(2) David Dollar, Sino Shift; China’s rebalancing opens new opportunities for developing Asia. pages 10-13
Quote:
"Thus, China has recently been using a lot more investment to grow significantly more slowly than in the past. This pattern of growth manifests three problems. First, technological advance as measured by total factor productivity (TFP) growth has slowed. TFP measures how much an economy is getting from its capital and labor [Some economists uses 'productivity' as a shorthand definition of TFP].
"The earlier experiences of Japan, Korea, and Taiwan Province of China provide some useful historical guidance about China’s current stage of development. When those economies were at this level of per capita GDP in the 1970s and 1980s, their investment, averaging 35 percent of GDP, was high by global standards but 15 percentage points below China’s recent level. They were still experiencing rapid TFP growth so they grew about as quickly as China is now, but using less capital. * * * heir average household consumption rate at this stage was 52 percent, 18 percentage points higher than China’s now.
"China has one of the highest urban-rural income divides in the world: the average urban dweller makes more than three times as much as a rural resident. * * * Even including these migrants [in the cities], though, China’s urbanization rate—52 percent of the population lives in cities—is low given its level of development. * * * The migrant worker system provides low-cost labor for construction and exports while suppressing domestic demand by leaving families behind in poor rural areas with few public services. * * * An important source of productivity growth is the movement of labor from small-scale farming to higher-paying jobs in manufacturing and services.
"Finally, China’s service sector must be exposed to competition from private firms and the international market. State-owned enterprises continue to dominate modern services—in finance, telecommunications, media, and logistics, to name a few. The rebalancing from investment toward consumption means that manufacturing will grow less rapidly than in the past while the service sector expands. China will need more productivity growth in the service sector, which is hard to achieve in a protected economy
"In recent years China’s real wages have been rising nearly 15 percent a year, far faster than elsewhere in Asia, where low single digits have been the norm (see Chart 2). Add in the real effective appreciation of China’s exchange rate, and the result is a China that is a high-wage producer among Asian developing economies. This means China is losing its comparative advantage in labor-intensive activities such as manufacturing of garments and footwear and electronics assembly. Lower-wage developing economies can now step in and seize some market share from China, either exporting directly to final markets in the
United States and Europe or exporting to China as part of a supply chain (see “Adding Value” in the December 2013 F&D). Since China still has a large surplus and is moving up the value chain, this loss of market share in labor-intensive activities is a healthy development that mirrors the earlier transitions of economies such as Korea and Taiwan Province of China. This transformation is already occurring and should be a powerful incentive for nearby developing economies to improve their investment climate and maintain sound macroeconomic policies so that they get the maximum benefit.
"On the services side, developing Asian economies are dramatically increasing tourism services to China. Last year 100 million Chinese tourists traveled abroad, the vast majority within Asia.
"most observers deem investment of 50 percent of GDP unsustainable: the already evident excess capacity in housing, manufacturing, and infrastructure would become increasingly acute. At some point China’s commercial investment will have to drop in response to poor returns; this already seems to be happening in the first half of 2014. And government-backed investment faces the problem that the overall ratio of government debt to GDP, while not yet alarming, has been rising rapidly.
"The hitch would be a simultaneous sharp drop in investment in China and abrupt slowdown in growth. * * * This is also a setting in which a market-driven Chinese exchange rate might depreciate: if investment drops sharply without a commensurate rise in consumption[,] the exchange rate would likely depreciate and the trade surplus widen. China would then be hanging on to labor-intensive manufacturing exports rather than opening up space for other countries.
"In recent years China’s real wages have been rising nearly 15 percent a year, far faster than elsewhere in Asia, where low single digits have been the norm (see Chart 2). Add in the real effective appreciation of China’s exchange rate, and the result is a China that is a high-wage producer among Asian developing economies. This means China is losing its comparative advantage in labor-intensive activities such as manufacturing of garments and footwear and electronics assembly. Lower-wage developing economies can now step in and seize some market share from China, either exporting directly to final markets in the
United States and Europe or exporting to China as part of a supply chain (see “Adding Value” in the December 2013 F&D). Since China still has a large surplus and is moving up the value chain, this loss of market share in labor-intensive activities is a healthy development that mirrors the earlier transitions of economies such as Korea and Taiwan Province of China. This transformation is already occurring and should be a powerful incentive for nearby developing economies to improve their investment climate and maintain sound macroeconomic policies so that they get the maximum benefit.
"On the services side, developing Asian economies are dramatically increasing tourism services to China. Last year 100 million Chinese tourists traveled abroad, the vast majority within Asia.
"most observers deem investment of 50 percent of GDP unsustainable: the already evident excess capacity in housing, manufacturing, and infrastructure would become increasingly acute. At some point China’s commercial investment will have to drop in response to poor returns; this already seems to be happening in the first half of 2014. And government-backed investment faces the problem that the overall ratio of government debt to GDP, while not yet alarming, has been rising rapidly.
"The hitch would be a simultaneous sharp drop in investment in China and abrupt slowdown in growth. * * * This is also a setting in which a market-driven Chinese exchange rate might depreciate: if investment drops sharply without a commensurate rise in consumption[,] the exchange rate would likely depreciate and the trade surplus widen. China would then be hanging on to labor-intensive manufacturing exports rather than opening up space for other countries.
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发表于 11-22-2014 19:07:33
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