Rebalancing China's Economic Growth: Some Insights from Japan's Experience

One of the greatest challenges China faces is reshaping its heavily investment‐driven mode of economic growth. By investigating how the rebalancing of Japan's economic growth mode was realized in the 1970s, we indicate that it is essential in rebalancing to correct the distortions in factor cost (labor cost and capital cost) in a harmonious way. In addition, we refer to Japan's experience to indicate that rebalancing of domestic growth does not necessarily lead to external rebalancing.