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This paper uses the 2015 version of the Organisation for Economic Co‐operation and Development (OECD) and World Trade Organization (WTO)'s Trade in Value‐added (TiVA) database to estimate China's value‐added exports to gross exports ratio (VAER), and calculate and compare China's bilateral gross trade imbalances and value‐added trade imbalances with its major trading partners at the aggregate and sector level, respectively. During the period from 1995 to 2011, China's value‐added exports were around 35% less than gross exports at the aggregate level, and around 60% and 80% for manufacturing sectors and tech‐intensive sectors, respectively. Compared with those based on conventional gross trade statistics, our estimates based on trade in value‐added cut China's overall trade imbalances substantially. China's value‐added trade surplus for manufacturing sectors, especially for the so‐called tech‐intensive sectors, was around 45% and over 85% less than gross trade surplus, respectively. China–U.S. value‐added trade surplus was 28–45% less than gross trade surplus during the period from 1995 to 2011. On the contrary, China's value‐added trade deficit with East and Southeast Asian economies is 71–99% and 59–93% less than gross trade deficit during the period from 2005 to 2011, respectively. [ABSTRACT FROM AUTHOR]

In this paper, the convergence clustering in 31 Chinese provinces regarding several important economic indicators over the period 1952 to 2016 was empirically investigated. Several provincial clusters were identified in the per capita (real) gross domestic product (GDP), consumption–income ratio, retail price, and consumer price inflation rates, using a club convergence and clustering procedure. The empirical findings are as follows. First, it was found that all series of the original data contain a significant nonlinear component. Second, it was observed that there are five significant clusters for the per capita income in China. Third, it was found that there are four significant clusters for the consumption–income ratio. Fourth, it was observed that there are four significant clusters for the retail inflation rates and two significant clusters for the consumer inflation rates in China. These results will enable local and central planners to implement economic growth, savings and price adjustment policies for different groups of provinces. [ABSTRACT FROM AUTHOR]

A Fisher's Identity model is established to study Northern Song China's (960-1126) level of velocity of money using money supply and gross domestic product ( GDP) data. Results of the exercise help rationalize what is called the 'bronze coin' puzzle, which is the massive amount of minted coins seemingly incommensurate with price levels. It is shown that the velocity of money was increasing and comparable to pre-industrial England levels. This paper argues that the driving forces of the short supply of money are greater than usual hoarding by the state treasury and coin outflows to Song's trading partners via smuggling. Since velocity of money is an indicator of economic development in ancient societies, this paper provides a realistic validation of the premise of the Needham puzzle. [ABSTRACT FROM AUTHOR]

When exploring the logic why some economies grow faster than others, previous studies commonly assume that all economies follow a universal growth path. This paper explores the heterogeneity of growth regimes across economies and then investigates the decomposition bias of growth sources in traditional methods. Using a panel data of China's provinces, the empirical results show that a finite mixture model with three classes is best to describe the data, revealing that there are multiple growth regimes across provinces. Also, some provinces switch regimes over time while the others remain stable. Further, neglecting heterogeneous regimes overestimates the importance of factor endowment and underestimates the importance of sector productivity, while it does not greatly influence the importance of of factor market efficiency. In particular, the decomposition bias embodies in physical capital and energy input rather than labor. Our findings indicate that the existing literature may underestimate the contribution of sector productivity. Thus, it is critical to account for heterogeneous regimes when exploring the sources of economic growth. [ABSTRACT FROM AUTHOR]

This paper looks at the role of textile exports in Japan and China's economic development in the period of 1868-1930 as a major explanation for the ' Little Divergence' between the two countries in the context of the ' Great Divergence' between Europe and Asia. Because of textiles' large weighting in proto-industrialization gross domestic product ( GDP), we postulate that China's initial 20-year lag in textiles vis-à-vis Japan turns out to be fatal for its industry and that it eventually ordains totally different development patterns for the textile industry in the two countries, which ultimately led to different growth patterns for the overall economy. Although both countries saw rapid growth of textile exports, the nature of those exports and the entailed position of each country in the industry value chain of trade were quite different. We then use Granger causality tests to show that in one case ( Japan) it is in support of the export-led-growth hypothesis ( ELG) while in another ( China) it is not. Our study then also explains why Japan's industrial revolution took place much earlier than China's. [ABSTRACT FROM AUTHOR]

This paper offers an explanation of why, in Imperial China, the merchant class expanded and the economy modernized up to the 13th century, and why it entered into decline from the 14th century onward. The modernization of China required the accumulation of public capital and the building of good institutions, upon which a vibrant class of merchants and entrepreneurs could gradually emerge. This class contributed to the enrichment of the society and the emperor, but its activities also weakened the dominance of the emperor and the élite, who would then prefer to block the modernization of China and to restrict the size of the merchant class, putting the economy into long-run stagnation. However, when the emperor faced severe foreign military threats and when he realized that a modern sector improved the defense capabilities of China, he made the opposite choice. [ABSTRACT FROM AUTHOR]

How much of China’s recent economic performance can be attributed to market-oriented reforms introduced in the last two decades? A long-run perspective may be important for understanding the process of economic development occurring today. This paper compares the integration of rice markets in China today and 270 years ago. In the eighteenth century, transport technology was non-mechanized, but markets were close to being free. We distinguish local harvest and weather from aggregate sources of price variation in a historical sample and in a similarly constructed contemporary sample. Findings indicate the degree of market integration in the 1720s is a very good predictor of per capita income in the 1990s. Moreover, the current pattern of interregional income in China is strongly linked to persistent geographic factors that were already apparent several centuries ago, well before the enactment of modern reform programs. [ABSTRACT FROM AUTHOR]

Foreign direct investment (FDI) is blamed for being one of the main factors widening regional inequality in Chinese regions since it is highly unevenly distributed spatially. If this logic were true, then controlling the scale of FDI could be a solution to reduce regional inequality. However, it is difficult to reconcile the positive effect of FDI on economic growth with its potential “negative” effect on regional inequality. Using the largest panel dataset covering all the Chinese regions over the entire period 1979–2003 and employing an augmented Cobb–Douglas production function, this paper proves that FDI has been an important factor responsible for regional growth differences in China. However, it suggests that FDI cannot be blamed for rising regional inequality. It is the uneven distribution of FDI instead of FDI itself that has caused regional growth differences. The research results have important policy implications on regional development in China relating to FDI. [ABSTRACT FROM AUTHOR]

The impressive economic growth in a select group of Asian economies in the last several decades prompts some to argue that authoritarianism helps rapid economic growth while democracy hampers it. In this paper, we used the panel data approach to test this hypothesis for seven Asian economies, including South Korea, Singapore, and China. Our results reject the strong version of this hypothesis but fail to reject the weak version of it. Specifically, we found insignificant impacts of political freedom but significant effects of economic freedom on advancing economic convergence in these economies. [ABSTRACT FROM AUTHOR]

Abstract: China's abundant supply of cheap labor has played an important role in its remarkable economic and social development. Recently, however, China has experienced a labor shortage and rising wages, implying that the country's long‐lasting competitive advantage based on its “unlimited” labor supply and low costs is vanishing. We find that structural demographic changes, regional economic growth disparities and the household registration system may have caused the labor shortage. Furthermore, China's continued low wages, relatively low labor share of gross national income, declining proportion of household consumption to GDP, and productivity improvements as well as increasing unit labor costs can be used to explain the recent wage increases. The dramatic development of its labor market signals that China is entering a new stage of economic development. The country's prior successful model of economic development needs to be adjusted to adapt to the new situation in its labor market to achieve sustainable economic development. [ABSTRACT FROM AUTHOR]

We construct a political variable-the number of ministers of all national government departments born in each province weighted by provincial population-to examine its effect on economic growth in China during 1981-2010. We find that the lagged per capita political variable has a significant, positive effect on economic growth in both ordinary least squares ( OLS) estimation and system generalized method of moments ( GMM) estimation. We also find that the lagged per capita political variable has a significant, positive effect on financial deregulation policies distributed across provinces, which offers a possible mechanism for the political variable to impact growth. [ABSTRACT FROM AUTHOR]

The expansion of agroforestry crops in South Asia has resulted in the reallocation of local agricultural resources, including labor force. Based on two‐wave panel data collected from more than 600 smallholder rubber farmers in southwest China, this study examines the impacts of rubber expansion on the migration of rural labor. The results show that smallholders planting more rubber plantations have significantly fewer migrant family members and lower likelihood of migration, revealing a significantly negative effect of rubber cultivation on the migration of rural labor. Given that the migration of rural labor is a major trend in rural economic transformation, rubber farming appears to result in the resource curse in rubber planting areas. In addition, a positive interaction effect between rubber cultivation and the price of natural rubber on the migration of rural labor reveals that the resource curse effect of natural rubber decreases with the decrease in the price of natural rubber. A period with a relatively low price of natural rubber provides an opportunity to foster the migration of rural labor in rubber planting areas. [ABSTRACT FROM AUTHOR]

This study examines the key drivers of the information and communication technology (ICT) sector's growth and the dynamics of its sectoral relationships in the Chinese economy, about which little is known, by using four updated and harmonized input–output tables for the period 2002–2017. The decomposition analysis shows that the ICT sector's growth was mainly driven by the expansion of export and domestic demand in the 2002–2007 period and by domestic demand expansion in the 2007–2012 and 2012–2017 periods. Furthermore, causative matrix analysis demonstrates that the ICT sector was consistently externalized throughout the study period, regardless of whether it received limited feedback from non‐ICT sectors' final demand in the 2002–2007 and 2012–2017 periods or substantial feedback in the 2007–2012 period. Finally, linkage analysis reveals that the ICT sector has had profound intersectoral linkages with both supply‐ and demand‐side effects in the economy. We conclude that the ICT sector has been the engine of economic growth in China and that stimulating its growth is a key tool for economic development. [ABSTRACT FROM AUTHOR]

This paper analyzes the evolution of urban output per capita across Chinese cities in post-reform era. Our results suggest no evidence of output convergence across cities from 1984 to 2003. We find that cities with comparable output per capita are likely to be located in the same region; furthermore, cities tend to mirror the mobility of their counterparts located in the same province, but not the same region. The divergence in urban output per capita across the nation will continue if the current economic growth pattern persists in the future. [ABSTRACT FROM AUTHOR]

This study aims to assess whether counter‐cyclical fiscal policy to release infrastructure bottlenecks achieved the goal of "Beyond Keynesianism," that is, to stimulate long‐term economic growth. The proactive fiscal policy during the Asian financial crisis dramatically expanded the National Highway System in China. Taking the highway project as an example, we evaluate its impact on per capita output and employment growth and investigate the underlying mechanism. Using provincial panel data from 1995 to 2016, our system generalized method of moments estimation finds that this large‐scale high‐rank road infrastructure project leads to an increase in per capita GDP growth. Automobile‐intensive industries benefit most from it. A channel analysis indicates that the growth effect is driven by structural transformation. Further, the project increases overall employment, mainly in secondary industries. It also creates extra demand for road transportation and longer‐distance road freight transport by facilitating the flow of both commodities and passengers. [ABSTRACT FROM AUTHOR]

We look at two emerging economies, Brazil and China, and propose an evaluation of their recent development in terms of growth performance and the evolution of income inequality. Our analysis, therefore, is related to the literature on their recent vast growth and also to the much debated Kuznets curve and theory. However, we claim that neither the growth nor the Kuznets approach capture recent relevant phenomena characterizing such countries' dynamics: namely, the presence of at least two distinct growth models. Cointegration analysis and empirical evidence seem to corroborate our interpretation. They also offer some further insights. We surmise that while contributing to press for a further re-examination of convergence in the light of the issue of income distribution, such findings have interpretative relevance and policy implications for other less developed countries. [ABSTRACT FROM AUTHOR]

This study examines the causal relationship between Chinese money supply growth and inflation, using the bootstrap Granger full-sample causality test and sub-sample rolling-window estimation test to determine whether such a relationship in China supports the quantity theory of money. The result indicates that there is a unidirectional relationship from inflation to money supply growth. However, considering structural changes in two series, we find that short-run relationships using full-sample data are unstable, which suggests that full-sample causality tests cannot be relied upon. Then, we use a time-varying rolling-window approach to revisit the dynamic causal relationship, and the results show that money supply growth has both positive and negative impacts on inflation in several sub-periods, and in turn, inflation has the same effects on money supply growth for China. These findings are basically consistent with the modern quantity theory of money from the perspective of money supply and price level. When money supply growth does not outweigh output growth, inflation should not be curbed only by decreasing money supply. It notes that a stable money supply growth is critical to price level stability and economic development in China. [ABSTRACT FROM AUTHOR]

This study investigates the exchange rate exposure of Chinese firms at the industry and firm level based on the conventional capital asset pricing model ( CAPM) framework. At the industry level, the dynamic conditional correlation MGARCH (DCC MGARCH) estimates demonstrate that the market model and three-factor model are appropriate for exposure measurements, and industry returns are more likely to be exposed to unanticipated changes in the real exchange rate and the trade-weighted effective exchange rate, particularly for manufacturing industries. At the firm level, although the seemingly unrelated regression (SUR) estimates vary across markets, it is apparent that there is a relationship between firm size and exposure effects, which also show that lagged exchange rate changes have significant exposure effects on firm returns. This study finally suggests that non-financial firms should set up special commissions to hedge currency risks of their future cash flows. [ABSTRACT FROM AUTHOR]

The objective of this study is to calculate and decompose productivity incorporating multi-environmental pollutants in Chinese industrial sectors from 1992 to 2008. We apply a weighted Russell directional distance model to calculate productivity from both the economic and environmental performance. The main findings are: (1) Chinese industrial sectors increased productivity, with the main contributing factors being labor saving prior to 2000; (2) The main contributing factors for productivity growth in coastal areas include both economic and environmental performance improvement. While central and western regions improved productivity owing to economic development, they have a trade-off relationship between economic and environmental performance. [ABSTRACT FROM AUTHOR]

The relationship between research and development (R&D) intensity and wages is examined using a unique matched employer-employee dataset. The ordinary least squares estimates suggest that a one standard deviation increase in R&D intensity is associated with an increase in the hourly wage rate between 3.4% and 6.9% for the full sample, depending on the exact specification. The instrumental variable estimates are that a one standard deviation increase in R&D intensity is associated with an increase in the hourly wage rate between 5.5% and 11.4%. The wage elasticity with respect to R&D intensity is found to be higher in larger firms as well as for better educated workers and workers with technical skills. Consistent with the rent-sharing hypothesis it is also found that the wage elasticity with respect to R&D intensity is higher for workers who belong to the Communist Party or union. [ABSTRACT FROM AUTHOR]

This study asks whether, in a rapidly changing world, the estimated proportion of the world's population with income below US$1 (adjusted according to purchasing power parity) per day is still a good measure of trends in poverty. It argues that strong economic growth in nations such as China implies that the commonly accepted international poverty line definition of one half median national equivalent income is increasingly relevant and that poverty intensity (the normalized deficit or Foster–Greer–Thorbecke (FGT) index of order one) is a better summary index. This index has a convenient graphical representation—the “poverty box”. Using the proposed poverty line and the example of ranking the level of rural poverty in Chinese provinces, the study demonstrates how poverty intensity replicates the poverty rankings of the Sen family of poverty indices and captures most of the information content of higher-order FGT indices. [ABSTRACT FROM AUTHOR]

Abstract This study develops a new analytical framework to account for sources of rapid economic growth in China. The traditional Solow approach is expanded to include another source of economic growth—structural change. The empirical results show that structural change has contributed to growth significantly by reallocating resources from low-productivity sectors to high-productivity sectors. It is found that the returns to capital investment in both agricultural production and rural enterprises are much higher than those in urban sectors, indicating underinvestment in rural areas. On the other hand, labor productivity in the agricultural sector remains low, a result of the still large surpluses of labor in the sector. Therefore, further development of rural enterprises and an increase in labor flow among sectors and across regions are key to improvements in overall economic efficiency. [ABSTRACT FROM AUTHOR]

Investigates the relationship between foreign direct investment and economic growth in China. Transfer of foreign technology as a key determinant of economic growth; Influence of economic growth on the inflows of foreign capital; Use of simultaneous-equation model based on a sample of Chinese provinces from 1985 to 1996.