Industrial Total Factor Productivity Growth, Dual Economy Transition And Current-Account Balances

China’s large current account surpluses has attracted much attention for the academic and political either at home or abroad. And the dual economic structure is not only the long-term institutional factor that hinders the economic development of China, but also the underlying cause of many economic conflicts, meanwhile, given the economic development of China needs the sustained growth of the industrial TFP. Therefore, there has important theoretical and practical significance for recognizing China’s sustained current account surpluses, speeding up the dual economy transition and the growth of the industrial TFP based on the dynamic relationship among the growth of the industrial TFP、dual economic transition and current account balance.This paper establishes an intertemporal model of current account with dual economic structure. Using this model, we firstly analyze the dynamic effects of an unexpected permanent growth of the industrial sector TFP on economy transition and current account, and then analyze the influence to current account dynamics by dual economy transition, to better analyze we use numerical simulation methods, Then we establishes SVAR model to analyze their dynamic relationships with impulse response function and variance decomposition. The theoretical model show that:the unexpected permanent growth of TFP in industrial sector will lead to dual economy transition, and the extent of the transition is greater in the long run than in the short run; and in the short period, it will lead to current account surplus, but in the long period the impact is none; the existence of dual economy transition will have a significant positive influence on the current account in the short time, but in the long time, there is no impact. Meanwhile, the empirical analyze indicates that:the permanent growth of TFP in industrial sector will lead to current account deficit, and weaken the dual economy transition, but not significantly; the existence of dual economy transition will have a significant positive influence on the magnitude of current account balance, which is accorded with the conclusion of the theoretical model.current account deficit will solve the dilemma of consumption volatility and slowdown in economic transition, can promote the transition of economy, and smooth consumption at the same time, a revelation of the theoretical model is:China’s previous sustained current account surplus was reasonable, In view of China’s future economic growth needs the industrial TFP growth and economic transition, the optimal current account balance is not deficit, but the surplus.