Search

The paper reviews the World Trade Organization's analysis of developments in China's trade policy during 2012-14. The review overlaps with the continuing Great Recession and with China's determination to foster a sustainable rate of economic growth. Developments in the country's trade policy include the launching of the Shanghai pilot free trade zone. China faces a series of trade policy-related challenges including the complex process necessary to internationalise the renminbi. [ABSTRACT FROM AUTHOR]

This paper investigates how globalisation has affected inflation in China. We estimated standard Phillips curve inflation equations and examined whether globalisation has affected the structure of inflation dynamics as captured by the Phillips curve. Empirical results suggest that the globalisation of the Chinese economy has changed the behaviour of inflation dynamics. In particular, the impact of domestic and global output gaps on domestic inflation in China has changed significantly since 1994. Before 1994, the domestic output gap was a major factor in driving domestic inflation. After 1994, however, the global output gap plays a significant and more important role in affecting domestic inflation. The finding implies that Chinese monetary authorities should specifically take into account the developments in global output in their monetary policymaking process. [ABSTRACT FROM AUTHOR]

One of the most impressive changes in the global economy in the past half-century has been China's high and sustained growth and its integration into the global economy. This phenomenal change not only brings huge benefits to the Chinese people, but also exerts a tremendous influence on the rest of the world. How large is China's influence on the global economy? How are various countries/regions affected differently? How are various industries in a country affected differently? Answering these questions is not simple. In this paper, we review the recent literature that attempts to answer these questions. The findings of the survey conducted in this study aim to provide a complete picture of China's global influence and to identify issues that require further analysis. [ABSTRACT FROM AUTHOR]

This paper has evaluated the WTO trade policy review, and added more information and recent data to examine more closely China's economy and trade. Major trade policies during 2014-16 were summarised as the Belt and Road Initiative, policies facilitating trade and new adjustments to support and promote cross-border e-commence. After evaluating data on China's trade and economic performance, it discussed three challenges the Chinese government needs to deal with in the near future. [ABSTRACT FROM AUTHOR]

Using a firm-level database from 1999 to 2008, this paper sheds new light on the industrial dynamics of China's clothing industry, highlighting the multi-scalar process of spatial restructuring primarily driven by differences in the rate of job creation, especially through start-up firms. At the inter-provincial level, 2004 represents a turning point where the industry ceased to be concentrated in coastal areas and began to relocate inland, especially to central provinces. At the intra-provincial level, cities in coastal provinces remained the most attractive locations for start-up companies even after 2004. The results suggest that the regionally decentralised authoritarian regime, intertwined with market forces shaping the multi-scalar process of spatial restructuring, is pivotal to understanding the changing geography of China's apparel industry. [ABSTRACT FROM AUTHOR]

This paper studies the effects of a public insurance system, the New Cooperative Medical Scheme (NCMS) on household savings in rural China. We develop a theoretical model in which we explain the impact of health insurance on savings through the impact of health insurance on out-of-pocket (OOP) health expense given the household level of wealth and seriousness of illness. We test the model empirically using data from the China Health and Nutrition Survey. We run endogenous and exogenous quantile regressions to evaluate the effects of NCMS participation on the distributions of household savings and OOP health expense. The impact of NCMS varies with the seriousness of illness. The NCMS induces an increase in OOP health expense for mild illness and, inversely, a decrease in health payments for more serious illnesses. The NCMS also leads to a higher incidence of catastrophic healthcare spending. The impact of the NCMS, given a certain state of illness, also varies with the household level of wealth. Poor households face health expense for both mild and serious illnesses. As the NCMS has opposite effects on the OOP expense for these two kinds of illness, we observe no effect on poor households' precautionary savings. Because the decrease in OOP health expense for mild illness is larger for less poor households, the NCMS induces a decrease in their savings. For the most affluent households, the higher decrease in OOP spending on most moderate illness is dominated by a sharp increase in catastrophic expense, causing an increase in savings. To significantly reduce household savings and enhance household consumption, the NCMS has to offer better coverage against both serious and catastrophic health risks. [ABSTRACT FROM AUTHOR]

The financial crisis was followed by a period of extraordinary monetary policy easing. This period of quantitative easing and zero interest rate policies had significant effects on financial markets and created a global investment environment dominated by a single global factor of central bank policy. Looking forward, “normal” markets should include: (i) higher interest rates, but lower in the steady‐state than pre‐crisis; (ii) greater cross‐country interest differentials; and (iii) lower cross‐asset return correlations. In this environment, idiosyncratic macroeconomic differences across countries matter more than a “risk on/off” global factor that dominated in the post‐crisis era so that the opportunity set for global macro investors should be better than it has been in the 10 years since the crisis. The future investment environment will not be simply that of the pre‐crisis era but will reflect the evolution of the world economy. No single country in this evolution is more important than China and the changes ahead in China will create both risks and opportunities for investors. [ABSTRACT FROM AUTHOR]

Using cross-country panel data, this study identifies and discusses major factors contributing to China's strong growth in the past four decades. China's low initial per capita income relative to its own long-run potential, combined with sound policy factors including a high investment rate, strong human capital, high trade openness and improved institutions, enabled the economy to converge with advanced economies in terms of income level. The shift-share analysis with industry-level data shows that strong labour productivity growth in the manufacturing sector largely contributed to China's overall labour productivity growth. Although labour reallocation from agriculture to the services sector made a positive contribution to aggregate labour productivity growth, labour productivity growth in the services sector itself was negative over the 1980-2010 period. China's average potential GDP growth is predicted to decline significantly in the coming decade, to 5%-6% and fall further to 3%-4%-due to the convergence effect and structural problems-unless China substantially upgrades its institutions and policy factors and improves productivity, particularly in its services sector. [ABSTRACT FROM AUTHOR]

The design of China's foreign direct investment ( FDI) and export promotion policies has intrinsic elements not helpful with the original policy intent to generate spillovers to the wide Chinese economy. Applying panel estimation models to Chinese provincial-level data for 1993-2008, we examine the impacts of China's coastal FDI and exports on its inland regions. We find that the coastal FDI has overall positive inter-regional impacts, while the coastal exports do not. Cooperative joint ventures generate positive impacts, but little for wholly foreign-funded enterprises and even negative for equity joint ventures. The inter-regional impacts do not exhibit any significance and robustness across exporters' ownership status. We attribute these counter-intuitive findings to the protectionist behaviours of state-owned enterprises in equity joint ventures and the prevalence of processing exports. [ABSTRACT FROM AUTHOR]

The China (Shanghai) Pilot Free Trade Zone ( SPFTZ) founded one year ago is a trial for China's new round of reform and opening up, which has promised liberalisation on the capital account and trade facilitation as its main objectives. Here, we discuss why China adopted such a pilot zone after three decades of economic development, and explore what the differences are between the SPFTZ and other free trade areas, and developments of the SPFTZ in the past year. We also make a preliminary assessment of the SPFTZ's initial impacts, especially of its impact on China's capital account opening and financial liberalisation. It is possible that the successful practice of the SPFTZ and more pilot policies replicated in China will give rise to a more balanced Chinese economy in the following decade. [ABSTRACT FROM AUTHOR]

The article presents author's views related to State Enterprise Reform in China for improving the economy of China. Topics include role of State owned enterprises (SOEs) in the internationalization of Chinese economy, business funded by SOE through the state-owned banking sector, and contribution of SOE in the economic stabilization of country.

This article uses the theory of uneven and combined development (U&CD) to produce a novel explanation of 'Brexit and Trump' – the two shock political events of 2016. The argument proceeds in three steps. First, we identify the global conjuncture of historical unevenness in which the votes occurred: how the neoliberal transformation of the advanced capitalist countries was synchronized with the radically different process of primitive accumulation in China. Second, we apply the theory of U&CD to this peculiar 'simultaneity of the non‐simultaneous': the 'big country' effects of China's industrialization, we find, were thrice multiplied by its combination with the advanced sectors of the world economy, which accelerated China's take‐off, brought forward its export phase, and widened its export profile at a moment of maximum openness in international trade. Finally, this produced the pattern of development that led to the events of 2016: the resultant trade shocks intensified the internal inequalities of British and American societies in ways that match the geography of the Leave and Trump votes. The analysis has a wider intellectual implication too, for the phenomena of historical unevenness and combination are intrinsic to the history of the global political economy; and the theory of U&CD therefore has a unique contribution to make to the field of International Political Economy. [ABSTRACT FROM AUTHOR]

Studies of the factors that influence housing prices have focused on housing characteristics, governmental policies, environmental goods, macroeconomic and social fundamentals, and so on. However, the effect of industrial structural adjustment on housing prices is worthy of further investigation. In China, it would be helpful to measure this effect to coordinate housing policy and the ‘Made in China 2025’ strategy, which aims to accelerate industrial restructuring. We selected a spatial panel data model to quantify the effects of the industrial rationalisation and sophistication attributable to spatial dependence in housing prices. Estimation results show that structural adjustment has a statistically significant effect on housing prices that varies widely across regions. In descending order, the impact of industrial structure sophistication decreases in eastern, central, western, and northeastern China. This finding suggests that the government should match housing with local industry, prevent excessive real estate development in conventional agricultural areas, and pay close attention to changes in housing prices caused by increasing industrial restructuring. [ABSTRACT FROM AUTHOR]

Trust in banks is essential to financial system effectiveness. The present study examines the determinants of trust in banks in China. Using the most recent wave of the World Values Survey, which included information on trust in banks from the survey in China in 2012, we perform ordered logit estimations to investigate the potential influence of a large set of individual and provincial indicators on trust in banks. We observe the influence of certain sociodemographic indicators. Membership in the Communist Party and living in a rural area are negatively associated with trust in banks. Age and satisfaction with financial situation contribute to higher trust in banks, while being married and having a higher level of education tend to lower trust in banks. Access to information regardless of the type of media disseminating the information (newspapers, television or Internet) seem to have no impact on trust in banks. Economic values influence trust in banks. In particular, individuals who favour inequality as an incentive for individual effort or support an expanded government ownership role in the economy tend to trust banks more. [ABSTRACT FROM AUTHOR]

Developing Asia has benefited greatly from the rise of the People's Republic of China (PRC), primarily through the trade channel. The PRC and its neighbours have collectively formed a regional production network, and the PRC is becoming an increasingly important source of final demand. Two empirical techniques are used to examine the likely economic impact of growth deceleration in the PRC on other Asian economies: (1) a single-equation approach that captures the trade channel; and (2) a global vector autoregressive model that captures the effects beyond the trade channel. The results of both analyses confirm that deceleration in the PRC will have a non-negligible negative effect on other economies, especially on East and Southeast Asian economies. An out-of-sample analysis to tease out the effects of slower growth in the PRC from the recent growth performance of selected Southeast Asian economies suggests that the PRC effect is contributing to the growth dynamics of this region but is not always dominant. [ABSTRACT FROM AUTHOR]

The wealthy hand-to-mouth are households who are poor in liquid wealth (e.g. cash and checking accounts) and rich in illiquid wealth (e.g. housing and retirement accounts), while the poor hand-to-mouth are poor in both liquid and illiquid wealth. Data from the China Household Finance Survey reveal the following facts about the country's wealthy hand-to-mouth. First, they represent the majority of the hand-to-mouth households in China. Second, they have different wealth portfolios and demographic features from the poor hand-to-mouth. Finally, they have larger consumption responses to income fluctuations than non-hand-to-mouth households, after controlling for endogeneity, income, hand-to-mouth status and other household characteristics. [ABSTRACT FROM AUTHOR]

An introduction is presented in which the editor discusses various reports within the issue on topics including dual-track reform strategy adopted in the Chinese economy, impact of financial repression on China's economic growth, and impact of local government debt on leverage ratios.

China has a population three times more than all other transition economies combined, and China's economic development in the last two decades has been nothing short of phenomenal, having overtaken Japan as the world's second-largest economy. China's future economic growth, social and political stability will undoubtedly have an unprecedented influence on the order and fiscal stability of the Chinese people. [ABSTRACT FROM AUTHOR]

For more than three decades, China has managed to combine rapid economic growth with a strictly regulated financial sector. The discrepancy between economic and financial development has raised the question of whether China might be an exception to the so-called finance-growth nexus. This study examines the relationship between finance and growth at the provincial level in China using a new set of measures of capital freedom and financial development. The results indicate that capital freedom and financial development are associated with both higher income and growth rates. In particular, we find that the marketisation of financial institutions and strengthening of legal and government institutions have a particularly strong impact on income and growth in low-income provinces. [ABSTRACT FROM AUTHOR]

China has developed ambitious bioenergy installation targets as part of its broader goals to increase its renewable energy-generating capacity and decarbonize its economy. A key target feedstock for bioenergy is the 800 million tonnes of agricultural residues that China produces each year. At present, the main financial incentive to support bioenergy generation from agricultural residues is a feed-in-tariff provided for bioenergy that is produced by units that take 80% or more of their feedstock energy from biomass. Although this policy has catalysed the construction of many bioenergy units, there are reports that these projects are experiencing serious financial and technical problems, leading to low operational efficiency and even closure. An alternative option for China's agricultural residues is cofiring with coal in existing power stations. However, this is currently unprofitable for power station operators, as cofiring is not eligible for financial assistance through the bioenergy feed-in-tariff. In the light of China's ambitious target to install 30 GW of bioenergy generation capacity by 2020, this study investigates the extent to which extension of the bioenergy feed-in-tariff to include cofiring could contribute towards this goal. The results suggest that 39% of China's straw energy resources are located within 50 km of a power station. Assuming cofiring ratios of up to 10% coal energy replacement, an annual 89-117 TWh of electricity could be generated by cofiring agricultural residues collected within 50 km radii of power stations. If China extends its bioenergy subsidies to include cofiring, an annual 62-92 TWh can be produced at an internal rate of return of 8% or more. This equates to 42-62% of the bioenergy generation that China might expect if it met its 2020 target of installing 30 GW of bioenergy capacity. Overall, this indicates a strong case for the Chinese government to extend its existing bioenergy feed-in-tariff to include cofiring at low energy replacement ratios. [ABSTRACT FROM AUTHOR]

We propose a special panel quantile regression model with multiple stochastic change-points to analyze latent structural breaks in the short-term post-offering price-volume relationships in China's growth enterprise market where the piecewise quantile equations are defined by change point indication functions. We also develop a new Bayesian inference and Markov chain Monte Carlo simulation approach to estimate the parameters, including the locations of change points, and put forth simulation-based posterior Bayesian factor tests to find the best number of change points. Our empirical evidence suggests that the single change point effect is significant on quantile-based price-volume relationships in China's growth enterprise market. The lagged initial public offering (IPO) return and the IPO volume rate of change have positive impacts on the current IPO return before and after the change point. Along with investors' gradually declining hot sentiment toward a new IPO, the market index volume rate of change induces the abnormal short-term post-offering IPO return to move back to the equilibrium. Copyright © 2015 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The rise of China as an economic power has led to concern in many Asian counties that this development poses a threat to their ability to export. The empirical support for this remains inconsistent, however. One explanation for these inconsistencies includes biases that follow from the use of a gravity model specified in an a-theoretical manner. We study the effect of the Chinese exports growth using the empirical framework outlined by Baldwin and Taglioni (2006). We report evidence of a positive relationship between Chinese and its Asian neighbours' exports, with countries with greater endowments of human capital benefiting most from this growth. [ABSTRACT FROM AUTHOR]

China's economic presence in the Caribbean has grown significantly in the last decade. The growing economic presence of China in the Caribbean is evident in China's exports and development assistance to the region. Caribbean exports to China have not significantly increased; in fact, they declined during the period 2006-09. This is in contrast to the growth of exports from Latin America and the rest of the world and represents a missed opportunity for Caribbean exporters. The potential for further growth in economic relations between China and the Caribbean lies in trade including services, foreign investment and tourism. The pattern of trade, investment and development assistance in the Caribbean is very different from that in Latin America, and therefore it is misleading to conflate the two regions and draw an inference of similarity beyond very broad trends as is the case of the literature on the economic presence of China in Latin America. The contrast is vividly evident in the fact that China is now the largest trade partner of some Latin American countries but remains a small fraction of the Caribbean's trade. [ABSTRACT FROM AUTHOR]

A new wave of regional trade negotiations have sprung up in the Asia- Pacific region. China faces challenges and opportunities simultaneously. On the one hand, if China is excluded from major regional trade agreements, such as Trans-Pacific Partnership, it may hurt China's future growth. On the other hand, China can utilise the opportunities of regional trade negotiations to shape the new rules of international trade from the very early stage. Regional trade negotiations are also important for China because it needs further opening up to facilitate the domestic economic reform. [ABSTRACT FROM AUTHOR]

Exploring the cause-and-effect relationship between economic sectors and water resources is important to China. This study implemented a factor decomposition analysis by weighted average decomposition (WAD) model on the changes of Chinese virtual water (VW) consumption between 2002 and 2007, which includes both direct water consumption (consumed to produce final products) and indirect water consumption (consumed to produce intermediate products). The change in VW consumption is decomposed into three determinant factors: technological effect, economic structural effect and the products' scale effect. The results show that the volume of VW consumption in China has decreased from 5.92 × 1011 m3 in 2002 to 5.17 × 1011 m3 in 2007, which is mainly because of the technological effect (-5.48 × 1011 m3). The increase in net VW exports is mainly due to the economic structure effect (6.19 × 109 m3) and the fast growth of exports (3.49 × 1010 m3). [ABSTRACT FROM AUTHOR]

The article talks about the need of building efficient financial system in China by adopting dual-track systems for improving economic condition of China. Topics include roles and behavior of state-owned enterprises (SOEs) and state-owned banks (SOBs); government reform efforts including developments of digital finance in China; and Peking University Digital Finance Development Index for tracking the progress of digital finance in various sectors.

Abstract: The present study aims to explore the relationship between the sovereign yield curve and fiscal behaviour in China. The Chinese Government is very powerful, and fiscal policy plays an important role in China's economy. A dynamic Nelson–Siegel model is adopted to estimate the level, slope and curvature factors of the yield curve. Three aspects of fiscal behaviour, including government spending, revenue and budget balance, are considered. Significant relationships between fiscal behaviour and the sovereign yield curve are found and described in the present study. Higher government expenditure raises the level and slope factors of the yield curve, while increasing government revenue reduces the level factor and enhances the slope factor. Furthermore, improved budget balance decreases the level and slope factors of the yield curve. Fiscal behaviour also interacts with the macroeconomy in China. Fiscal policy is insensitive to price surges in contrast to the strong responses of monetary policy to higher inflation. In addition, crowding‐out effects of government spending are demonstrated in this study. [ABSTRACT FROM AUTHOR]

The author offers his views on the article "Campaign-Style Enforcement and Regulatory Compliance" by Nicole Ning Liu, Carlos Wing-Hang Lo, Xueyong Zhan, and Wei Wang. Topics include the article's description of the role of campaign-style enforcement in changing cadre-level behavior in Chinese environmental policy implementation, the reliance of the article on the self-interested reporting of the individuals charged with implementation.