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Sustaining Growth: A Projection Of China’S Rebalancing Efforts Towards Domestic Consumption, Yugai Zhu
Sustaining Growth: A Projection Of China’S Rebalancing Efforts Towards Domestic Consumption, Yugai Zhu
Senior Projects Spring 2011
According to the macroeconomic identity, combined private sector and public sector balance should match current account balance in any economy. This senior project applies the macroeconomic identity to Chinese data, and analyzes systematically China’s economic structure. The analysis finds that China is not as reliant on trade as people normally think despite that the private sector is running a large surplus. Furthermore, it also shows that the private sector can be induced to spend more, and the public sector has much potential to increase deficit spending. Based on these results, I recommend a combination of 10% to 20% exchange rate …