Financial Liberalisation and Growth in China’s Economic Reform

This paper summarises China’s financial liberalisation experience and examines the contributions of financial resources on economic growth during the post‐reform period. Financial liberalisation has resulted in the reallocation of the four sources of total investment in fixed assets: state budget appropriation, national bank loans, self‐raised funds, and foreign investment. We find that the growth of GDP and industrial production are positively related to the growth of self‐raised funds and foreign investment. We conclude that the use of foreign investment and funds raised by the enterprises themselves are more efficient than the government’s appropriation and provision of bank loans.     

China’s Foreign Trade: Perspectives From the Past 150 Years

This paper studies the trade of China in the past 150 years, starting from the first opening of China after the Opium War. The main purpose of the paper is to identify what is (and was) China’s ‘normal’ level of foreign trade, and how these levels changed under different trade regimes, from 1840 to the present. We present new evidence on China’s foreign trade during the treaty port era (1842–1948), drawn from disaggregated trade data collected by the Chinese Maritime Customs Service, that yields important findings for current research. First, although the volume of foreign trade remained limited initially, there was a notable expansion in the diversity of products, with many new goods being imported into China. Second, the regional diffusion of foreign goods through China was greatly facilitated by the expansions of the port system. Third, the importance of Hong Kong as an intermediary in China’s trade has undergone long‐term fluctuations suggestive of learning effects. China’s recent wave of liberalization has led by the early 1990s to a trade level comparable to the high of the 1920s. While much of China’s recent growth in world trade is in line with her income growth, there is no doubt that China’s trade openness today, comparable by some measures to Denmark’s, is a stunning reversal relative to the pre‐1978 and also the pre‐1840 period. The paper emphasises the roles that history and institutional change have played in this.     

Money Following Trust: Evidence from China’s High‐Value Payment System

This study enriches the economic consequence of trust from the perspective of cash flow. It analyzes the impact of trust on interprovincial cash flow using matching data pertaining to Chinese provincial trust and the high‐value payment system in 2006–2010. It further investigates trust’s effect in different legal protection scenarios to explore the interactive role of formal and informal institutions. The results indicate that trust can significantly promote interprovincial cash flow and it persists after addressing endogeneity concerns and across different methods. However, this effect is only significant or much larger in provinces with less legal protection, indicating the alternative roles played by trust and formal institutions.     

The International Effects of China’s Growth,Trade and Education Booms

China’s international trade flows have increased by 500 per cent since 1992, far outstripping GDP growth. Likewise tertiary education enrolments have increased by 300 per cent. We simulate these changes using a multi‐sector growth model of the Chinese and USA economies. A decade of trade biased growth in China is found to raise USA GDP by approximately 3–4.5 percentage points and has a large impact on the demand for tertiary education in China. Despite these positive effects of growth, the results suggest that the expansion of China’s education sector per se has practically no long‐run impact on the USA economy.     

Transpacific Trade Imbalances: Causes and Cures

This paper explores the causes of the transpacific trade imbalances using an empirical global model. It also evaluates the impact of various policies to reduce these imbalances. We find the fundamental cause of trade imbalance since 1997 is changes in saving‐investment gaps, attributed to the surge of the US fiscal deficits and the decline of East Asia's private investment after the 1997 financial crisis. Our simulation results show that a revaluation of East Asia's exchange rates by 10 per cent (effectively a shift in monetary policy) cannot resolve the imbalances. We find East Asia's concerted efforts to stimulate aggregate demand can have significant impacts on trade balances globally, but the impact on the US trade balance is not large. US fiscal contraction is estimated to have large impacts on the US trade position overall and on the bilateral trade balances with East Asian economies. These results suggest that in order to improve the transpacific imbalance, macroeconomic adjustment will need to be made on both sides of the Pacific.     

China’s Growing Influence in Southeast Asia – Monetary Policy and Equity Markets

This study analyses the potential transmission of China’s monetary policy shocks to equity markets in Southeast Asia. Impulse response functions indicate that the impact of a monetary expansion in China is significant and positive for four of the five Southeast Asian equity markets. One explanation for this result is that monetary policy shocks in China lead to an increase in demand for goods and services in both China and abroad, which then shows up in the foreign equity market. The results in this paper provide evidence of China’s influence in Southeast Asia and its financial markets. The transmission effect is small and very short lived, but can be expected to increase if the current trends of a deepening economic integration between China and Southeast Asia and a maturing Chinese central bank continue.     

The European Union’s Constitutional Crisis—Causes and Consequences

The rejection of the treaty establishing a European constitution by French and Dutch voters has thrown the EU into a deep crisis. What developments in the EU contributed to these referenda results? What consequences are to be drawn for the continuation of integration and the integration goal, the governance of the EU-25 and the further planned enlargements? What flaws are there in the present draft constitution and how can these be dealt with?     

International Terrorism: Causes,Consequences and Cures

A popular view is that international terrorism is on the increase, that it is religiously motivated and that it has important adverse consequences. This paper investigates this view. It examines the empirical evidence on the causes of international terrorism from the late 1960s to the early 2000s and discovers that, while religion has had a part to play, explanations based on economics and politics appear to be consistent with the facts. Terrorists come from relatively poor and undemocratic countries and commit attacks in relatively rich and democratic ones. The paper then examines the micro, macro and global economic effects of international terrorism from both a theoretical and empirical angle, and discovers that the negative effect on domestic aggregate demand is temporary and the effect on aggregate supply insignificant. Finally, the paper explores policies to deal with international terrorism and demonstrates that this is complex. Analogies with conventional crime may be unhelpful.     

Doing business in China I. The business environment in China—getting to know the next century’s superpower

This article is the first of two parts of a comprehensive analysis regarding the key issues involved in doing business in China. By examining the complex business environment, it aims at helping foreign businessmen and investors to master the key background knowledge for being successful in the Central Kingdom ("know‐what"). A key theme is China’s immense diversity, variety, and complexity, as well as enormous competitive intensity, which are unrivaled by any other market in the world. Foreign businessmen often underestimate these aspects. The article reviews China’s historical development, political structure and climate, international relations, economy, and foreign trade. China’s infrastructure and energy structure, legal framework, competitive environment, as well as market structure and potential also are analyzed. © 2000 John Wiley & Sons, Inc.     

Note: Dealing with Iraq’s foreign indebtedness

Iraq now faces a growing economic crisis, which is impoverishing the country and threatening its basic social fabric. The crisis is partly the result of decades of mismanagement on the part of the Iraqi government. It is also the result of massive overspending and foreign borrowing during the Iran–Iraq War and the Gulf War. This article investigates Iraq’s debt crisis and attempts to devise a pragmatic debt‐management strategy, which could pos‐sibly lead to solving this acute problem. The four‐pillar strategy introduced here, if well implemented, would not only obliterate the debt, but could more importantly set the scene for Iraq’s return to its place in the international community with a renewed political and economic stability. © 2000 John Wiley & Sons, Inc.     

Reduced‐fat foods: the shopper’s viewpoint

The inclusion of reduced‐fat foods in the daily diet affords consumers the potential to reduce overall dietary fat. Nevertheless, despite an increased range of these food products throughout the market, there has remained a lack of widespread consumer acceptance. The aim of the study was therefore to understand why consumers choose or reject reduced‐fat foods. Ninety consumers were interviewed by means of a qualitative approach within food retail outlets in the United Kingdom. Thematic content analysis indicated that uptake or rejection of these products is influenced by health concerns, ‘goodness of fit’ with individual dietary health strategies, the preferences of different household members, perceived sensory properties and scepticism towards these products. The results imply a need to explore and innovate ‘natural’ fat substitutes and to improve the sensory quality of reduced‐fat products. Further research is required to determine how these foods are used within the household and incorporated within the overall diet. Policy must seek to restore consumer trust in reduced‐fat food products and the food supply generally.     

A Second-hand Shoppers’ Motivation Scale: Antecedents, Consequences, and Implications for Retailers

In view of growing interest in alternative consumption channels and critiques of conventional retailing, this study proposes a scale of second-hand shopping motivations. After defining the concept, we present the characteristics of second-hand shopping and explain the importance of a motivation-based approach. Through qualitative and quantitative studies and two data collections carried out in France with 708 subjects, we propose a reliable, valid, eight-factor scale that includes motivations related to products and distribution channels. A second-order hierarchical structure supports the tripartite nature (critical, economic, and recreational) of this form of shopping. Furthermore, the measure reveals, through a typological analysis, four consumer segments: “polymorphous enthusiasts”, “thrifty critics”, “nostalgic hedonists”, and “regular specialist shoppers”. We discuss the applications of this new scale and their implications for both research and retailing strategies.     

Gray Shades of Green: Causes and Consequences of Green Skepticism

Consumer skepticism of corporate environmental activities is on the rise. Yet research on this timely, intriguing, and important topic is scarce for both academics and practitioners. Building on attribution theory, we develop and test a theoretically anchored model that explains the sources and consequences of green skepticism. The study findings reveal that consumers’ perceptions of industry norms, corporate social responsibility, and corporate history are important factors that explain why consumers assign different motives to corporate environmental actions. In addition, the results show that while intrinsic motives exert a strong negative effect on green skepticism, extrinsic motives have no discernible effect. Furthermore, the findings indicate that green skepticism prompts consumers to seek more information about the products, sparks negative word of mouth to friends and acquaintances, and forestalls purchase intentions. The study offers several implications for corporate and public policy makers and presents fruitful research directions.     

The Causes and Consequences of Accelerated Stock Repurchases

We examine the choice between accelerated share repurchase (ASR) and open market repurchase (OMR) as repurchase mechanisms between 2004 and 2007. For a sample of ASRs and OMRs that actually buy shares in the announcement quarter, we find that ASR firms have lower market‐to‐book ratios, less cash, but greater managerial entrenchment. Prior to repurchase, ASR firms are subject to significantly more takeover rumors than OMR firms are, and this, along with entrenchment and undervaluation, affects the choice to use ASRs. ASR firms experience positive average abnormal returns both before and after the announcement. Moreover, the latent takeover probability is significantly lower for both ASR and OMR firms (when compared with pre‐announcement levels), but the reduction for ASR firms is more pronounced. Our results suggest that repurchases, and especially ASRs, indeed make a firm a less attractive prospect for takeover.