Abstract
Throughout history, economic development has always been accompanied by continuous structural transformation underpinned by the process of upgrading endowments (capital, labor, and natural resources), industrial structure, and technology (Lin 2010). Three decades’ rapid growth has transformed China from an agriculture-based economy to one dominated by industrial and services sectors, placing China in the ranks of middle-income countries while enabling many people to escape poverty. However, China’s growth process, particularly after 2000, has been driven mainly by heavy investment in capital-intensive large-scale industries, infrastructure development, and real estate investment, while consumption growth has been much slower. Such a growth pattern, as put bluntly by Chinese Premier Wen Jiabao (2009), is “unstable, unbalanced, uncoordinated and unsustainable.”
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Notes
- 1.
The new structural economics approach to sustainable growth proposed by Lin (2010) is centered on three ideas. First, it emphasizes that an economy’s structure of factor endowments evolves from one stage of development to another. Second, each stage of economic development is a point along the continuum from a low-income agrarian economy to a high-income industrialized economy, not a dichotomy of two economic development stages (“poor” vs. “rich” or “developing” vs. “industrialized”). Third, at each given stage of development, the market is the basic mechanism for effective resource allocation. However, the government should play an active facilitating role because of the positive externalities of knowledge generation and infrastructure investment in the process of upgrading.
References
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© 2014 Social Sciences Academic Press (China) and Springer-Verlag Berlin Heidelberg
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Wang, X., Wang, L., Wang, Y. (2014). Why China Must Advance Transformation and Improve the Quality of Growth. In: The Quality of Growth and Poverty Reduction in China. International Research on Poverty Reduction. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-36346-7_4
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DOI: https://doi.org/10.1007/978-3-642-36346-7_4
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