Sustaining China's Economic Growth after the Global Financial Crisis

by Nicholas R. Lardy
January 2012
Book Description

The global financial crisis and ensuing economic downturn has raised many questions concerning the future of global economic growth. Prior to the financial crisis, global growth was characterized by growing imbalances, reflected primarily in large trade surpluses in China, Japan, Germany, and the oil exporting countries and rapidly growing deficits, primarily in the United States. The global crisis raises the question of whether the previous growth model of low consumption, high saving countries such as China is obsolete. Although a strong and rapid policy response beginning in the early fall of 2008 made China the first globally significant economy to come off the bottom and begin to grow more rapidly, critics charged that China's recovery was based on the old growth model, relying primarily on burgeoning investment in the short run and the expectation of a revival of expanding net exports once global recovery gained traction. Critics, however, argued that as government-financed investment inevitably tapered off, the likelihood was that global recovery would not be sufficiently strong for China's exports to resume their former role as a major contributor to China's economic expansion. The prospect, in the eyes of these critics, is that China's growth will inevitably falter. This study examines China's response to the global crisis, the prospects for altering the model of economic growth that dominated the first decade of this century, and the implications for the United States and the global economy of successful Chinese rebalancing. On the first it analyzes the strengths and weaknesses of China's stimulus program. On the second it analyzes the nature of origins of the imbalances in China's economy and the array of policy options that the government has to transition to more consumption-driven growth. On the third successful rebalancing would mean that more rapid growth of consumption would offset the drag on growth from a shrinkage of China's external surplus. Successful rebalancing would mean China would no longer be a source of financing for any ongoing US external deficit. From a global perspective China would no longer be a source of the global economic imbalances that contributed to the recent global financial crisis and great recession.

Selected chapters and sections are provided for preview only.



Introduction [pdf]

1. China's Response to the Global Crisis [pdf]

2. Imbalances and Their Implications for China's Economy

3. Policies for Rebalancing Economic Growth

4. China and Global Economic Rebalancing [pdf]

5. The Politics of Economic Rebalancing

Appendix A Statistical Issues


Index [pdf]


Review—Sustaining China�s Economic Growth
Review in e-international Relations
March 11, 2013

Advice for China's New Guard
The Washington Post
November 7, 2012

Lardy vs. Pettis: Debating China's Economic Future, Round 2
Write-in debate in the Wall Street Journal
November 7, 2012

Lardy vs. Pettis—Debating China's Economic Future
Write-in debate in the Wall Street Journal
November 2, 2012

Fact Check: Obama, Romney China Ads
CNN video: Nicholas R. Lardy sets the facts straight about China in the latest Romney and Obama campaign ads.
September 24, 2012

China's Lost Decade
Book review by Ian Johnson in the New York Review of Books
September 2012

The Chinese Growth Model Before and After the Financial Crisis
Op-ed by Nicholas R. Lardy in the Montreal Review
July 2012

Sustaining China�s Economic Growth After the Global Financial Crisis
Review in Foreign Affairs by Richard N. Cooper
May/June 2012

Sustaining China's Economic Growth After the Global Financial Crisis

Video interview for ChinaFile
June 2012

The Imbalances in China's Economy
Interview in the New York Times Economix
April 11, 2012

China's Economic Future and Its Implications for the United States
Interview with the Chicago Council on Global Affairs
March 14, 2012

Can China Get Its Prices Right? [pdf]
Review in China Economic Quarterly by Arthur Kroeber
March 2012

China Is Right to Open Up Slowly
Review in the Financial Times by Martin Wolf
February 28, 2012

China's Rebalancing Will Not Be Automatic
Op-ed in East Asia Forum by Nicholas R. Lardy
February 22, 2012

Chinese Economic Growth Requires Restructuring Economy
Review in the Epoch Times
February 16, 2012

China Central Television (CCTV) Interview
February 6, 2012

Chinese Economic Reform, Full Front and Centre
Review in East Asia Forum by Peter Drysdale
February 6, 2012

Sustaining Economic Growth in China
Op-ed in East Asia Forum by Nicholas R. Lardy
February 5, 2012

China Must Reform to Maintain High Levels of Economic Growth
Op-ed in Public Service Europe
Nicholas Lardy
February 3, 2012

Peterson's Lardy Discusses China's Growth [mp3]
Interview with Bloomberg
January 25, 2012

Sustaining China's Economic Growth after the Global Financial Crisis
Review in the Financial Times
January 22, 2012

China Can't Grow Its Way Out of a European Recession
Review in Fortune
January 19, 2012

8 Questions
Review in Wall Street Journal China Real Time Blog
January 16, 2012

Appearance on CNBC Asia Squawk Box
January 11, 2012

Is a Chinese Economic Slump on the Horizon?
Washington Post article by Robert Samuelson
January 8, 2012

Lardy Documents Impact of Chinese Rebalancing on US Economic Prospects
Inside US-China Trade News Brief
January 4, 2012

Other Buying Options
Non-US customers: for faster service, please order through Eurospan.
Book Data

January 2012
ISBN paper 978-0-88132-626-0
193 pp.

View release event

Commentaries on This Book

"There is no question more important for the global economy than China and no closer student of Chinese economic policy than Nick Lardy. It follows that this book should be read by anyone concerned with the future of the global economy."

—Lawrence H. Summers, former Director of the White House National Economic Council and Charles W. Eliot University Professor at Harvard University's Kennedy School of Government

"China does not get special dispensation from the rebalancing imperatives that all major economies face in this post-crisis era. Nick Lardy sheds considerable insight into the critical Chinese piece of this agenda—detailing the financial and currency reforms that will be required for the long-awaited transition to a pro-consumption growth dynamic. This book will undoubtedly elevate the debate over China's global economic impact."

—Stephen Roach, Yale University, Non-Executive Chairman Morgan Stanley Asia

"Nicholas Lardy is one of most respected American scholars in China because of his admirable works on the Chinese economy. His new book Sustaining China's Economic Growth after the Financial Crisis is a must-read for those who are concerned with China's growth. So far as I have seen, this book is the most comprehensive, detailed, and well-structured account of the turns and twists of the Chinese government's policy in restructuring the imbalanced economy and responding to the global financial crisis in recent years. Nicholas Lardy's defense of China's stimulus program may raise some eyebrows, but his explanation certainly will inspire more in-depth discussions."

—Yu Yongding, President of the China Society of World Economics, and former member of the monetary policy committee of the Peoples' Bank of China

"Nick Lardy is one of the most knowledgeable people on China's economy I know. I always take his opinions on China very seriously, and the contents of this book is no exception. I believe it is a must read for anyone interested in today's economic policies in China."

—Bill Rhodes, President & CEO, William R. Rhodes Global Advisors, LLC

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