Agriculture Reference
In-Depth Information
10
Trade reform, macroeconomic
policy and sectoral labour
movement in China
Jennifer Chang and Rod Tyers
Although the Chinese economy continues to grow rapidly, since the Asian
financial crisis of the late 1990s there is evidence of a slowdown, most
promnently n per capta rural ncome growth. One explanaton for ths s
that the relocation of labour from agriculture to manufacturing and services,
essential in any growing developing economy, has been retarded. This could
be due to policy disincentives designed to control urban congestion, such
as the household regstraton or
hukou
system (Ianchovichina and Martin
2002a) or nformaton asymmetres and transacton/nfrastructural costs
(Scular and Zhao 2002). A further hypothess attrbutes comparatvely poor
performance in China's rural sector to economic reforms; in particular,
to trade reform commtments n the leadup to and assocated wth WTO
accesson (Anderson et al. 2002).
It s the central hypothess of ths chapter that ths comparatve declne
in rural performance is due, at least in part, to a combination of China's
adherence to ts
de facto
fixed exchange rate regime and to shocks that
have tended to depreciate its real exchange rate. Most significant amongst
these shocks was the surge of (largely illegal) outflows on the capital account
First published in Garnaut, R. and Song, L. (eds), 2003.
China: New Engine of World Growth
,
Asia Pacific Press, Canberra:231-75.
