China： Unscathed through the Global Financial Tsunami

This paper investigates the reasons behind the resilience of China＇s economy to the global financial tsunami. China ＇s economy is lowly leveraged in its banking, household, public and external sectors and, therefore, is less plagued by the global deleveraging than most developed economies. Chinese domestic sectors have improved significantly over the past decade, giving them larger capacity to cope with external shocks than during the Asian financial crisis a decade ago. Contrary to the conventional wisdom that China＇s economic growth is highly dependent on exports, we find that the main growth engine for China is domestic demand. Destocking, rather than falling exports, was the main cause of the sharp economic slowdown in China in late 2008 and early 2009. Therefore, the global economic slowdown should have limited impact on China＇s economy. We forecast a sustained eeonomic recovery in China in 2009-2011, with real GDP growth exceeding 10 percent in 2010.     

Promoting Private Entrepreneurship for Deepening Market Reform in China: A Resource Allocation Perspective

After more than three decades of rapid growth, China's economy is going through an important turning point, where structural imbalances in both supply and demand sides must be addressed for a more moderate and sustainable growth path. By focusing on the structural changes to its ownership, a central element in China's economic transformation under market reform, the present paper highlights the importance of private entrepreneurship in deepening market reform and, thereby, in driving economic growth in a more efficient and sustainable way. Based on a perspective of resource allocation and a conceptual framework of entrepreneurship, the paper elaborates on the evolution of the private sector and its performance in the context of ownership reform, making comparisons with the performance of the state sector. The analysis suggests that there is further room for more productive use of economic resources, especially capital, land and natural resources, by increasing the participation of private entrepreneurs in industries with high entry barriers in favor of state‐owned enterprises. Moreover, more competitive and equal access to productive resources through reform is needed to promote more productive entrepreneurship and to reduce rent‐seeking activities.     

The causes of Japan's ‘lost decade’: The role of household consumption

In this paper, I analyze the causes of the prolonged slowdown of the Japanese economy in the 1990s and find that the stagnation of investment, especially private fixed investment, was the primary culprit. I then investigate the causes of the stagnation of household consumption during the 1990s and find that the stagnation of household disposable income, the decline in household wealth, and increased uncertainty about the future are among the contributing factors. Finally, I consider whether demand side factors or supply side factors were more important as causes of the prolonged slowdown of the Japanese economy in the 1990s and conclude that the former (especially misguided government policies) were probably more important.     

Local Government Debt,Factor Misallocation and Regional Economic Performance in China

This paper examines total factor efficiency and productivity performance by taking into account local government debt (LGD) in 31 Chinese provincial regions for the period 2000–2013. The results show that neglecting LGD may overstate economic performance in Chinese provinces. The eastern region shows better performance in single factor efficiency and total factor efficiency than the non‐eastern regions. The western region shows the worst total factor performance. The north‐eastern region is the only region that has experienced a decline in total factor performance. The state‐dominated, investment‐driven development model may help technological progress across Chinese regions but could lead to significant factor misallocation. We argue that biases towards more state‐dominated investment and land supply in less productive western, central and north‐eastern regions, at the expense of investment and land supply in more productive eastern regions, have contributed to the recent slowdown in economic growth in China. Therefore, further market‐oriented reforms in factor markets should be considered in the future.     

Industrial Structural Change and Economic Growth in China, 1987–2008

The present paper studies the sources of economic growth and the nature of structural change in the Chinese economy from 1987 to 2008. Using a methodology that evaluates the contribution of an industry to economic growth, the present paper shows that the post‐2000 subperiod marked an increased reliance on the services sector as a source of growth in the Chinese economy. Much of the acceleration in real GDP or aggregate labor productivity growth in China in the post‐2000 subperiod compared to the pre‐2000 period can be traced to an increased contribution from service‐producing and high‐technology exporting manufacturing industries. The evidence indicates that the Chinese economy has been rebalancing toward domestic consumption and shifting its export sector toward high‐technology manufacturing industries.     

The Future is in the Past: Projecting and Plotting the Potential Rate of Growth and Trajectory of the Structural Change of the Chinese Economy for the Next 20 Years

Based on the convergence hypothesis and referring to the experience of East Asian high‐performing economies from 1950 to 2010, this paper projects and plots the potential growth rate of the Chinese economy over the next 20 years. It predicts that the potential growth rate of per capita GDP adjusted by purchasing power parity averages at 6.02 percent from 2015 to 2035, while the potential GDP growth rate of 2015 would still be above 8 percent, which implies that the realized rate of growth has not reached its potential since 2012. Besides, based on the per capita GDP projected and on cross‐country comparison, the paper plots the trajectory of structural change of the Chinese economy from 2015 to 2035. The result shows that: (i) the value‐added share of primary industry will drop more rapidly than the employment share; (ii) the value‐added share of secondary industry will decline and employment share will present an inverted U shape whose turning point will probably come between 2020 and 2025; (iii) both the value‐added and employment share of tertiary industry will increase continuously.     

The Role of the Real Estate Sector in the Structural Dynamics of the Chinese Economy: An Input–Output Analysis

Market‐oriented housing reforms and the rapid urbanization process have led to spectacular growth in the Chinese real estate sector (RES). However, the changes in the role played by this sector in the structural dynamics of the Chinese economy have not been examined sufficiently. Accordingly, we analyze the intersectoral structural changes to the Chinese RES, its linkages with the rest of the economy, and its growth sources, using four Chinese input–output tables from 2002 to 2017. We depart from existing work on the RES by using the causative matrix approach and structural decomposition analysis, and obtain three main results. First, the RES, which received little non‐RES feedback during the 2002–2007 period, has subsequently received much more substantial feedback. Second, the impact of the RES on China's economic growth stems mainly from its forward linkages. Third, the growth in the RES has been driven mainly by domestic demand expansion. Our results highlight that the Chinese RES, which plays a key role in value chains, is highly dependent on its own final demand and a fall in its demand would impede economic development. An important implication of these results is that developing the national economy by stimulating the RES would not be as effective as developing the RES through stimulating the national economy.     

Business Cycle in China since the Lehman Crisis： Interaction among Macroeconomic Policy,Economic Growth and Inflation

The major objectives of China＇s macroeconomic policy are to stabilize economic growth and inflation, which, in turn, are important factors determining key prices, such as the policy interest rate, the renminbi exchange rate and stockprices. In a framework that distinguishes different phases of the business cycle based on whether the current period＇s economic growth rate and inflation rate are above or below their ＂＇normal＂ values, this paper analyzes the interaction among macroeconomic policy, economic growth and inflation in China since the Lehman crisis, and the implications for these key prices. The path of China＇s economy indicates that stimulus measures taken by the government during the recession phase and tightening measures implemented during the overheating phase have helped minimize the fluctuation over the business cycle. Our analysis shows that Chinese authorities tend to rely more on adjusting the exchange rate than the interest rate to stabilize the economy. Comparing with conditions at the time of the post-Lehman recession, the current slowpace of economie growth in China may reflect not only weakening demand, but also a lowerpotential growth rate associated with the arrival of the Lewis turning point.     

China's Economic Transition Syndrome

Following 30 years of high economic growth, China's economy is in the midst of a classic transition from an industrial to a post‐industrial economy. In this transition period, the mismatch between supply and demand is growing, while the country's economic growth engine is weakening. Stimulus policies have aimed to maintain the country's economic growth momentum but they have come at the price of sharply increased financial fragility and resource misallocation, both of which are harmful to economic growth. China's “economic transition syndrome” refers to the vicious cycle of slowing GDP growth, combined with increasing demand for stimulus policies, and increasing financial fragility and resource misallocation.     

China's ‘New Normal’: Is the growth slowdown demand- or supply-driven?

China's ‘New Normal’ has been much discussed in recent years. An important aspect of the New Normal is the growth slowdown from levels of around 10% per annum to a more modest 6 or 7%. Not surprisingly, there has been widespread discussion of whether the slowdown is permanent or not and, in either case, what the sources of the slowdown are. However, much of this discussion has been based on informal analysis of the data rather than formal econometric results. We make a move in the direction of formal empirical analysis of this issue by estimating and simulating a vector autoregressive (VAR) model which distinguishes between demand, supply and foreign shocks as possible drivers of changes in economic growth. We analyse both two-variable (growth and inflation) and three-variable (foreign growth, domestic growth and inflation) VAR models and identify demand, supply and foreign shocks, using a modification of the Blanchard-Quah identification procedure. In the two-variable model we identify two shocks (demand and supply) and find that the slowdown since the GFC has been mainly supply-driven. This conclusion is not changed when a foreign growth variable is added to the model and a foreign shock is allowed for – we find that demand continues to be of relatively little importance, that the foreign shock also makes little contribution to explaining the long-run growth decline in China which continues to be driven by long-term supply factors. This conclusion is robust to a number of alternative formulations of the model. Thus, the growth slowdown may, indeed, be characterised as the ‘New Normal’.     

Role of TFP in China's Growth*

This paper uses the dual approach to growth accounting to examine the role of total factor productivity (TFP) in recent Chinese growth. Most previous growth accounting studies on China have followed the primal approach, which depends heavily on the national income accounts. Unfortunately, despite efforts to rectify them, Chinese national income accounts data continue to have problems that affect primal approach growth accounting results. The dual approach, in contrast, allows independent price information to play a role. Recent research has focused on the following two questions: (i) How significant has TFP's role been in post‐reform Chinese growth? (ii) Has TFP growth rate slowed down in more recent years? This paper finds that: (i) the TFP growth rate for mainland China computed using the dual approach also proves high; and (ii) there has been some slowdown in TFP growth rate in recent years.     

Real Exchange Rate in China：A Long-run Perspective

This paper investigates the RMB exchange rate from a long‐run viewpoint. Whether China's rapid economic growth brought about real exchange rate appreciation between 1975 and 2002 is empirically examined, based on a supply‐side model, the Balassa—Semuelson Hypothesis (BSH). The same test is conducted on Japan, Hong Kong, Korea, Malaysia, Singapore, Thailand, the Philippines, Indonesia and India. Our result indicates that the BSH only exists where the industrial structure has been upgraded and the economy has been successfully transformed from an agricultural economy to a manufacturing economy. Interestingly, China, among those where the BSH does not present, appears to be upgrading its industrial and trade structure. We then try to answer the question of why past rapid growth has no significant relationship with the RMB real exchange rate and what factors are underlying the trend of the RMB real exchange rate. We expect an appreciating trend of RMB real exchange rate in the foreseeable future, presuming that China's industrial upgrading process continues and the factors pertaining to the BSH's prediction, such as rise of wage rates in both tradables and nontradables, become more significant. (Edited by Xiaoming Feng)     

China's Trade Slowdown: Cyclical or Structural?

This paper analyzes whether the slowdown of China's trade in 2012–2015 was cyclical or structural, and further discusses the effects of structural factors, including trade structure, trade protectionism and global value chain participation. Using the national panel data from 2000 to 2015, based on the error correction model and import‐intensity‐adjusted demand model, our results show that the slowdown of China's trade growth in 2012–2015 was mainly a result of cyclical factors. Using 2000–2015 industry‐level data, we also find that the structure of trade goods had an inhibitory effect on the import slowdown but a positive effect on the export slowdown. Trade protectionism had an adverse effect on the trade growth slowdown. The global value chain participation marginally contributed to the slowdown in trade growth. Therefore, the impacts of structural factors on trade growth slowdown cannot be ignored, and related policies should receive greater attention from policy‐makers.     

20世纪90年代以来美国对外贸易逆差与经济增长的相关性分析

本文应用协整分析和格兰杰因果检验方法检验了20世纪90年代以来美国对外贸易逆差与经济增长的相关性。检验结果表明,1991~2005年间,美国对外贸易逆差的扩大与经济增长之间存在着长期稳定的动态均衡关系,美国的经济增长是其对外贸易逆差扩大的Granger原因,而拒绝对外贸易逆差扩大不是美国经济增长的Granger原因的概率只有60%。对此计量检验结果,本文认为,美国国内总供给与总需求缺口、经济结构升级、低利率、高新技术出口管制以及美国的国际分工地位、大规模对外直接投资、主要贸易伙伴经济增速缓慢、谋求全球霸权等国内外因素对美国经济的影响具有双效性:一方面支撑了美国经济的增长;另一方面却加剧了美国对外贸易的逆差。     

Has China's Housing Production Peaked?

China's real estate has been a key engine of its sustained economic expansion. This paper argues, however, that even before the COVID‐19 shock, a decades‐long housing boom had given rise to severe price misalignments and regional supply–demand mismatches, making an adjustment both necessary and inevitable. We make use of newly available and updated data sources to analyze supply–demand conditions in the fast‐moving Chinese economy. The imbalances are then compared to benchmarks from other economies. We conclude that the real estate sector is quite vulnerable to a sustained aggregate growth shock, such as COVID‐19 might pose. In our baseline calibration, using input–output tables and taking account of the very large footprint of housing construction and real estate related sectors, the adjustment to a decline in housing activity can easily trim a cumulative 5–10 percent from the level of output over a period of years.     

Transmission of China's Shocks to the BRIS Countries

This paper investigates the effects of China on the BRIS countries, namely Brazil, Russia, India and South Africa. We identify Chinese supply and demand shocks and assess their transmission to BRIS in a structural dynamic factor model framework estimated over the period 1995Q2‐2009Q4. The findings show that Chinese supply shocks are more important than its demand shocks. Supply shocks produce positive and significant output responses in all BRIS countries. And while these supply shocks have a permanent impact on the BRIS countries, the effects of demand shocks are short‐lived. Both supply and demand shocks are transmitted through trade rather than financial linkages. However, the responses of the BRIS countries are heterogeneous and therefore require country‐specific policy responses.     

China＇s Economy in 2007/2008： Coping with Problems of Runaway Growth

Fuelled by high domestic investment and rapid export expansion, China ＂s economy grew by ll.4 pereent in 2007, the highest increase since 1994 and the fifth eonseeutive year of double-digit growth. Such spectacular growth performance is unprecedented in the world＇s economic history. However, the Chinese Government is again worried about a possible ＂hard landing＂for the economy, as no economy can sustain very strong growth for extremely long period without overheating. Cracks in China ＂s economy are indeed emerging. The eonsumer priee index shot up to 6.9percent in November 2007, the highest level in a decade, with the annual inflation for 2007 rising to 4.S pereent, well above the government＇s ＂comfort level＂ of 3 percent. This prompted China＇s top leadership to declare that reducing economic overheating and curbing inflation would be the top poliey priorities for 2008. To contain such cost-push inflation, the government has to tackle its root causes, such as excessive liquidity, which is caused by the undervaluation of the renminbi, which in turn is attributable to China＇s chronic external and internal maeroeeonomie imbalances~ High growth is likely to continue in 2008, at around l O pereent, with inflation of S-6 pereent expected, despite the anticipated tighter maeroeeonomie control measures and the more troubled external economic environment （e.g. the expected US economic slowdown）. Regardless, China ＂s fundamental problems associated with runaway growth will largely remain. In addition, if the US economy slips into a serious recession, the Chinese economy will not be able to deeouple from it and escape unscathed.     

Growth Slowdown in China since 2008: Will There Be a Hard Landing in the Near Future?

China has witnessed an unprecedented great leap forward in investment since the 2008 global financial crisis, and at the same time real GDP growth has undergone a significant slowdown. This paper examines China's growth slowdown since 2008 up to 2013 using a growth accounting model in a systematic way. It is found that China's growth slowdown since 2008 almost completely comes from a sharp slowdown in total factor productivity growth. During this period, the positive effect on growth from expanding investment has been completely offset by the negative effect of the slowdown in total factor productivity growth. Currently, China's economy has slid into the Solow downward path. Under these circumstances, a soft landing is completely infeasible. Unless the Chinese Government implements substantial rebalancing and comprehensive and in‐depth market‐oriented reform, accompanied by large‐scale de‐investment (decreasing in the ratio of investment in GDP) and massive employment adjustment, China will be unable to avoid the Solow downward path, and a hard landing in investment will be inevitable in the near future.     

关于日本经济长期停滞理论与政策的思考

泡沫危机以后,日本试图通过凯恩斯经济政策和结构改革的交替运用来恢复经济增长。20世纪90年代前期,凯恩斯经济政策的运用取得了短期效果。由于供给结构的变化,这一政策并没有使日本经济真正摆脱危机的困境。90年代后期,日本开始改为实施结构改革来提高其潜在增长率。由于总需求的持续减少,日本经济开始由短期衰退转为长期停滞。本文认为,泡沫危机后日本资产价格的持续下跌,导致各经济主体出现大量的不良资产,抵消了以上两大政策的经济效应。其中,商业银行对不良债权处理的拖延造成供给结构效率下降、企业投资和个人消费持续减少,使日本经济的停滞趋于长期化。     

供给侧视角下FDI与经济增长方式关系研究

在以需求侧驱动转向供给侧驱动为主导的经济新常态下，FDI作为综合性投资方式成为推动经济增长的重要引擎之一。基于供给侧视角，论证了C-D生产函数机理，量化经济增长方式；从而通过协整检验以及VEC模型探究FDI与量化的经济增长方式之间的长期均衡效应和短期动态波动机制；进而基于VAR模型对变量进行脉冲响应函数和方差分解分析。结果表明：FDI与全要素生产率贡献率的长期均衡对短期动态波动具有反向修正机制；FDI受到单位冲击后引起全要素生产率贡献率的强烈正向响应，并且FDI对经济增长方式转变的贡献率达到了11%。