The Transformation of China's Foreign Economic Strategy under the “New Normal”
Read
DownLoad |
| Title | The Transformation of China's Foreign Economic Strategy under the “New Normal”
|
| Author | Gong Gang, Ma Li, Li Bingnian and Xu Wenge |
| Organization | Yunnan University of Finance and Economics |
| Email | gonggang@vip.163.com；maliwhu123@126.com；libingnian@163.com；xuwenge_nk@163.com |
| Key Words | Foreign Economic Strategy, the “New Normal”, Supply-determined Economy, Neoclassical Growth Model |
| Abstract | The “new normal” means that Chinese economy is no longer a demand-determined economy, but a supply determined-economy in normal or general situation. Because of that, the main driving force of economic growth lies in the supply side. A supply-determined economy is not only the logical starting point of China's supply-side reform, but also means a necessity for transforming China's foreign economic strategy. In a supply-determined economy, export and trade surplus imply that the country will use its scarce resources to support other countries and therefore it will inhibit the country’s economic growth. On the other hand, import and the trade deficit will help to promote the country's economic growth. Therefore, after entering the new normal, China's strategy of foreign trade should be timely adjusted to promote the import and trade deficit. However, trade deficit in long run is not sustainable, unless the country uses its home currency to buy imports. So the transformation of China's foreign trade strategy also requires the transformation of China's foreign currency strategy, that is, the China's foreign currency strategy should shift from the previous soft currency to the hard currency with the goal of internationalization of the RMB. A large number of imports and direct investment with RMB in peripheral countries is an important measure to promote the internationalization of the RMB in peripheral region. This is an important content of China’s one-belt and one-road strategy. |
| Serial Number | WP1184 |
| Time | 2017-04-25 |
|