The Driving Force and Direction of China’s Industrial Transformation: A Perspective Based on New Structuralism*

Ba Shusong  and Zheng Jun *
Northeastern University, Shenyang, China

 
Abstract: According to New Structural Economics, the ultimate direction of industrial transformation is determined by factor endowment structure and the relative price system of factors. In today’s China, the predominant factor in its labor endowment is shifting from population size to the regional movement of population and population quality, and its land endowment is changing from cheap, massive supply to expensive, limited supply, and the economy has potential of technological catch-up. Because of these three fundamental realities and the special situation that China is vast in territory and has a continuous industrial spectrum, its industrial transformation will be featured with “three unique regions within one country” and that the eastern region enters a new stage which focuses on the development of services, the six central provinces and the western triangle zone take over industries transferred from the east and the resource-rich western region becomes the “home front” as a major supplier of resources. However, this “three region differentiation” will not be automatically developed. Only in a competitive factor market, a flexible financial market and an elastic labor market can the persistent changes in endowment structure drive China’s industrial structure towards its optimal form. To achieve this, we need to launch a series of necessary structural reforms.
Keywords: labor endowment, endowment structure, technological catch-up, industrial transformation

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