Search

This paper provides a detailed account of China's Dual Circulation Development Paradigm and examines its theoretical foundation from the perspective of the New Structural Economics approach. The purpose of this Paradigm is to shift the focus from foreign to domestic circulation as the major driving force for China's sustainable development, and to emphasize the importance of a positive reciprocal relationship between domestic and international economic circulations. This paper argues that aim of the Paradigm is to facilitate a qualitative leap in industrial upgrading to achieve both a higher-quality domestic circulation and a higher-level of international circulation. By explaining the development thinking from the Chinese policy-makers' perspective, this paper also casts light on growth and development issues facing other countries. [ABSTRACT FROM AUTHOR]

An analysis of competition, policy constraints and privatization activities reveals that state-owned business enterprises (SOEs) stand to benefit from any government move that will seek to remove policy burdens. The removal of policy burdens coupled with efforts to level their playing field would allow SOEs to resist unnecessary political interventions and allow the state to impose hard budget constraints on them.

I. INTRODUCTION China's rural reform and development made great achievements and attracted world attention in the 1980s. In terms of organizational and institutional innovations, uniform public ownership gave way to [...]

The article focuses on China's 14th Five-Year Plan (2021–2025) with entrance into a new era of socialism with Chinese characteristics. It mentions China will enter the ranks of high-income economies by bringing its gross national income (GNI) per capita and China achieve high-quality growth with this big gap remains. It also mentions new structural economics (NSE) researchers are trying to understand how local governments in China can plan for high-quality development.

In 2020, China proposed a new development paradigm centered on domestic circulation with a "dual circulation" model in which domestic circulation and international circulation promote each other. This new paradigm reflects a clear understanding of China's development trend that saw its share of exports in the GDP declining steadily since 2006. However, the new paradigm does not necessarily mean that China should change its past policy of fully utilizing domestic and international markets and resources in economic development. Because of large economies of scale in modern manufacturing sector, China should continue to make full use of international markets. [ABSTRACT FROM AUTHOR]

This paper explores the ideas of development and the role of the state in economic development and institutional change from the New Structural Economics perspective. We argue that economic structures – including the structure of technology and industry, and hard and soft infrastructure – are endogenous to the endowment structure, which is given at any specific time and changeable over time. We advocate a state to facilitate structural change by using industrial policy to overcome market failures in order to help industries with latent comparative advantages to become competitive in the market and the state should pragmatically prioritize the use of its limited resources and implementation capability to create enclaves with favourable infrastructure and institution to jump start a dynamic growth in a country beset with poor infrastructure and institution. [ABSTRACT FROM AUTHOR]

This paper studies the causes, mechanisms and consequences of decreasing firm value and welfare loss in an economy under a fixed exchange rate regime when there is an unexpected appreciation in domestic currency. We also study the possible economic crisis caused by the exchange rate shock. We consider the established production capacity as well as the training of firmspecific labors before production to obtain that unexpected appreciation in domestic currency leads to unemployment of firm workers as well as a decrease in the firm's output and revenue. Furthermore, when the exchange rate appreciates to a certain degree, it is likely to induce economic crisis—firms will stop production completely which will not only decrease the firm's value, but also create a greater loss of social welfare due to the waste of existing capacity and human capital in the economy. Our study also implies that when an economy shifts from a fixed exchange rate regime to a more flexible one, government could adopt gradual reform policies and partial deregulation of the exchange rate to reduce or prevent social welfare loss when domestic currency faces appreciation pressure. [ABSTRACT FROM AUTHOR]

Examines the effect of fiscal decentralization on economic growth in China by using a production-function-based regression analysis framework. Overview of the fiscal reforms in China in the 1980s; Econometric model that focuses on the changes in fiscal relations between the central and provincial governments; Role of rural reform, capital accumulation and nonstate sector development in economic growth.

In this article, the authors provide another explanation for the prevalence of the soft budget constraint (SBC) in socialist and transitional economies. They argue that the SBC is rooted in the state's accountability problem. To understand the SBC problem in a traditional social economy, one needs to understand the issue of the viability of strategic industries and its relation to the origin of the Stalinist system. In the Stalinist system, because of the price distortions, a state-owned enterprise's (SOE) profitability was determined mostly by its plan-determined output and input prices. Due to the SBC and other problems, the traditional Stalinist system was very inefficient.

The article examines the cause of the economic problems of China. The discrepancy between the reforms in the macro-policy environment and the reforms in the macro-policy environment and the reforms in the micro-management institution and resource allocation system is identified as the root of the problems. Government officials in China are advised to abandon the catching-up and forging-ahead development strategy in order to complete the reforms in the macro-policy environment. According to the article, the consequences of the forging-ahead strategy include a distorted macro-policy environment, a loss of comparative advantage, a biased industrial structure, and low economic efficiency.

One of the most important remaining issues in China's transition to a market economy is the reform of state-owned enterprises (SOE's). When reforms started in late 1978, SOE's dominated China's industrial sectors in every aspect. After 18 years of gradual transition, the SOE share in China's total industrial output has declined from 77.6 percent in 1978 to 28.8 percent in 1996. However, in 1996 SOE's still employed 57.4 percent of urban workers and possessed 52.2 percent of total investment in industrial fixed assets. Improving SOE performance is crucial for social stability and sustained growth in China. However, over 40 percent of SOE's are losing money. In this paper, the authors will argue that the root of the SOE problem is the separation of ownership and control and that the often-criticized soft-budget constraints arise from various state-imposed policy burdens, which make the state accountable for the poor performance of SOE's. The key for a successful SOE reform is to remove the policy burdens and to create a level playing field so that market competition can provide sufficient information for the managerial performance of the SOE's and make the managers' incentives compatible with those of the state. [ABSTRACT FROM AUTHOR]