An Economic Analysis on the Potential and Steady Growth of China: a Practice Based on the Dualistic System Economics in China

TL;DR

This paper analyzes China's dualistic economic system, highlighting institutional distortions and proposing a model incorporating debt and land assets to understand growth and stability.

Contribution

It introduces a new analytical framework based on dualistic system economics, including models that account for debt and land assets affecting China's economic dynamics.

Findings

Institutional distortions impact consumption and income distribution.

Debt and land assets significantly influence money supply and price levels.

A preliminary calculation system for China's economic analysis is established.

Abstract

The existing theorization of development economics and transition economics is probably inadequate and perhaps even flawed to accurately explain and analyze a dual economic system such as that in China. China is a country in the transition of dual structure and system. The reform of its economic system has brought off a long period of transformation. The allocation of factors is subjected to the dualistic regulation of planning or administration and market due to the dualistic system, and thus the signal distortion will be a commonly seen existence. From the perspective of balanced and safe growth, the institutional distortions of population birth, population flow, land transaction and housing supply, with the changing of export, may cause great influences on the production demand, which includes the iterative contraction of consumption, the increase of export competitive cost, the widening of urban-rural income gap, the transferring of residents' income and the crowding out of consumption. In view of the worldwide shift from a conservative model with more income than expenditure to the debt-based model with more expenditure than income and the need for loose monetary policy, we must explore a basic model that includes variables of debt and land assets that affecting money supply and price changes, especially in China, where the current debt ratio is high and is likely to rise continuously. Based on such a logical framework of dualistic system economics and its analysis method, a preliminary calculation system is formed through the establishment of models.