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OECD Economic Surveys: China 2010

image of OECD Economic Surveys: China 2010

This 2010 edition of OECD's periodic review of China's economy finds that China's spectacular expansion has continued in recent years, making for impressive improvements in living standards. The slowdown associated with the global financial and economic crisis was contained by massive fiscal and monetary policy stimulus, which has boosted domestic demand. This survey includes chapters on recent achievements and prospects, monetary policy, financial reforms, product market regulation and competition, inequality, the labour market, old-age security and the health care system.

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Product market regulation and competition

The extent of competition in product markets is an important determinant of economic growth in both developed and developing countries. This chapter presents and uses the first vintage of the OECD’s indicators of product market regulation for China to assess the extent to which China’s regulatory environment is supportive of competition in markets for goods and services. The results indicate that, although competition is increasingly robust across most markets, the overall level of product market regulation is still restrictive in international comparisons. These impediments to competition are likely to constrain growth more and more as the economy continues to develop and becomes more sophisticated. The chapter goes on to review various aspects of China’s regulatory framework and suggests a number of policy initiatives that would improve the extent to which competitive market forces are able to operate. Breaking the traditional links between state-owned enterprises and government agencies is an ongoing challenge. Reducing administrative burdens, increasing private sector involvement in network sectors and lowering barriers to foreign direct investment in services would also increase competition and enhance productivity growth going forward.

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