Recently, the co-authored paper"Measuring and Calculating the Weakness of China's Aggregate Demand: A Commentary on the 'China Overcapacity Theory'"by Professor Yu Miaojie, Fellow of the International Economic Association and Vice President of the Party Committee and President of Liaoning University, and Zhang Chenying, a master's student from the School of Finance and Trade, Liaoning University, was published in the fourth issue ofJournal of Beijing Jiaotong University (Social Science Edition)in 2024.
Abstract
Amid a complex and volatile international environment, China's external demand fluctuations have significantly impacted the stability of its macroeconomic operations. In this context, comprehensively analyzing the weakness of China's aggregate demand is critical to understanding the dynamic changes in economic performance and policy responses.
From a demand-side perspective, this paper uses a trade gravity model to estimate China's potential aggregate demand and compares it with effective demand to assess the weakness of China's internal and external demand from 2007 to 2022. The results show that:
Since 2008, China's external demand has been persistently weak, but the effective release of domestic potential demand has compensated for this shortfall, challenging the validity of the so-called "China Overcapacity Theory."
The COVID-19 pandemic in 2020 weakened domestic effective demand, leading to a certain degree of aggregate demand weakness. However, with the recovery of the domestic economy, this issue is expected to improve.
Thus, efforts should focus on transforming domestic and international market potential into effective demand by boosting consumption, driving investment, and promoting high-level openness to expand effective domestic and international demand.
Author Biographies
Yu Miaojie
Fellow of the International Economic Association, Distinguished Changjiang Scholar, and recipient of the National Science Fund for Distinguished Young Scholars.
Delegate to the 14th National People's Congress, Member of the Standing Committee of the Liaoning Provincial People’s Congress, Special Supervisor of the National Supervisory Commission, and Vice Chairman of the Liaoning Provincial Association for Discipline Inspection and Supervision.
Vice President of the Party Committee and President of Liaoning University.
Globally recognized as a top 1% highly cited economist in management and economics and the only Chinese scholar to have received the "Royal Economic Society Prize."
Prof. Yu's research focuses on international trade and China's economic development. He has published nearly 200 papers in top-tier journals, includingEconomic Journal,Review of Economics & Statistics,Journal of International Economics,Journal of Development Economics, and leading Chinese journals such asEconomic Research JournalandManagement World. He has also authored 32 books in Chinese, English, and German.
Prof. Yu serves as Deputy Editor ofEconomic Journal, Associate Editor ofReview of International Economics, and Honorary Editor-in-Chief ofInternational Trade. He is also the Chief Editor ofJournal of Liaoning University,Japanese Studies, and Executive Editor ofJournal of Chang'an University.
Notable Honors and Achievements:
Received numerous accolades, including the Ministry of Education Philosophy and Social Sciences Outstanding Achievement Award (three times), Wu Yuzhang Humanities and Social Sciences Research Award, and Zhang Peigang Development Economics Award.
Represented China's youth delegation to the Russian Federation Parliament and was personally received by President Xi Jinping as an outstanding young scholar during Peking University’s 120th anniversary celebrations.
Zhang Chenying
Master's student at the School of Finance and Trade, Liaoning University.
Research interests include international trade and Chinese economic studies.
Published or accepted papers in journals such asJournal of Beijing Jiaotong University (Social Science Edition)andOpen Guide.
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https://www.cnki.com.cn/Article/CJFDTOTAL-BFJD20241122004.htm
