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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front. Econ. China    2019, Vol. 14 Issue (1) : 80-109    https://doi.org/10.3868/s060-008-019-0006-2
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Tackle China’s Economic Complexities by Deepening Reform and Opening Up: Macroeconomic Outlook, Policy Simulations, and Reform Implementation—A Summary of the Annual SUFE Macroeconomic Report (2018–2019)
Kevin X.D. Huang1(), Guoqiang Tian2(), Yuqin Wang3()
1. Department of Economics, Vanderbilt University, Nashville, TN 37235, USA; Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China
2. Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China; Department of Economics, Texas A&M University, College Station, TX 77843, USA; School of Economics, Shanghai University of Finance and Economics, Shanghai 200433, China
3. Institute for Advanced Research, Shanghai University of Finance and Economics, Shanghai 200433, China
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Abstract

Faced with complicated external and internal challenges, China’s economy continues to see sluggish growth in 2018. Rapid accumulation of household debts, exacerbation in income inequality, tightened real sector liquidity, escalated trade tensions with the US, and weakened external demand pose key problems in China’s macroeconomic landscape. The status quo is exacerbated by soaring uncertainty and weakening confidence in the face of persistent resource misallocations and institutional distortions, which cast more shadow on the already dampened consumer sentiment, sluggish private investment growth, and fallen foreign reserves. This summary report highlights the urgency of deeper structural reforms for tackling the various internal and external problems. Based on the IAR-CMM model, with both cyclical and secular factors taken into consideration, our baseline forecast of real GDP growth rate is 6.4% (6.1% using more reliable instead of the official data) in 2019. Alternative scenario analyses and policy simulations are conducted to assess the consequences of possible downside risks and the corresponding policy options needed to ensure the assumed growth targets. These analyses lead us to conclude that comprehensively deepening reform and opening up, which should be both rule-of-law based and market-oriented, with well-designed and well-conceived strategies that properly weigh short-, medium-, and long-term benefits and costs, should continue to be set as the guidance for China’s transformation into a phase with sustainable and high-quality growth.

Keywords macroeconomic outlook      alternative scenario analysis      policy simulation      risk      reform      complex status-quo      resource misallocations      market-oriented     
Issue Date: 16 April 2019
 Cite this article:   
Kevin X.D. Huang,Guoqiang Tian,Yuqin Wang. Tackle China’s Economic Complexities by Deepening Reform and Opening Up: Macroeconomic Outlook, Policy Simulations, and Reform Implementation—A Summary of the Annual SUFE Macroeconomic Report (2018–2019)[J]. Front. Econ. China, 2019, 14(1): 80-109.
 URL:  
http://academic.hep.com.cn/fec/EN/10.3868/s060-008-019-0006-2
http://academic.hep.com.cn/fec/EN/Y2019/V14/I1/80
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[2] Justin Yifu Lin. China’s Growth Deceleration: Causes and Future Growth Prospect[J]. Front. Econ. China, 2019, 14(1): 26-52.
[3] Guoqiang Tian. Deceleration of China’s Economic Growth: Causes and Countermeasures[J]. Front. Econ. China, 2019, 14(1): 3-25.
[4] Shangzhou Ji, George Yungchih Wang. Political Connections, Government Regulations and Risk-Taking — Evidence From China[J]. Front. Econ. China, 2018, 13(4): 655-684.
[5] Liuyan Zhao, Yan Zhao. Purchasing Power Parity and Price Fluctuations in China before July 1937[J]. Front. Econ. China, 2018, 13(3): 458-483.
[6] Kevin X. D. Huang, Lei Ning, Guoqiang Tian. Conquering China’s Unbalanced and Inadequate Development: Macroeconomic Outlook, Policy Simulations, and Reform Implementation—A Summary of Annual SUFE Macroeconomic Report (2017–2018)[J]. Front. Econ. China, 2018, 13(2): 147-170.
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[8] 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.
[9] Qin Zhou, Kisalaya Basu, Yan Yuan. Does Health Insurance Coverage Influence Household Financial Portfolios? A Case Study in Urban China[J]. Front. Econ. China, 2017, 12(1): 94-112.
[10] 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.
[11] Tan Li,Larry Qiu,Ying Xue. Understanding China’s Foreign Trade Policy: A Literature Review[J]. Front. Econ. China, 2016, 11(3): 410-438.
[12] 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.
[13] Guoqiang Tian. China’s Reform: History, Logic and Future[J]. Front. Econ. China, 2016, 11(2): 210-231.
[14] Avinash Dixit. Governance Reforms and Growth: Some Ideas from Economic Theory[J]. Front. Econ. China, 2015, 10(4): 567-584.
[15] 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.
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