Development Strategy, Factor Income Distribution And Demand Structure Imbalance

There is an imbalance among consumption demand, investment demand and export in China today. In order to explain China demand structure imbalance, after reviewing the related literature, this paper constructs a theoretical framework from development strategy perspective, by which we proposes that overtaking strategy leads to structural imbalance of factor distribution of income in china, which is the fundamental factor of the imbalance between consumption and investment structure, and china export expansion is the inevitable result of the imbalance between consumption and investment structure. Then, in order to test our opinion, Chinese provincial panel data over the period 1985-2008 and fixed effects estimation are adopted. Results show that our opinion are well confirmed. The main results are as follows.The development strategy is an important factor affecting the structure of factor distribution of income. Overtaking strategy causes the decline of the labor share of income through the institution arrangement favoring capital, imperfect competition of product and factor market and capital deepening.The development strategy leads to imbalance between consumption and investment structure through the effect of structural imbalance of factor distribution of income. The more share of national income distributed to government and capital, the more investment and less consumption due to higher marginal rate of investment and lower consumption rate of government and capital. And the decline of the labor share of income restricts the household consumption demand.Overtaking strategy leads to china export expansion through the effect of the factor prices distortion, imbalance between consumption and investment structure, regional market segmentation and more FDI introducing.