Overcoming the “reverse transmission mechanism” for sustainable growth

ZHANG Ping ( 张平 )
Institute of Economics, Chinese Academy of Social Sciences
Editorial Note:“Reverse transmission mechanism” is a deep-seated problem in China’s economy. Understanding it is the key to unraveling the interaction among China’s growth mechanism, cycles and policy options. In the new millennium, great changes have occurred in the economic environment and the “reverse transmission mechanism” has shown that it works in different ways. From this approach, this paper concludes that “welfare and administrative spending rigidity” after 2000 has a stronger feature of “reverse transmission,” which forces China’s economy onto a path of unsustainable expansion. To seek sustainable growth, new reverse transmissions of welfare and administrative spending must be broken. In light of the present phase of development, only by adjusting administrative costs and welfare spending can we balance development, transform the
growth pattern, and embark on a sustainable path.

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