
IS - 2
ER -