Abstract:

Abstract: China’s economy is now growing quite fast, but in the meantime it faces serious internal and external imbalance. The internal imbalance presents with excessive saving, excessive investment and insufficient consumption, and saving is even more overabundant than investment. The external imbalance appears with the huge quantity of the surplus of balance of payments and foreign exchange reserves, both of which are increasing quickly. The internal and external imbalance is the imbalance of demand structure, namely the economic growth is pulled by high investment and high export while the promotion of consumption is severely lacking, the essence of which is the excessive saving of the whole economy. Moreover, the excessive saving and the imbalance of demand structure are caused by the unbalanced national income distribution, that is, the relatively smaller share of wage and its persistent decrease and the relatively larger share of profit and tax income and their long–lasting increase. However, the unbalanced national income distribution is result of the economic growth pattern that fast economic growth and quick capital accumulation are achieved by the unlimited labor supply and the very low labor cost. Therefore, the correction for China’s macroeconomic imbalance should be implemented systematically in three aspects: demand pattern, distribution pattern and economic growthpattern, by coordinating different policy instruments like the fiscal policy, monetary policy, foreign economic policy, income distribution policy, and supply management policy etc.