A Different Development Model in China’s Western and Eastern Provinces?

Abstract

Economic growth in China has declined between 2008 and 2009. The global financial crisis of 2008/9 has shown a number of structural weaknesses in the Chinese economy, such as the functioning of its capital and labor markets and the substantial income differences between the developed eastern and less developed western provinces. Migration is the linchpin of China's development model; workers move from the western to the eastern provinces and back, in particular because of the crisis. How has China reacted to the financial crisis of 2008? After assessing the Chinese stimulus program and its negative effects on liquidity in general and the financial sector in particular some of the resulting issues, such as a dual development model for the eastern and western part of China and the development of the internal market at the expense of more export will be reviewed, before assessing which factors can still constrain China's ascent.