Please wait a minute...

Frontiers of Economics in China

Front. Econ. China    2017, Vol. 12 Issue (2) : 167-187     DOI: 10.3868/s060-006-017-0008-8
Orginal Article |
China under Uncertainty: Outlook, Counterfactual and Policy Simulations, and Reform Implementation—A Summary of Annual Report (2016–2017)
Kevin X. D. Huang1(), Guoqiang Tian2(), Yibo Yang3()
1. Department of Economics, Vanderbilt University, Nashville, TN 37235, USA; Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China
2. School of Economics and Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China; Department of Economics, Texas A&M University, College Station, TX 77843-1372, USA
3. Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China
Download: PDF(660 KB)  
Export: BibTeX | EndNote | Reference Manager | ProCite | RefWorks
Abstract

China’s macroeconomy is surrounded by increased uncertainties while facing persistent downward pressures entering year 2017. Major external challenges are imposed by the chaotic political climate and disorderly retreat from globalization of the US accompanied with the impending FED rate hikes, which may trigger a destructive trade war and exert pressures on RMB depreciation and capital flight. Remaining ingrained in major internal challenges are the gridlock risks accumulated from excessive financialization of real estate sector and swelling housing market bubbles amid escalating debt levels, and more fundamentally, the continued off-real-to-virtual movement in the general economy and ascendancy of government over market in resource allocation. Based on IAR-CMM model, which takes into account both cyclical and secular factors, the baseline real GDP growth rate is projected to be 6.5% in 2017 (6.13% using more reliable instead of official data). Counterfactual analyses and policy simulations are also conducted to highlight the convoluted uncertainties surrounding China’s macroeconomy. Through the lens of these analyses, we identify a root cause of the weak outlook as the persistently distorted economic structure due to procrastination in reforms of the institutions and governance, which not only impairs China’s growth potential but also limits the power of its recent stimulating policies while exacerbating their side effects. Key to successful economic restructuring in the face of adversely evolving demographics are market-oriented reforms, with well-designed strategies to balance short-term stabilization and long-run development. Such reforms should hold center stage in China’s transition towards a modern free market economy and regulatory state.

Keywords macroeconomic outlook      uncertainty      alternative scenarios      policy simulation      reform      development      governance     
Issue Date: 17 July 2017
 Cite this article:   
Kevin X. D. Huang,Guoqiang Tian,Yibo Yang. China under Uncertainty: Outlook, Counterfactual and Policy Simulations, and Reform Implementation—A Summary of Annual Report (2016–2017)[J]. Front. Econ. China, 2017, 12(2): 167-187.
 URL:  
http://journal.hep.com.cn/fec/EN/10.3868/s060-006-017-0008-8
http://journal.hep.com.cn/fec/EN/Y2017/V12/I2/167
Service
E-mail this article
E-mail Alert
RSS
Articles by authors
Kevin X. D. Huang
Guoqiang Tian
Yibo Yang
Related articles from Frontiers Journals
[1] Örn B. Bodvarsson,Jack W. Hou,Kailing Shen. Aging and Migration: Micro and Macro Evidence from China[J]. Front. Econ. China, 2016, 11(4): 548-580.
[2] Haiwen Zhou,Ruhai Zhou. A Dynamic Model of the Choice of Technology in Economic Development[J]. Front. Econ. China, 2016, 11(3): 498-518.
[3] Tan Li,Larry Qiu,Ying Xue. Understanding China’s Foreign Trade Policy: A Literature Review[J]. Front. Econ. China, 2016, 11(3): 410-438.
[4] Guoqiang Tian. China’s Reform: History, Logic and Future[J]. Front. Econ. China, 2016, 11(2): 210-231.
[5] Kevin X. D. Huang,Guoqiang Tian. China’s Macroeconomic Outlook and Risk Assessment: Counterfactual Analysis, Policy Simulation, and Long-Term Governance — A Summary of Annual Report (2015–2016)[J]. Front. Econ. China, 2016, 11(2): 173-191.
[6] Haiwen Zhou. Unemployment and Economic Integration for Developing Countries[J]. Front. Econ. China, 2015, 10(4): 664-690.
[7] Xinkui Wang. Shanghai Pilot Free Trade Zone and the National Strategy of Opening-up to Boost Reform[J]. Front. Econ. China, 2015, 10(4): 591-603.
[8] Avinash Dixit. Governance Reforms and Growth: Some Ideas from Economic Theory[J]. Front. Econ. China, 2015, 10(4): 567-584.
[9] Yizhong Wang,Frank M. Song. Macroeconomic Uncertainty, Fund Demand and Corporate Investment[J]. Front. Econ. China, 2015, 10(2): 365-391.
[10] Xiaoli He,Hongwu Wang,Haoran Pan. Energy Consumption, Economic Development and Temperature in China: Evidence from PSTR Model[J]. Front. Econ. China, 2014, 9(4): 695-712.
[11] Xudong Chen,Guoqiang Tian. The Nature and Avoidance of the “Middle Income Trap”[J]. Front. Econ. China, 2014, 9(3): 347-369.
[12] Qianjin Lu. Weights and Empirical Analysis of RMB Exchange Rate Adjustments with Reference to a Basket of Currencies Following the Exchange Rate System Reform of 2010[J]. Front. Econ. China, 2014, 9(2): 285-308.
[13] Haiwen Zhou. The Choice of Technology and Rural-Urban Migration in Economic Development[J]. Front Econ Chin, 2013, 8(3): 337-361.
[14] Kevin X. D. Huang, Chun Jiang, Qingyuan Li,, Kai Sheng, Jia Wang, Qiwei Zhao. Financial Development, Foreign Direct Investment, and the Efficiency of Capital Allocation in China[J]. Front Econ Chin, 2013, 8(2): 165-185.
[15] Jingwen Yu, Chunchao Wang. What Role Does the Political Environment Play in Economic Development? —A Case Study of Fujian Province[J]. Front Econ Chin, 2012, 7(4): 544-559.
Viewed
Full text


Abstract

Cited

  Shared   
  Discussed