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Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication. The authors thank Jacinta Bernadette Rico and Erica Clower for excellent research assistance. Hiro Ito thanks Portland State University for its financial support. Helpful comments by Guonan Ma, Gunther Schnabl, Naoyuki Yoshino, and other conference participants on a presentation given at the conference "Intra-European Imbalances, Global Imbalances, International Banking, and International Financial Stability" on 17-18 September 2012 in Berlin are gratefully acknowledged. The authors accept responsibility for any errors in the paper.The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, the ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.Asian Development Bank Institute Kasumigaseki Building 8F 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, JapanTel:+81-3-3593-5500 Fax:+81-3-3593-5571 URL:www.adbi.org E-mail: info@adbi.org © 2012 Asian Development Bank Institute ADBI Working Paper 393
Ito and Volz
AbstractThis paper examines the impact of sectorial reforms on current account imbalances, with a special focus on the People's Republic of China (PRC). In particular, we investigate to what extent reforms pertaining to the financial sector, social protection, and healthcare may contribute to a rebalancing of the PRC'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 PRC economy.
JEL Classification: F32, F41 ADBI Working Paper 393Ito and Volz
