Analysis of the Transformation of Chinese Economic Growth in the «Xi Era»
Abstract
The article analyzes the transformation of China's economic growth mechanisms in the period after Xi Jinping came to power, with a focus on interprovincial heterogeneity. Based on panel data for 29 provinces of China for 2001-2024, the Bayesian hierarchical regression model is estimated, which makes it possible to identify both average (fixed) and provincial-specific (random and total) effects of key intra-system macroeconomic factors, including export growth rates, R&D expenditures, retail sales and budget deficits. It is emphasized that the observed slowdown in the Chinese economy is not temporary, but structural, determined by the existing imbalances in the economy, including at the regional level.
The empirical strategy assumes an explicit division of the sample into the periods before and after 2012 (the year Xi Jinping came to power), which makes it possible to identify changes in the role of these factors in the context of the discussed transition from an export-oriented growth model to a reliance on domestic consumption and innovation. However, the results show that in 2013–2024 exports remain the main driving force, while role of R&D activity has strengthened extremely, domestic consumption loses its leading position, and government spending ceases to influence the dynamics of economic development in any way, which casts doubt on the success of the “dual circulation” policy. It is also worth noting that after 2012, the interprovincial variability in the contributions of growth factors is decreasing, and 3 types of growth mechanism identified as a result of cluster analysis of the combined effects which existed in 2001–2012 are subsequently reduced to 2.
The findings complement the literature on the “new normal” of the Chinese economy and contribute to research on regional inequality, demonstrating that the transformation of the growthmodel is accompanied not only by changes in average effects, but also by a contraction of the space of regional economic divergence.
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