China and Global Imbalances from a View of Sectorial Reforms

This article examines the impact of sectorial reforms on current account imbalances, with a special focus on C hina. In particular, we investigate to what extent reforms pertaining to the financial sector, social protection, and healthcare may contribute to a rebalancing of C hina's persistent current account imbalances. Our forecasting results suggest that reforming the financial sector would be a significant contributor to the country's rebalancing with an effect much larger than that of capital account liberalization. Strengthened provisions of social protection and publicly‐funded healthcare are also found to contribute to a rebalancing of the Chinese economy.