July 17, 2013
Wonkblog has an interesting interview with Patrick Chovanec, an economics professor at Tsinghua University’s School of Economics and Management in Beijing on China’s current economic problems. At one point Mr. Chovanec refers to:
“China’s growth model for the last 30 years, which has been a classic export-led growth model.”
Actually China’s growth over the last three decades has not been consistently export led, or at least not to the same degree as was the case in the 10 years leading up to the economic crisis.
As can be seen, until 1997, the year of the East Asian financial crisis, China had relatively balanced trade. It did run substantial surpluses in several years, but its trade surplus averaged just 0.3 percent of GDP from 1980 to 1996. By contrast, in the years from 1997 to 2008 the surplus averaged 4.5 percent of GDP. There clearly was a qualitatively different story of growth in the period from the East Asian financial crisis to the 2008 world economic crisis. It is misleading to imply that the Chinese economy had the same dynamic over this whole period.
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