How will China shape the world economy?

We will provide an outlook for China's role in the world economy over the coming decades, an exercise which would not be possible without an analysis of the prospects for China's continued economic growth. Based on international and historical comparisons, we argue that today's China meets all three key conditions for continued economic growth, including a stable government that is supportive of a market economy; high and increasing quality of human capital, and openness to developed economies. Dependent on China's continued growth, we explore how China will impact many other economies through trade and investment, creating winners and losers in the world economy. Moreover, we argue that China will become a more active player in changing global economic governance not only through participating in reforms of existing institutions but also by leading efforts to establish new ones.     

Openness and Economic Performance: A Comparative Study of China and the Asian NIEs

Being the world's largest developing economy, China's successful economic performance since 1978 has had a powerful impact on the global economy. Its open policy features an evolutionary process, involving the gradual liberalization of foreign exchange, international trade and foreign direct investments. This paper evaluates how this evolutionary process has contributed to China's economic success in comparison with the development experiences of the Asian newly industrialized economies (NIEs). It concludes that despite the economic crisis in 1997–98, China and the NIEs represent a successful development model, which is built upon openness and huge investments in physical and human capital.     

An empirical investigation on the temporal properties of China's GDP

This paper employs a structural time series model designed with three components of stochastic seasonality, trigonometric expression of cyclicality and local linear trend to investigate the evolutionary process of China's GDP. In particular, the model is able to detect the stop–go feature of China's economic growth, i.e., growth cycle, as well as business cycle. The empirical result suggests that most variation in China's macroeconomic performance came from business cycle. The investigation of the three components along with historical events suggests that the Chinese economy had been largely influenced by political activities up to the early 1990s. In the mid-1990s China entered a period of stable and highly growing economy, thanks to the economic reform and the successful implementation of macroeconomic policies. However, since the mid-2000s China has become more sensitive to the turbulences in international markets. In the foreseeable future, the challenge facing China is a more volatile economy with possible slowdown in the economic growth, although the growth rate would still be high compared to developed economies.     

China's FDI and non-FDI economies and the sustainability of future high Chinese growth

This paper presents and assesses of the contribution of inward FDI to China's recent rapid economic growth using a two stage growth accounting approach. Recent econometric literature focuses on testing whether Chinese growth depends on inward FDI rather than measuring the contribution. Foreign Invested Enterprises (FIEs), often (but not exclusively) are joint ventures between foreign companies and Chinese enterprises, and can be thought of as forming a distinctive subpart of the Chinese economy. These enterprises account for over 50% of China's exports and 60% of China's imports. Their share in Chinese GDP has been over 20% in the last two years, but they employ only 3% of the workforce, since their average labor productivity exceeds that of Non-FIEs by around 9:1. Their production is more heavily for export rather than the domestic market because FIEs provide access to both distribution systems abroad and product design for export markets. Our decomposition results indicate that China's FIEs may have contributed over 40% of China's economic growth in 2003 and 2004, and without this inward FDI, China's overall GDP growth rate could have been around 3.4 percentage points lower. We suggest that the sustainability of both China' export and overall economic growth may be questionable if inward FDI plateaus in the future.     

基于主成分分析的经济绿色发展评价研究

我国经济快速增长引发了严重的生态环境问题，人们深刻意识到资源环境问题对我国经济发展的瓶颈作用。因此，我国必须发展绿色经济。以绿色经济的内涵为基础，结合国内外权威机构经典观点的高频指标并以相关文献中的指标为根据，建立了绿色经济评价指标体系。最后，采用主成分分析、聚类分析等方法对我国各省级行政区经济绿色发展进行实证研究。     

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： Between Social Stability and Market Integration

I. IntroductionOver the past two and a half decades the Chinese leadership has succeeded in ensuring96 Giovanni B. Andornino, Russell G. Wilcox / 95 – 108, Vol. 14, No. 3, 2006 ?2006 The Authors Journal compilation ?2006 Institute of World Economics and Politics, Chinese Academy of Social Sciences economic growth while implementing policies engineered to allow gradual integration into the world economy in a more or less managed fashion.1 Starting from a position of isolation and suppo…     

China,Like the US,Faces Challenges in Achieving Inclusive Growth through Manufacturing

For more than three decades the goal of becoming “the factory of the world” has been at the core of China's development strategy. This strategy, in combination with high rates of domestic investment and low rates of consumption, has made Chinese production the most manufacturing intensive in the world. But as its wages have risen, China's competitiveness in the most labor‐intensive manufacturing industries has eroded. Its ability to assemble products remains a major source of its exports, but it has also tried to shift toward more sophisticated value‐added production domestically. Chinese domestic spending has shifted away from investment toward consumption as citizens' income has grown. Like Americans, Chinese are also spending more on services than on manufactured goods. All of these changes are fundamentally altering the structure of China's production, reducing the role of manufacturing and increasing the skill levels of workers in manufacturing. This paper reviews the challenges posed by these developments for China's long‐term goal of achieving more inclusive growth. It presents evidence that the commonly held perceptions that Chinese manufacturing employment growth is robust are wrong. In fact, such growth has peaked and China is now following a pattern of structural change that is typical of a more mature emerging economy, in which the share of employment in manufacturing declines as workers are increasingly employed in services.     

Understanding China's Economic Growth from a Regional Policy Perspective

There has been ongoing interest in China's economic growth. What were the drivers of China's economic growth in past years? What policies were used to promote China's economic growth? Although different lenses may be used to understand and explain China's economic growth, this paper draws on historical, theoretical, and empirical perspectives to discuss the nexus between China's regional policies and economic growth. First, we review the evolution of China's regional policy and the policy's changing emphasis in different development stages, from balanced, unbalanced, and coordinated development to synergistic development. Then we construct a theoretical model to illustrate the impact of regional policy on the local economy and conduct an empirical examination with a case study of regional policy using regression discontinuity design. This paper analyzes the concept of regional policy and the underpinning logic of economic growth and presents practical approaches to formulate a better regional policy framework.     

China＇s Economic Growth： International Spillovers

China's economic development since 1978 is one of the most significant events in recent history. Many aspects of this development have been extensively analyzed in the published literature. However, the implications of China's growth for other countries have been relatively neglected. The present paper attempts to fill this gap in the literature. The paper first presents some facts on China's role in the world economy, and then measures the impact of China's growth on growth in the rest of the world in both the short term and the long term. Short‐run estimates based on vector autoregression and error correction models suggest that spillover effects of China's growth have increased in recent decades. Long‐term spillover effects, estimated through growth regressions based on panel data, are also significant and have extended in recent decades beyond Asia. The estimates are robust to the effects of global and regional shocks, changes in model specification, and sample period.     

Beyond privatization: Institutional innovation and growth in China's large state-owned enterprises

This article demonstrates that China's large state-owned enterprises (SOEs) are not stagnant fossils waiting to die. Under economic reform policies this sector has undergone large change due to enhanced enterprise autonomy, the impact of market forces, rapid growth of domestic demand for upstream products, strategic integration with the world economy and the state's policy to promote large businesses. China's large SOEs are developing new institutional forms that do not neatly fit into existing patterns. China is experimentally changing its institutions through a combination of central policy, local initiative and interaction with international investment. This presents a challenge to the “transitional orthodoxy” and to ideas concerning property rights in development economics. There is not a universal model of property rights and government action that works best in all circumstances. China's experience with the reform of large SOEs shows the diverse possibilities for effective industrial institutions.     

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.     

Differences in returns to FDI between China's coast and interior: One country,two economies?

In principle, returns to factors of production within single economic systems should exhibit relatively uniform returns. Notwithstanding the fact that over the past 30 years China's economy has increasingly liberalized both internally and externally, it is widely understood that wages received by industrial workers in the coast and interior have widely diverged. However, less is known about how, between China's coast and interior, relative returns to domestic capital and foreign investment have fared, although we do know that the surge of foreign direct investment in China in recent decades has been overwhelmingly concentrated in the coastal region. This paper investigates comparative factor returns within China's industrial sector as measured by the marginal productivities of labor, domestic capital, and foreign capital. Using balanced and unbalanced samples of enterprise data during 1998–2004, we find significant differences between the returns to each of these factors. This paper explores the differences in estimates of factor returns that arise from the use of balanced versus unbalanced samples and least squares versus fixed effects estimators. We conclude that while returns to labor and domestic capital are higher in China's coastal economy, returns to foreign-owned capital are higher in the interior region. Indeed, the differences are indicative of those found in the literature that estimates cross-country comparisons between OECD and developing economies, suggesting that China's economy exhibits some of the differences found between the world's more and less developed economies.     

China＇s Changing Economic Structure and Implications for Regional Patterns of Trade, Production and Integration

I. Introduction There is a strong momentum for regional economic integration within East Asia.1 But few countries in the region harbor any illusion of realizing a region-wide economic union any time soon. A crucial ingredient in any successful East Asia-wide economic integration effort is China. China could be a major catalyst in the integration process if it chooses to.But it would do so only if such a move is in line with the overall objectives of its foreign economic policy. More import…     

The economic causes and consequences of social instability in China

This paper provides a survey of the economic literature relevant to social instability in China and moulds it into an argument. The objective is to offer a fresh view of economic policy and performance through the lens of the threat posed by social instability. This is a concept that economists rarely analyse, and yet it can lurk behind much economic policy-making. China's leadership has often publicly expressed its concern to avoid ‘social instability’. It is viewed as a threat both to the political order and to the continued rapid growth of the economy. This threat to growth in turn endangers the maintenance of social stability. The paper examines the likely economic determinants of social instability, using both surveys and other evidence. After discussing the determinants of China's rapid growth, the paper goes on to examine the likely mechanisms by which social instability can affect the growth rate. There is a case for more research on the role of social instability in the economic development process.     

High‐speed Rail and Urban Economic Growth in China after the Global Financial Crisis

High‐speed rail (HSR) has been an important driver of China's economic expansion over the last decade. Using data of 285 prefecture‐level cities over 2010–2014, this paper proposes an endogenous economic growth model to explain how and why HSR may have propelled China's economic growth by reducing the time‐space between cities. The research results show that HSR has a potent effect on urban economic growth and regional convergence. Ceteris paribus, HSR appears to have accelerated economic growth by more than 0.6 percent and the pace of regional economic convergence by approximately 2 percent per annum over the data period. Our research findings have important policy implications for the sustainability of China's economic development, backed by HSR.     

Prospect for China-Korea Economic Relations

This paper briefly reviews the economic performance of China's economic reform starting in 1978, and which it presents personal views on the experiences of Korea's economic development and lessons for China's economic reform. The paper reviews the China‐Korea economic relationship, and explores both the opportunities of China's economic development for Korea and the prospects for Bilateral Economic cooperation. It is estimated that the Chinese economy will maintain dynamic growth for the coming decade. The 2008 Olympic Games and the 2010 World Expo in China will provide further impetuses for Chinese economic development. China's huge market and its rapid economic growth can help the further recovery and development of the Korean economy. At the same time, the further development of the Chinese economy can benefit from financial, technical and managerial support from Korea. The complementarities between the industrial structures of China and Korea will surely push their future economic cooperation into a broader and deeper stage. Bilateral trade will enhance the competitiveness of both nations in the global market and help them achieve mutual prosperity and development. (Edited by Xinyu Fan)     

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.     

Population dynamics and economic growth in China

This paper focuses on two major elements of China's population dynamics—the rising proportion of workers in the population and the shift of rural workers from agriculture into industry and services—in a provincial-level analysis of per capita income and productivity growth during the last three decades. We measure the ‘mechanical’ contributions of these dynamics to per capita income as revealed by growth decompositions, before assessing the determinants of per capita income and productivity growth in a series of regressions that include the growth of the working-age to total population (WAP) ratio and a measure of sectoral employment change. Our results indicate that sectoral change has made a significant positive contribution to both per capita income growth and aggregate productivity growth, stemming from its positive impact on agricultural productivity growth—as predicted by the Lewisian dual economy model. However, the negative impact of sectoral change on productivity growth in the industrial and service sectors, combined with the negative impact of growth of the WAP ratio on both per capita income and aggregate productivity growth, suggests that the benefits of China's population dynamics during the last three decades have been overstated.     

Development trajectories: Hong Kong vs. Shanghai

Over the past three decades, Shanghai and Hong Kong, leading cities in China's Yangzi River Delta and Pearl River Delta, respectively, have seen rapid economic development and institutional transformation. Shanghai has experienced a major breakthrough in its export‐driven economy and in industrial upgrading since the opening of the Pudong area in the 1990s. Shanghai has also ramped up its efforts to catch up with Hong Kong and has already become one of the world's foremost manufacturing and export hubs. At the same time, and particularly following the 1997 Asian economic crisis, Hong Kong has redoubled efforts to identify shortcomings in its economic architecture; and has explored plans to transcend its traditional role as a financial hub, to attract entrepreneurial hi‐tech talent, and to overcome inequitable income growth. This paper explores the development trajectories of these two cities and how they depart from the pre‐1978 development models. The paper also examines the extent to which the current trajectories are complementary or in competition.