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How Important is Exports and FDI for China's Economic Growth? XING, Yuqing PRADHANANGA, Manisha Chinese economy growth external demand GDP accounting https://www.grips.ac.jp/list/jp/facultyinfo/xing_yuqing/ The Global Financial Crisis and the recent slowdown of China's growth have led to questions about the sustainability of China's growth. The argument is that, China is too dependent on external demand and that it needs to "rebalance" its economy toward domestic consumption. However, conventional measures of external: net exports-over-GDP and exports-over-GDP are biased and do not accurately measure the contribution of external demand to GDP growth. In this paper, we propose two measures that are simple modifications of the conventional measures. We argue that our proposed measures provide a more accurate estimate of the vulnerability of China's economy to external shocks, in the form of exports and FDI. Our estimates show that in 2001, exports and FDI accounted for 18.2% of GDP growth and by 2004 the share rose to 49 percent. During 2005-2007, the contribution of exports and FDI to growth remained in the range of 38-40 percent. Our estimates also show that the impressive recovery of the Chinese economy in the post-crisis period owed at least 53% of its growth to exports and FDI. Based on these results, we conclude that the Chinese economy remains highly dependent on external demand in the form of exports and FDI, and re-balancing the economy towards domestic demand has not been achieved yet. JEL Classification Codes: F43, E01 経済学 / Economics GRIPS Policy Research Center 2013-05-27 eng technical report AM https://doi.org/10.24545/00001115 https://grips.repo.nii.ac.jp/records/1115 10.24545/00001115 https://ideas.repec.org/p/ngi/dpaper/13-04.html https://ideas.repec.org/p/ngi/dpaper/13-04.html GRIPS Discussion Papers DP13-04 https://grips.repo.nii.ac.jp/record/1115/files/DP13-04.pdf application/pdf 651.7 kB