From Polarisation to Integration in Vietnam

This paper analyses the growth trajectory of China and related structural change to assess China's capacity to continue its rapid growth over the next decade. The evidence demonstrates that the multi-path approach undertaken has enabled China to transform its economy from low value-added towards high value-added activities through structural change from low to high value-added industries, as well as upgrading within industries. In doing so, China did not follow the neo-liberal advocacy of freeing markets. Selective state interventions facilitated China's transformation from an agricultural to an industrial economy over the last few decades. Upgrading towards higher value-added activities and the continuing strength of macroeconomic indicators, such as balance of payment and capital account surpluses, and low trade intensity of GDP and debt service along with significant deepening in human capital and R&;D activities, suggests that China will continue to grow relatively rapidly over the next decade. To do this China needs to find solutions to growing deficits in power and water supply, and potentially dangerous political upheavals if growing economic inequality problems are not solved.