China's Imbalanced Growth Policy
China’s Imbalanced Growth Miracle at the Expense of Households Min Jung Chey
1000092808
999 Words
Advanced English Writing
Mr. Ballentine
6 May 2013
Chey i
Rough Draft Outline
THESIS： China’s imbalance is a symptom of distorted and unsustainable domestic policies that transfer wealth from households to the government.
I. The significant lag in China’s wage growth compared to the growth in productivity, effectively transferred wealth from workers to employers, contributing to the over-investment and under-consumption growth model.
-China’s wage growth is significantly slower than the growth in productivity.
-Examples of Hukou and unionization policy.
-Underpriced wage directly impacts the relationship between laborers and employers transferring household’s real income into producers’ investments.
II. The undervalued RMB policy also cuts the household’s purchasing power and strengthens the distortion of the domestic economy.
-How RMB is undervalued.
-How the undervalued currency creates distortions.
III. Financially repressive policies played a key role in orchestrating the unprecedentedly wide spread of interest rates, turning households’ wealth over to domestic investments.
-Financially repressive policies dramatically repress interest rates.
Chey ii
-Policies allow manufacturers to finance their investment at a lower rate, by cutting the household depositor’s interest income
Chey iii
Rough Draft
China’s Imbalanced Growth Model and Domestic Distortions
China in recent years has generated what is probably the largest trade surplus as a share of GDP in history. Although many analysts, as is argued by conservative macro analyst Kenneth Austin, describe this as evidence of a very successful growth model in which the trade surplus derives from good planning and fundamental strengths within the Chinese economy (159), China’s economy, as defined as investment driven economy, the imbalances and instability dwell deeply
1000092808
999 Words
Advanced English Writing
Mr. Ballentine
6 May 2013
Chey i
Rough Draft Outline
THESIS： China’s imbalance is a symptom of distorted and unsustainable domestic policies that transfer wealth from households to the government.
I. The significant lag in China’s wage growth compared to the growth in productivity, effectively transferred wealth from workers to employers, contributing to the over-investment and under-consumption growth model.
-China’s wage growth is significantly slower than the growth in productivity.
-Examples of Hukou and unionization policy.
-Underpriced wage directly impacts the relationship between laborers and employers transferring household’s real income into producers’ investments.
II. The undervalued RMB policy also cuts the household’s purchasing power and strengthens the distortion of the domestic economy.
-How RMB is undervalued.
-How the undervalued currency creates distortions.
III. Financially repressive policies played a key role in orchestrating the unprecedentedly wide spread of interest rates, turning households’ wealth over to domestic investments.
-Financially repressive policies dramatically repress interest rates.
Chey ii
-Policies allow manufacturers to finance their investment at a lower rate, by cutting the household depositor’s interest income
Chey iii
Rough Draft
China’s Imbalanced Growth Model and Domestic Distortions
China in recent years has generated what is probably the largest trade surplus as a share of GDP in history. Although many analysts, as is argued by conservative macro analyst Kenneth Austin, describe this as evidence of a very successful growth model in which the trade surplus derives from good planning and fundamental strengths within the Chinese economy (159), China’s economy, as defined as investment driven economy, the imbalances and instability dwell deeply
Cited: 1. Kenneth, Austin. "Communist China 's Capitalism: The Highest Stage of Capitalist Imperialism."World Economics 12.1 (2011): 79-94. Print. 2. China. Ministry of Finance. Bogus Arguments for RMB Revaluation. By John Ross. N.p., 27 Nov. 2009. Web. 3. Richberg, Keith. "China Hopes Social Safety Net Will Push Its Citizens to Consume More, Save Less." Washington Post 14 July 2010: A20-A21. Print. 4. Lin, Justin Yifu. "China and the Global Economy." 20th Anniversery of the University of Science and Technology. Hong Kong. 23 Mar. 2011. Lecture. 5. Browne, Andrew. "Beijing Economist Laments Folly of China Planning." Wall Street Journal15 Sept. 2011: A13-A12. Print. 6. Huang, Yasheng. "Chinomics: The Fallacy of the Beijing Consensus." Wall Street Journal. 16 Feb. 2012. Web. 7. Van Der Kamp, Jake. "Home Truths about Trade with China." South China Morning Post. 16 Feb. 2012. Web. 8. International Monetary Fund. Targets, Interest Rates, and Household Savings in Urban China. By Malhar Nabar. Vol. 11. Print. Ser. 223.