What Caused the Sharp Downturn in the Chinese Economy during the Global Financial Crisis？ A Critical Note on Causality in Trade Linkage

In responding to a view that attributes sharp downturns in the Chinese economy in late 2008 and early 2009 to the ＂collapse of external demand,＂ the present paper scrutinizes three relevant issues： How have large Chinese importers behaved in a demand-price setting？ How have Chinese commodity imports and exports interacted in recent years？ Did the downturns in China＇s export growth come earlier and were they deeper than those in Chinese import growth？ All answers appear to suggest a conclusion contrary to the abovementioned view： sharp downturns in China＇s trade and economy during the reeent global financial crisis were, to a large extent, caused by certain domestic factors, or by factors that should not be regarded as entirely ＂external. ＂ Insomuch as globalization has advanced, a large economy like China＇s today faces new potential sources of macroeeonomic disturbances, from inside and outside.     

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.     

Financial Imbalance Index as a New Early Warning Indicator： Methods and Applications in the Chinese Economy

Based on the stylized facts of financial crises and systemic risk accumulation, this paper constructs a new financial imbalance index （FII） from the perspective of endogenous financial cycles and assesses its application in China＇s macro-financial analysis. The results show that the FII is not only an effective index to detect financial imbalances in China＇s economic cycles, but is also more accurate than and plays more of a leading role than conventional indicators, such as the consumer price index, the financial conditions index and the purchasing managers indicator. Empirical analysis shows that the FII can be used as an effective indicator to measure systemic financial risk, and can provide policy-makers and market participants with useful information to make appropriate decisions.     

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.     

How to rescue the environment： The uncommon idea

Successful solution to any environmental problem implies working with Knightian uncertainty that explicitly deals with decision making under conditions of unstructured randomness. Nature did not endow us with clear set of laws. A ＂wild＂ type of randomness that we will never discern due to its unstable properties makes the assignment of corresponding probabilities impossible. For that reason, the consideration of general economical factors within cost/benefit analysis must fail. So, instead of governmental imervention and cup and trade scheme, we propose direct financial market out of certificates on environmental improvements. They could be applied unaided by a model specification. The approach is based on Principal-Agent method. We propose to fill a huge gap in what is called Free Market Environmentalism （FME）, and make the proposal of financial market property rights for situations when ＂property＂ rights can not be set.     

Restructuring in China＇s State-owned Enterprises： Evidence from the Coal Industry

Usingfirm-level data for China ＂s state-owned coal mines, this paper examines the impact of privatization, corporatization and debt restructuring of state-owned enterprises on technical efficiency. A stochastic frontier production method is applied to a panel dataset from 2000 to 2007. The simultaneous study of these three measures makes it possible to study individual effects more precisely than otherwise. The study shows that the three reform initiatives are all able to improve technical efficiency in state-owned coal mines. The finding of a significant efficiency improvement from relinquishing state ownership provides an alternative to privatization. The study of debt restructuring and technical efficiency has not been documented in the published literature.     

An Empirical Study on Relationship between Corporation Performance and Capital Structure

By using data of listed companies in both Shanghai and Shenzhen stock markets in 2001, this paper analyzes the relationship between corporation performance and capital structure. Empirical study finds that there is a strong correlation between corporate performance and financial structure： （1） Corporation performance is positively related to debt ratio; （2） When debt ratio is between 24.52% and 51.13%, corporate performance has a quadratic or cubic correlation passively related to debt ratio.     

Socialism Market Economy： Innovations on the Way Which Brings China to Prosperity

Only when a country creates a unique market economy pattern that is suitable for its own, will it be able to head for prosperity. China has created its socialist market economy pattern. From the history of the social development pattern of major countries and areas in the world, this paper expounds and proves the scientific character of innovations on the way which brings China into prosperity; forecasts and differentiates China＇s three development stages in the future according to the appraisal index; and finally concludes that in order to complete the first stage, that is the transforming transition period, transformation of four patterns must be done.     

Decomposing the Effects of FDI on Guangdong＇s Economic Growth

Guangdong has been experiencing rapid economic growth, while this rapid growth was accompanied by a boom in inward foreign investment and the establishment of a direct link with the outside world. Using city-level panel data from 1996 to 2002, the four-year moving fixed effects FDI-led growth model empirically shows that Hong Kong, Macao and Taiwan （HMT） investment will not continue to make up the bulk of FDI in Guangdong for long, and that its dominant influence on Guangdong＇s economic growth will be gradually replaced by other sources of investment in the near future due to various political and economical reasons.     

Several ponders on current real estate macroeconomic regulation and control

In view of the housing price continually rising and real estate market＇s confusion, the real estate market＇s macroeconomic regulation and control of government have become the social economy＇s hot topic. In order to enable the macroeconomic regulation and control policy to achieve the expectation effect, this paper proposes that real estate macroeconomic regulation and control should be paid attention to, and gives the countermeasure suggestion.     

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.     

Analysis of China＇s Overheated Economy and Macroeconomic Policy Options

Based on macroeconomic analysis since 2003, this article holds mat a trena towaras overheating has surfaced in China‘s economy. China‘s rapid economic expansion has affected the quality of its growth, with rising material and energy consumption and imbalanced economic structure as the main manifestations. Regarding macroeconomic policy options in 2004, decision-makers should shift the policy focus from control of deflation to prevention of inflation; the pace of economic growth should be properly set; a balance between consumption and investment should be strengthened by controlling excessive expansion of investment, and industrial restructuring should be conducted in a coordinated manner on the basis of properly controlling the overly rapid indastrial growth; policies should be continued to boost exports and sustainable growth of foreign investment; and more efforts should be made to accelerate the change in the mode of economic growth.     

China＇s Pension Reform and Capital Market Development

The paper analyzes the interaction between the pension system and capital market development, especially the case of China. A funded pension system is most likely to boost the capital market, but in the absence of a supportive financial infrastructure and effective financial regulation, a funded system will not be successful. China‘s determination to establish a partially funded system is afirst step in the right direction, but without the separation of individual accounts from the social pooling and their replenishment, the working out of the implicit pension debt, and improvements in pension fund management and regulation, the pension system will not be sustainable. The key to capital market development in the process of the pension reform is to enact laws to protect the interests of pensioners, to contract out pension fund management to professional asset managers, and to accelerate the financial opening.     

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.     

Do corporations overinvest？ Evidence from Tunisia

The authors study the positive relationship existing between internal net worth and investment. This relationship has been interpreted in the financial literature as evidence showing that the management overinvests the free cash flow available to them in poorly-performing, sub-optimal investment projects. In this paper, the authors empirically tackle this problem in the case of the manufacturing and industrial Tunisian corporations and show that our empirical regularities do not stand for this interpretation. The authors conversely prove that overinvestment does not seem to occur on the basis of the grouping results. Hereby, there do not corroborate the empirical regularities documented in Lamont （1997）.     

Capital structure： The Italian market perspective

This article first investigates the determinants of＂capital structure＂ and the extent to which financial structure policy contributes to the creation of shareholder value in Italian companies through a survey of 76 CFOs of Italian listed non-financial companies, and revealed that the key driver is the quest for financial flexibility, necessary to combine effectively capital structure policy with the other two levers of value creation, investment policy and payout policy. These three value creation drivers are autonomous, but this empirical study reveals a clear hierarchy that links liability policy （capital structure and payout） to asset policy （investments） leading companies to make sub-optimal financial structure decisions that may not minimize the weighted average cost of capital, though ensuring the financial flexibility necessary to activate their principal lever of value creation, investment policy, effectively and without excessive constraints. A major finding in a subsequent benchmarking exercise is that Italian ＂family capitalism＂ affects corporate governance and therefore capital structure decisions. This finding may not be restricted to the Italian market, but could apply to all countries in which ownership structures are centered on very few shareholders with weak financial market control and where banks often play a crucial role in the governance of companies.     

Seeking for Balances between Deficits and Competitive Advantage： Looking into the American Financial Market and Policies in Advance after the Presidential Election

The American financial market plays a remarkable role as one of the global core markets, but many changes have taken place in recent years. The policy of White House becomes one of the variables deciding the direction of the market movement. After the Presidential Election, the financial market will move in the effect of anticipating the policies in next phase. For the uncertainty during the resuscitation, the financial policy is facing the problem that how to be an assistance in keeping the economic growth, and how to seek for balances in the contradiction between controlling deficit and maintaining competitive advantages. After the comprehensive analysis on American financial market, the possible result could be like this： interest rate will rise gradually again, exchange rate will fluctuate in perch, but the price of the assets in capital markets will show the difference according to the market framework. The analysis aiming at market and policy can impossibly be built on the base of the hypothetical close system. If no ideal adjustment emerges in American foreign policy in the future, the financial market will possibly turn into another disordered circle.     

Structural Restriction in the Development of China＇s Financial Industry

After China‘s accession to the WTO, the main problem China now faces in its financial development is how to enhance international competitiveness while safeguarding financial security. Since reform and opening up, the development of China‘s financial industry has featured extensive quantitative expansion, but without sufficient consideration given to increased risk. This has led to serious defects in the financial structure, which has hampered the financial industry from further development and from improving its international competitiveness. All these have had unfavorable impacts on financial stability and security.Therefore, in developing China ‘s financial industry, the stubborn pursuit of growth in quantity is inadvisable. What is needed is to change this way of thinking and to promote reform and development of the financial industry with emphasis on structure improvement,and to seek a way of development that can raise international competitiveness, while at the same time ensuring financial security.     

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.     

Financial Performance of SMEs Evidence on the Influence of Environmental Uncertainty： A Conceptual Framework

The purpose of this study is to understand the association between environmental uncertainty and financial performance of small and medium enterprises （SMEs）. Current study describes the influence of environmental uncertainty on the financial performance of SMEs in lraq. The objective of this study was to assess the influence of environmental uncertainty on financial performance of SMEs. SMEs play an important economic role in many countries. In Iraq for example, the available data from the Central Organization for Statistics （COS） indicate that private sector in Iraq consists primarily of SMEs where those companies represent 99% of all companies in lraq and this sector contributed over 50% of new jobs created. Despite their significance, facing competitive business environment, SMEs are required to develop innovation strategy in order to sustain competitive advantage. SMEs also are faced with the threat of failure with past statistics indicating that three out five fail within the first few months. This study sought to understand how SMEs manage the challenges they face. These challenges seem to change （evolve） according to different environmental uncertainty conditions. In this study, authors will develop an empirical model that can be applied in other sectors to improve financial performance of SMEs in lraq.