An Analysis of the Restricting Factors in the Chinese Industrialisation-led Binary Economic Structure - 中欧社会论坛 - China Europa Forum

An Analysis of the Restricting Factors in the Chinese Industrialisation-led Binary Economic Structure

Authors: Zeng Yinchu

The article focuses on the relation between industrialisation and the effect of binary economy transition. Based on the reservation of the rational core of the model of binary economy transition, the model’s hypothesis is expanded, so that the change of the product’s supply and demand is considered, and the guiding effect of market demand is valued. It breaks through the framework of closed economy, analyses the binary effect of economic opening. Meanwhile, it pays attention to the capacity of resources, environment, and values the economic development’s impact on the environment. On this basis, the influencing factors of industrialisation’s propelling the dualistic structure transition are analysed in terms of choosing the type of technology to improve, the demand to be enlarged, resource and environment restriction and export-oriented economic development. The article probes further into the new industrialisation mode that can accelerate China’s dualistic structure transition.

The result shows that first, according to the model of binary economic development, the key to binary economic transition is in the transfer of labour from agricultural sector to non-agricultural sector; and whether agricultural labour can successfully be transferred to non-agricultural sector depends mainly on the employment capacity of the non-agricultural sector. Generally, the accumulation of capital, the improvement level and nature, and the level of wages in reality are the direct factors which affect the ability of non-agricultural sector’s employment capacity. Classic binary economic development values explaining the industrialisation’s impact on dualistic structure transition by the transfer of the labour from agricultural sector to non-agricultural sector. It can still be applied in China. We can follow the core of the classic binary economic development model, but we have to expand the hypothesis of the model. According to the economic environment and historic stage that China is in now, we have to consider at least the trend of market demand, the economy opening, and the resource and environment capacity, which restricts the choices of industrialisation and affects dualistic structure transition.

Second, seeing from the result of industrialisation that affects dualistic structure transition, the choice of technology type contradicts local market’s demand trend. After supply exceeds demand in local market, the competitiveness pressure of the market makes it inevitable for enterprises to update equipment and import technology. This is one of the reasons why after 1996 the effect of industrialisation leading to dualistic structure transition decreased. Therefore, expanding according to the demand, and ensuring the GDP of non-agricultural industry’s growth which is in relatively appropriate speed is particularly the main driving force of accelerating dualistic structure transition. However, with the prerequisite of satisfying the market demand, the government should still encourage the development of labour-intensive industry, which fits China’s natural essential production factors. The urban service industry will probably be China’s rapid developing labour employing industry. Meanwhile, according to the important function of export-oriented economy in China’s dualistic structure transition, another endeavouring is to develop export-oriented labour-intensive industry.

Third, China is a country largely short of equal resource for everyone. Excessive consumption of resources and serious environmental problems will seriously affect industrialisation and the sustainable development of the economy. The economic development stage China is in now is faced with a large probability of further deterioration of resource and environment. High awareness must be raised. The slowdown of economic development and the increased basic daily living expenses caused by the worsening of resources and environment will lower the effect of dualistic structure brought by industrialisation.

As a result, the article suggests that in order to cultivate new rapid growing labour employing industry, we should establish an urban service industry-specific development promotion scheme. In order to further encourage the export of labour-intensive product, a labour-intensive product international marketing supporting scheme should be established. To solve the environmental problem caused by the progress of industrialisation, an economic R&D promotional funding scheme should be established.

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