Reaping the Economic Benefits of Decarbonization for China

Chinaneeds to reduce its carbon emissions if global climate change mitigation is to succeed. Conventional economic analysis views cutting emissions as a cost, creating a collective action problem. However, decarbonization can improve productivity andprovide co-benefits that accord with multiple national policy objectives. We track China ＇ s progress in reducing the emissions intensity of the economy, and construct a macro scenario with China＇s carbon emissions peaking in the 2020s. Investment in greater energy productivity and economic restructuring away from heavy industries can bring productivity gains, and decarbonization of energy supply has important co-benefits for airpollution and energy security. Combined with lower climate change risks and the likelihood thai China＇s actions will influence other countries, this suggests that cutting carbon emissions is not only in China＇s self-interest but also in the global interest. To properly identify the true costs and benefits of climate change action requires new thinking in economic analysis.     

How Will China Move towards Becoming a Low Carbon Economy？

China is facing increasing pressure from the international community to curb its greenhouse emissions. The next 15-20 years are important for China＇s social and economic development, but this is also a key period for controlling global greenhouse gas emissions. In considering the development path of China＇s economy, policy-makers are confronted by the issue of global climate change. Reducing carbon emissioms is now a worldwide task. For China, opportunities and challenges coexist. Post-Kyoto climate regime must provide incentives for China＇s transition to becoming a low carbon economy based on the principle of common but differentiated responsibilities.     

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.     

Labor Market Reform, Income Inequality and Economic Growth in China

The year 1996 was a turning point both in terms of Chinese labor market reform aria m China＇s economic growth pattern. Before 1996, labor market reform was mainly implemented through adjustment of people＇s occupation and income structure. Since 1996, employment restructuring has led to differentiation in terms of employment status. Labor market reform in the former stage resulted in slow growth in wages, whereas reform in the latter stage enhanced economic efficiency. Both stages have enabled the Chinese economy to apply its comparative advantage of low labor cost. Labor market reform has also increased income disparity and, therefore, new challenges are posed in sustaining economic growth. China needs to adjust its development strategies and introduce labor market reform that can improve income equality, so as to achieve sustainable economic development.     

Past Successes and New Challenges： China＇s Foreign Trade at a Turning Point

Since 1979, China has recorded a remarkable trade performance, which has been driven by international processing and the offshoring strategies of foreign firms. The diversification of Chinese exports and their technological upgrading have been phenomenal However, there is also inertia, illustrated by the persistent dualism of the trade sector, the unrelenting specialization in downmarket products and the deteriorating terms of trade. These weaknesses have helped its partners to adjust to the rise of this new trade power. In the past decade, China＇s economy has faced the adverse effects o fan export-led growth and the global crisis has revealed its vulnerability. China is now forced to rebalance its economy. This will imply major changes in foreign trade, in favor of ordinary trade and away from processing. In the foreseeable future, China is unlikely to become the driver of international demand but will remain the engine of Asian economic integration.     

2003年以来中国的宏观经济形势分析

The Chinese economy has emerged from deflation and entered a new stage of economic growth in late 2002 and early 2003. The sudden pick up of the economy has led to a worsening of structural imbalance and inflation is rising. The Chinese government has to find a fine trade-off between growth and inflation. While the central bank needs to tighten its monetary policy, the government may need to use a more expansionary fiscal policy to offset the contracting effect created by the tightened monetary policy. The structural imbalance and partial overheating remind us that China‘s economic reform still has a long way to go. The Chinese government must speed up its reform process. While the long-term prospect for China‘s economic rise is promising, it may be necessary for the Chinese people to prepare themselves for a harder time ahead.     

China＇s Economy in 2006/2007： Managing High Growth for Faster Structural Adjustment

China's economy in 2006 continued to register high growth of 10.5 to 10.7 percent with low inflation (CPI at 1.3 percent),dissipating fears of a hard landing. Since its accession to the WTO,China has become a significant global economic player,and is the favorite destination for many regional and global production networks. China is now a truly economic power (jingji daguo). China's economic leadership is also increasingly confident of its ability to manage China's domestic economic growth and its growing relations with the outside world. Although China's growth is expected to slow down in 2007 to approximately 9.5 percent,the national mood now is one of "more balanced" growth rather than "fast growth". Therefore,the building of a "harmonious society" is to be emphasized in China,while letting economic growth solve the burning social and environmental issues. In 2007,the government will also need to deal with various internal and external macroeconomic imbalances. The renminbi will be under even stronger pressure to revalue,given China's record trade surplus of US$160bn and foreign reserves of US$1tn.     

Economic Policies for a Harmonious Society： A Symposium Editorial Introduction

China＇s remarkable economic growth has produced dramatic structtral and socioeconomic change. Economic growth has solved many problems but the accompanying changes in the economy and society have brought new problems to the fore. This has been recognized by China＇s Government in the recent emphasis that it has placed on the need to create a ＂harmonious society.＂ The new leadership will wish to devise new policies for the current challenges and those ahead.     

Financial Development, Economic Growth and Adaptive Efficiency： A Comparison between China and Pakistan

The strong economic growth in China is difficult to reconcile with its inefficient financial system. The puzzle of China＇s financial development and growth can be explained through a dynamic criterion of adaptive efficiency, rather than through allocative efficiency. Using the framework of an autoregressive distributed lag model, the present paper tests the hypothesis that the GDP growth rate is dependent on financial development along with other variables in China and Pakistan. The hypothesis cannot be rejected in both cases. However, the results show that economic growth has a negative relationship with credit to the private sector in China. We conclude that financial development is a source of China＇s high growth rate and that the banking system is still under an evolutionary process, involving the pursuit of social objectives instead of the sole objective of profit maximization. Our results provide some implications for other developing countries like Pakistan.     

Transition of China＇s Diplomacy and Foreign Relations

The present paper focuses on the transformation of China＇s foreign affairs. The transformation is closely associated with and mutually reinforced by the developmental changes that have taken place in China. China＇s strong economic focus has had a profound effect on its foreign relations and international strategies. With sustained growth over the past three decades （1978-2008）, China has become an important member of the world community. In particular, its influence has been growing in the Asia-Pacific area. China＇s unique developmental model and path are recognized and scrutinized worldwide. The present paper discusses special aspects of foreign aid and also explores the changes in principles of and approaches taken in the application of foreign aid policies. Under dual external and internal pressure, China has to constantly adjust, renew and improve its approach to diplomatic and international relations.     

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.     

Development in China＇s Foreign Trade： 2003-2012

China＇s foreign trade has entered a new stage, marked by some profound changes since 2003. After 5 years ＇consecutive high growth, China＇s foreign trade experienced a significant slowdown in growth following the onset of the global financial crisis in 2008. The purpose of this article is to present a review of the development in China＇s foreign trade over the past l O years, and to explore important changes that have taken place during this period of time. A majorfinding of the presentpaper is that the traditional forces driving the high export growth in China, that is, low-cost labor, low-cost resources and low-cost money, have been disappearing. The policy implication is that over the next l O-15 years, the most important conditions for sustaining high export growth will be promoting the development and export of private enterprises in traditional heaw industries and high-technology industries, and relying on technological progress and high produc6vity to propel export expansion.     

Would China＇s Sovereign Wealth Fund Be a Menace to the USA？

The sovereign wealth club acquired a new member with the official launch of the China Investment Corporation （CIC） on 29 September 2007. The arrival of CIC has further heated up debate regarding sovereign wealth funds （SWFs） and their potential implications for global financial markets. This is because, in carrying out its investments, CIC can tap into China＇s huge official foreign exchange reserves, which by April 2008 had surged to US$1.76tn. CIC＇s initial working capital of US$2OObn makes it the fifth largest SWFs in the world today. This article seeks to analyze CIC＇s investment strategies, as well as their potential economic and political implications for global as well as US financial markets.     

CO2 Emissions Embodied in China＇s Foreign Trade： An Investigation from the Perspective of Global Vertical Specialization

In light of the growth in vertically specialized in global trade, the present paper uses input output tables from the World Input-Output Database to construct an environmental multi regional input-output model to calculate the CO2 emissions embodied in China＇s international trade during 1995-2009. The advantage of this model lies in its incorporation of the re exported CO2 emissions component embodied in trade and its ability to differentiate domestic sourced CO2 emissions from foreign-sourced CO2 emissions in trade. The results show that carbon emissions embodied in both China＇s exports and imports increased significantly during 1995-2009. One important reason for this is that the re-exported carbon emissions embodied in China＇s imported intermediate inputs increased substantially during this period. Our research reveals that accelerating the transformation of trade pattern and upgrading processing trade should be emphasized in the formulation of policy to prompt CO 2 emissions abatement in China.     

英文文摘

Cultural and Creative Industry Development China Rethinking
At present, the fundamental issue of China＇s economic structure is to resolve the contradictions. The new urgent consumer market needs to be expanded and the new demands hot spots urgently need to be created. In this financial crisis, China＇s economic development has to not only solve the internal and external structural imbalances but also stimulus the formation of new growth engines.     

Impact of the Global Financial Crisis on China： Empirical Evidence and Policy Implications

This paper applies a structural vector autoregression analysis to quantify the impact of the global financial crisis on China. It is found that the impact is indeed sizeable： a 1-percent decline in economic growth in the USA, the EU and Japan is likely to lead to a0. 73-percent decline in growth in China. The article discusses whether the current measures of fiscal stimulus are adequate to offset the sharp decline in external demand Although there is little doubt that the massive fiscal stimulus will largely offset the significant shortfalls in external demand, the current growth pattern in China will be increasingly unsustainable in the long term. China ＂s reform cycles suggest that external shocks are often opportunities for structural reforms. Therefore, the crisis could also be a catulyst for rebalancing China ＇s economic structure so as to return the economy to a sustainable path.     

China＇s Construction Land Expansion and Economic Growth： A Capital-output Ratio Based Analysis

Since 2003, the Chinese Government has included land policy as an important component of macroeconomic policy. The present paper analyzes the impact of the expansion of construction land on economic growth in terms of the capital-output ratio. Using provincial panel data for China from 1999to 2005, we conclude that the excess expansion of China＇s construction land led to an increase in the capital-output ratio. Therefore, expanding construction land has made little contribution to economic growth. This paper argues that contractionary land policy does not deter high economic growth, and is a necessary condition for sustainable economic growth.     

RMB Internationalization and Its Implications for Financial and Monetary Cooperation in East Asia

This paper emphasizes the importance of the denomination of financial assets rather than trade invoicing as a long-term determinant of an international currency. China needs to liberalize and open its financial system and make the RMB fully convertible, and to adopt a moreflexible exchange rate system to speed up its currency internationalization, for which China could follow either a global or regional approach. The global approach is a riskier and more unpredictable strategy because it would demand a scope and timeframe of financial liberalization that is likely to be beyond China＇s institutional capacity over the coming decade. There are two options that could be taken in following the regional approach. One is creating an ASEAN＋ New 3 （the Chinese Mainland, Hong Kong, and Taiwan） RMB bloc and the other is liberalizing China＇s financial industries and internationalizing the RMB by playing a leading role in East Asia＇s economic integration within the framework of ASEAN＋ 3, This paper concludes that the latter is a more realistic and effective approach for China.     

Role of Green Governance in Achieving Sustainable Urbanization in China

Since economic reforms began in 1978, China＇s urban population has increased by half a billion. Over the next 20years, cities will likely add another 300 million people through local population growth, migration and the integration of nearby rural areas, Cities account for the majority of resource use and pollution so achieving greener growth will depend on developing and implementing a more sustainable urbanization model. China＇s leaders have responded to these challenges with ambitious goals and comprehensive environmental laws and regulations. These have so far not significantly reduced the harm from air, water and soil pollution.＂ in large measure because China ＂s green governance does not match its green ambitions. Drawing on the World Bank ＇s work on green growth and a recent joint urbanization study by the Development Research Center of China＇s State Council and the Worm Bank, this paper reviews recent academic research on green governance in urban China and discusses its main implications in the context of emerging global green growth concepts.     

China as a Global Manufacturing Powerhouse： Strategic Considerations and Structural Adjustment

This study examines the nature and consequences of China＇s rise to the center of world economic affairs through manufacturing-led development. Our historical analysis shows that China is still well short of the point in its developmental process where its growth might be reasonably expected to slow, or the energy, resource and carbon intensity of growth to recede. The study argues that the current trajectory of industrialization will have to be altered when China becomes more actively engaged in dealing with structural issues at home and abroad against the background of the unwinding of global imbalances. One profitable strategy that China might employ wouM be to approximate the incredibly fruitful mass-market integration efforts of the USA that eventually elevated it to its position of global primacy. The cyclical re-emergence of excess capacity in Chinese heavy industry, serious questions about the medium term ability of other major regions to accommodate further large gains in Chinese market share, and the stark conflict between the contemporary style of industrial development and the health of the biosphere indicate strongly that now is the time to catalyze the required adjustment and reform processes that will underpin sustainable long-run prosperity.