Search

This article introduces a special issue on technological development and policy making in China, highlighting their importance for China's economic growth. It discusses the shift in China's economy from reliance on property sector investment and low-value manufacturing to a new paradigm based on technological innovation and internal market expansion. The article emphasizes the need for adaptive policy making and financing support for science and technology development to enhance productivity growth. It also explores the Augmented National Innovation System (ANIS) in China, the growth of the semiconductor industry, and the limitations of the fiscal system. The research papers in this collection provide insights into China's economic transformation and propose reforms to support its development. [Extracted from the article]

Employing the Modern Monetary Theory (MMT), this paper examines the current Chinese fiscal system and highlights its three characteristics. First, fiscal revenues are centralized at the central government while expenditures are decentralized at the local governments; second, fiscal spending focuses on public investment but is insufficient in providing social safety net and public services; and third, indirect tax accounts for a great majority of tax revenues, leading to limited progressivity of the tax system. These limitations have constrained the effectiveness of China's fiscal policies and generated many perverse impacts. With the understanding that the central government has the monetary sovereignty and does not face financing constrained and that taxes are not to raise revenues for fiscal spending but to serve other purposes, the paper calls for fiscal reforms that realign fiscal resources and spending responsibilities between the central and local governments, increase fiscal spending on social security and public services, as well as broaden personal income tax to improve the distributive effect of taxation. [ABSTRACT FROM AUTHOR]

The improvement of industrial Total Factor Productivity (TFP) is the basis for the high-quality development of China's economy. Sci-tech finance affects industrial TFP through screening and allocation mechanism, governance mechanism, and integration mechanism. Based on provincial panel data from 2009 to 2016, this paper constructs a comprehensive index of regional Sci-tech finance and explores the impact of Sci-tech finance on industrial TFP from two perspectives: differences in financial development levels and transmission paths. The results show that Sci-tech finance has a significant role in promoting the industrial TFP, but this promotion needs to meet certain financial development conditions. In high-level financial development areas, the promotion effect is significant. It is not linear. The effect is a threshold effect with the diminishing marginal efficiency. Sci-tech finance mainly promotes industrial TFP through boosting the industry's scientific and technological innovation capacity. Policies and channels of Sci-tech finance to support science and technology innovation are put forward. [ABSTRACT FROM AUTHOR]

This paper analyzes the crowding-out effect of firms' environmental, social, and governance (ESG) activities, arguing that ESG rating convergence among firms makes investors hesitant, driving down economic and social welfare growth. This is yet another adverse consequence of overcompetition in ESG practices in addition to greenwashing. We first build a model to show that, although ESG incentive policies can improve social welfare in the short run, they may reverse long-term social welfare growth, resulting in an ESG-paradox situation. Empirically, we use various proxies of provincial social welfare and the distribution of ESG score changes for China's A-share companies and detect a significantly reduced impact on the social welfare growth of a Chinese province by either a lower standard deviation or skewness of annual ESG score growth calculated for all firms registered within that province. Overall, our findings reveal the complexity of formulating ESG incentive policies and suggest that firms should strike a strategic balance between their business operations and social responsibility when determining their optimal ESG input level. [ABSTRACT FROM AUTHOR]

With rapid industrialization and urbanization in China, a large rural population has migrated to cities and left their rural homestead land (RHL) idled. Land use policy on RHL utilization is crucial to the efficient use of land resources. However, due to farmers' limited knowledge of regulations and lack of participation in rural land governance, their preference is sometimes overlooked in the policy-making process. The purpose of this paper is to examine farmers' preferences for the two primary RHL utilization programs, i.e., transfer and surrender. We conducted a farmer household survey of 405 households in rural areas in Changchun at Jilin Province, China in 2018 and estimated farmers' willingness to participate in the mechanisms using a bivariate ordered probit model. Various options under the two mechanisms are also investigated. We find a positive correlation between rural households' willingness to participate in these two mechanisms. This is the first comprehensive study taking into consideration the correlation and tradeoff in farmers' choice between the two mechanisms. The results shed light on the heterogeneity of households' needs and interests in RHL utilization, an important component to be considered in rural development policy-making decisions. [ABSTRACT FROM AUTHOR]

In this exploratory research, we examine the effect of economic and noneconomic indicators on the creation of Chinese Banking and Insurance Regulatory Commission policies using a VAR model. We find that CBIRC policies are predicted by State Council construction policies and policies set by the State Administration of Foreign Exchange. This indicates that the CBIRC is inward-looking, observing what other regulators are doing rather than responding to changes in the real and financial economy. This may be a product of market distortions due to China's unique blend of state-oriented and market-based institutions. [ABSTRACT FROM AUTHOR]

I demonstrate that China is building an Augmented National innovation system or ANIS, with semiconductor industry and AI at the core. There are two dimensions along which China's NIS has been augmented. One is to move toward a more egalitarian innovation system in accordance with the goal of creating a harmonious, moderately prosperous economy and society. And the other is to include the AI and semiconductor base for high technology for the 4th Industrial Revolution. The Chinese ANIS has important regional and geoeconomic implications for the future. [ABSTRACT FROM AUTHOR]

This study aims to look deeper into the long-standing phenomenon of the United States' large trade deficits with China by examining both countries' bilateral trading structures (character). In this investigation, we, for the first time, redefine the traditional bilateral trade balance (BTB) ratio based on economic impact content as production-driven BTB ( X pd ) and non-production-driven BTB ( X npd ). This is done because, while the former undergoes an economic activity within the United States, the latter doesn't. The traditional ratio, i.e. total export/total import, doesn't technically allow such an investigation. Hence, the proposed methodology of this study, using these two new forms of BTBs, may provide new perspectives to this phenomenon for U.S. policymakers. The main empirical finding may make it imperative to analyze the US BTB with China using the methodology proposed because the independent variables of the study's models have different effects on X pd and X npd . For example, while real depreciation in the USD improves X npd for 13 industries, the same change in the USD improves X pd for only seven. Additionally, this methodology allows U.S. policymakers to compare/review the US BTB based on economic impact contents through X pd and X npd separately. Last, it can be interpreted that the United States benefits from decreasing trade-policy uncertainty in the United States. [ABSTRACT FROM AUTHOR]

This study investigates whether latecomer provinces in China have experienced premature deindustrialization or reindustrialization by examining the positions of the provincial industry-income nexus using the latecomer index. The latecomer index facilitates the identification of the downward (premature deindustrialization) and upward (reindustrialization) positions of the nexus for latecomer provinces. The empirical analysis reveals that, for the nationwide level, the premature deindustrialization effect remains during the total sample period of 1992–2020 reflecting the initial regime prioritizing eastern coastal industrialization, whereas the pace of the premature deindustrialization is slowed down in the periods of 2002–2020 and 2009–2020 due to a series of industrial policies under the subsequent regime. At the regional level, the reindustrialization impact dominates the premature deindustrialization effect in the eastern and central regions, whereas this effect dominates the reindustrialization impact in the western region. The study identifies the existence of reindustrialization in China in the regional analysis, whereas extant literature on reindustrialization focuses only on European cases. [ABSTRACT FROM AUTHOR]

Estimating effective VAT rates (EVATR) of industries to assess their tax burden and efficiency has drawn much interest in policy research; but the challenge is the lack of industrial Output VAT data. We develop a novel method to recover all VAT statistics at the industry level and endogenously solve EVATR from publicly available data by utilizing input-output relationship in a Computable General Equilibrium (CGE) structure. We apply the method to China's data, estimate EVATR, and analyze implied tax efficiency and the tax burden of individual industries. Our study identifies true reasons for "VAT over-taxation" in some Chinese industries: China's multiple-tier VAT rate system with unrefunded Input VAT and the accounting inconsistency between taxation and national accounts. [ABSTRACT FROM AUTHOR]

By employing panel data estimation for the period 2010–2019 we test the economic effects of China's education and cultural diplomacy in 56 Belt and Road countries. For empirical analysis, we used pooled ordinary least squares (POLS). Our empirical finding shows that China's education and cultural diplomacy has a positive and significant impact on trade and economic growth and these findings are robust to the estimation approaches. It is suggested that developing countries from the Belt and Road Initiative should establish collaborations with China to establish "University-Industry Linkages" to capture the knowledge economy and to boost trade, economic and social development. Moreover, the Government of China should also pay more attention to the economic effects of China's education and cultural factors like Confucius Institutes and Universities in policy design. [ABSTRACT FROM AUTHOR]