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.     

China and the Global Financial Crisis： Assessing the Impacts and Policy Responses

The present paper explores the role of China in the creation of the current global financial crisis and the impacts of the crisis on its economy. It argues against the view that the ＂saving glut＂ in China （along with other Asian emerging economies） played a significant causal role in the crisis. The global financial crisis did not engender much damage in China＇s financial structure, thanks to the relatively closed, bank-centered financial system. However, the impacts on the ＂real＂ side of the Chinese economy were hard felt. Growth and employment have fallen, largely due to the decline in exports and foreign direct investment. The crisis reveals the vulnerability of the export-dependent growth pattern. Policy responses of the Chinese Government, including monetary, fiscal and social policies, have helped to stem the downfall of the economy in the immediate term, but some of the policies have not addressed the structural problems of the Chinese economy and might well aggravate such problems over time. The present paper proposes a tentative reform blueprint to rebalance the economy and to sustain long-term growth.     

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.     

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.     

Is the Export-led Growth Hypothesis Enough to Account for China＇s Growth？

One of the missing pieces preventing us from understanding recent Chinese economic development is the role played by openness and capital accumulation in this process. The question is whether the sharp economic＇ growth that the Chinese economy has experienced is another case of export-led growth due to the open-door policy or whether, on the contrary, this growth has been caused by high domestic savings and investment rates （and the consequent capital accumulation）. To answer this question, we employed an empirical framework of the cointegrated vector autoregressive model. The empirical results show that both investment （in physieal capital and R＆D） and exports, as well as the exchange rate policy, are relevant factors in explaining China＇s long-run economic growth over the past 4 decades.     

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.     

Dealing with the Contagion： China and India in the Aftermath of the Subprime Meltdown

What began as a downturn in the US housing sector in the summer of 2007 had mushroomed into a global financial crisis by September 2008： the most severe since the 1930s. Developing countries, including China and India, at first seemingly sheltered from the worst of the turmoil, have not been immune to the contagion＇s spillover effects. What are China and India＇s precise vulnerabilities, and what can each do to better insulate their economies from the vagaries of global financial marker turmoil？ Equally important, what long-term strategies must each country adopt to make their economies more resilient to global market downturns？     

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.     

What Prompts the People＇s Bank of China to Change Its Monetary Policy Stance？ Evidence from a Discrete Choice Model

In the present paper, we model the policy stance of the People＇s Bank of China （PBC） as a latent variable, and the discrete changes in the reserve requirement ratio, policy interest rates, and the scale of open market operations are taken as signals of movement of this latent variable. We run a discrete choice regression that relates these observed indicators of policy stance to major trends of macroeconomic and financial developments, which are represented by common factors extracted from a large number of variables. The predicted value of the estimated model can then be interpreted as the implicit policy stance of the PBC. In a second step, we estimate how much of the variation in the PBC＇ s implicit stance can be explained by measures of its policy objectives on inflation, growth and financial stability. We find that deviations of CPI inflation from an implicit target and deviations of broad money growth from the announced targets, but not output gaps, figure significantly in the PBC＇s policy changes.     

Actuality Analysis of the Development of Industry Association in China and its Countermeasures

With China＇s entry into WTO and the globalization of the market economy, changing the old management mode of administration of Chinese employer＇s organization as soon as possible and building the function mode of modem market mechanism have already, become the urgent task of China＇s economic reform and development. Based on the current situation of the development of industry association in China, this paper lists the problems and difficulties faced in the development of employer＇s organization at present and puts forward corresponding countermeasures and suggestions by analyzing the problems.     

Has Fiscal Federalism Worked for Macroeconomic Purposes？ The Chinese Experience 1994-2003

China＇s central government undertook major tax regime reform in 1994 that was characterized by fiscal federalism. In hindsight, this reform might be viewed as being more emphatic towards the revenue side than the expenditure side. The reform has resulted in certain success both for revenue shifting and inflation fighting purposes. However, the reform and its subsequent follow-ups have not addressed some fundamental issues pertaining to China＇s government finance system, such as the overhauling of the function of government finance and redrawing lines between the central and regional governments with regard to their fiscal responsibilities and duties. Moreover, fiscal federalism might have actually increased fiscal burden on the economy, especially on domestic sectors of the economy. However, coupled with enhanced policy support for China＇ s external development, fiscal federalism might have helped to further accelerate resource shifts toward the external sector, thus resulting in an unprecedented rapid expansion in China＇ s exports since the mid1990s.     

The Empirical Analysis of the Reason and the Influence of the Rapid Growth of Foreign Exchange Reserves in China

The fluctuation of Chinese foreign exchange （Forex） reserve is affected by those factors, such as the volume of the Balance of Payments, the M2, the balance of external debts and so on. In this paper, the author establishes a model for the fluctuation of China＇s official foreign exchange reserve with the method of econometrics, finding out that it is the surplus of the balance of payments that results in the rapid growth of foreign exchange reserves. Then, this paper uses substantial data to objectively demonstrate the negative impact of position for Forex purchase and its sterilization operation on monetary policy and the economic development of the diverse sectors and regions.     

Is China up to the Test？ A Review of Theories and Priorities for Education Investment for a Modern China

This paper reviews the key theories relating to the role of education in economic development and social change and how education, as a critical component of total factor productivity, contributes to sustained economic growth. It examines how China ＂s education policy reflects the country＇s unique dual economy. Focusing on the post-reform period, the paper contends that while progress has been made, there are risks to China＇s future growth prospects from failing to reap the benefits of sound education policy. It argues that if the Chinese education system is to continue to be a driver of rather than a drain on economic growth, and if China is to successfully manage its transition towards more inclusive, sustainable and equitable growth, reforms will be needed to improve the quality of education at all levels and to create an environment in which China＇s extensive human capital is duly recognized and respected. Crucially, the education system should be transformed to ensure it promotes a comprehensive range of human capabilities, including those that go beyond the part humans play in augmenting production possibilities.     

Effect of Migration on Children＇s Self-esteem in Rural China

China＇s rapid economic growth has been facilitated by its large volume of rural to urban migration. China ＇s projected future development, especially increasing urbanization, implies that such migration will further intensify. However, migration does not come without cost. There are concerns about the potential negative impacts of migration on children＇s care, education, and, in particular, the self-esteem of children left behind in villages where one or both parents have out-migrated to cities. In this paper, we employ unique survey data collected from Shaanxi Province, where more than 4700 ninth grade students from 36 rural junior high schools in five counties were surveyed in late 2011. The results show that having both parents migrate into cities significantly reduced children ＂s self-esteem. The effects are also gender sensitive. Girls that had a father or both parents who had out-migrated were inclined to have lower self-esteem than boys. Moreover, our study findings indicate that parental migration decreased children ＂s self-esteem more for individuals with initial low self-esteem.     

China's Large and Rising Net Foreign Asset Position

China＇s emergence as a major player in world trade is well known, but its growing role in global finance might have been underappreciated. China is the second largest creditor in the world today, with a net creditorposition of 30 percent of GDP in 2008. We test the importance of the growth differential, demographics, government debt, financial depth and the exchange rate in shaping China＇s net foreign asset position. Our empirical results highlight the sharp fall in the young-age dependence as one key driver behind China ＇s puzzlingly large net lender position and also confirm the neoclassical prediction that faster growth attracts more capital inflows. Looking ahead, our findings suggest that China will unlikely turn into a meaningful net debtor nation over the next two decades.     

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.     

The New Characteristics of the International Capital Circulation and the Strategic Readjustment of China＇s Utilizing Foreign Capitals

This essay proposes the concrete view that China＇s strategy of utilizing foreign capitals to adjust again on the foundation of explaining new characteristics of international capital circulation, namely, expanding the foreign investments of the service trade, strengthening efforts to attract outside investment of the Midwest, attracting trans-corporation＇s investment, etc., Chinese enterprises actively move towards overseas investment and create the policy environment that can contribute to absorbing the foreign capitals as well as making national economy benefit from it.     

China＇s Regional Disparity and Its Policy Responses

The fruits of China＇s rapid economic development over the 3 decades have not been distributed fairly across different regions. Using data from a sample of 815 Chinese listed firrns during 1998-2004, our error-correction investment model showes evidence of different financial constraints on firms＇ investment in different regions. We argue that China＇s regional development policies have contributed greatly to the regional inequalities. To control the rising inequality, China has shifted its focus from the coast to the interior regions. However, it is becoming increasingly difficult for the government to direct the economy, as market mechanisms now have afar greater influence on the economy than the government does. The people-centered approach of the current leadership has meant that substantial attention has been placed on regional development disparities in an attempt to build a ＂harmonious society. ＂ China needs further extensive reforms if all the measures for reducing regional disparity are to be effective.     

The Foundation and Pattern Choice for the Sustainable Development of Chinese Financial Trust Industry

Since it was resumed in 1979, China＇s financial trust industry has experienced five major improvement and rectification. With the implementation and promulgation of ＂one law and two regulations＂ and the establishment of China＇s Trust Industry Association, financial trust industry is developing into a relatively good stage. In view of practice and regular patterns of its development, we have to set up ideas of sustainable development so as to prevent the financial trust industry from involving in a circle of ＂development-- reorganization---development again--reorganization again＂. At present, the premise to realize financial trust industry＇s sustainable development is to fully understand the unique comparative advantage of financial trust industry and establish scientific market function.     

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.