Chinese Industrialisation: Path Dependence and the Transition to a New Model

Abstract

China�s economic structure can be characterised as both over-industrialised and under-urbanised relative to its level of income per head. Further, for such a large economy, it is highly export oriented. The design of any new growth model will need to respect these major structural legacies. The �overindustrialised� assessment reflects a high proportion of secondary activity in gross value added relative to its peers; and the under-urbanised assessment reflects the fact that the policy framework has prevented internal rural�urban migration from progressing at the rate at which push and pull motivations alone would have predicted. Furthermore, the absorptive capabilities of the urban population are diminished by the underprivileged position of the migrant worker cohort. China thus has both a considerable overhang of industrial capacity and considerable latent demand for further urbanisation, alongside huge potential for generating greater benefits from the degree of urbanisation already achieved.