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By Shi Wujie, Department of Development Strategy and Regional Economy, DRC

Research Report No. 124, 2017 (Total. 5199) 2017-09-26

Abstract: Based on the changes of economic growth during the transitional period, this paper makes an in-depth analysis of the internal logic between stabilizing economic growth and optimizing income distribution structure, aiming at removing the improper understanding that these two concepts are contradictory to each other. The growth model which relies on material capital accumulation as the main driving force and bolstered by relevant institutional mechanism is adaptable to the traditional growth conditions, whereas it would lead to widening income disparity along with high economic growth. With the evolution of economic development in different phases, the former growth model has become inadaptable to the new growth conditions, giving rise to the imbalance to economic structure. The key to maintaining a mid-to-high growth rate lies in establishing a growth model that mainly depends on technological innovation and human capital accumulation, which is based on the optimization of income distribution structure. It is suggested that we pay more attention to optimizing the income distribution structure, avoid using strong stimulus polices to stabilize economic growth and try to make them become integrated through reform of institutional mechanism. To be specific, efforts should be made to further transform the relations between the government and market, cultivate key factors’ market, improve the business environment in the central and western regions, enhance government’s budgetary structure and strengthen the income redistribution.

Key words: smooth growth, optimized income distribution structure, development phase, reform