Decomposing Income Inequality and Policy Implications in Rural China

Using village data from samples covering 6 provinces,36 counties and 216 townships,the income inequalities within and between townships in rural China are assessed. The Theil index and the mean logarithmic deviation methods enable us to test income inequality at the township level,and to decompose it into intra-regional and inter-regional at county and provincial levels. In the present paper,we also decompose income inequalities between and within the nationally designated poor counties (NDPC). The results show that approximately two-thirds of the income inequality in rural China would be eliminated if measures and policies were targeted at the county level. This study also confirms the rationale that China's poverty alleviation strategy of focusing on poor counties based on the inequalities between NDPC and non-NDPC accounts for the most inter-province inequality.     

Financial Market Turmoil： Implications for Monetary Policy Transmission in China

The recent financial market turmoil has initiated another search for insightful understanding of the interactions between the financial market and monetary policy. This paper explores these interactions in terms of the transmission mechanism of monetary policy in China. We argue that evolving financial development, enhanced by the expansion of the financial market, has altered the conventional channel for monetary transmission in China. Analyzing marked changes in the financial landscape and taking into account policy regime shifts in China, the paper provides clear evidence showing that the financial market has become a new and important channel for transmission of monetary policy in China.     

Population Aging and Housing Consumption： A Nonlinear Relationship in China

Mass migration of rural workers to cities will inevitably increase urban housing demand. However, the scale of vacant urban housing will increase in future as a result of the population aging and the rising number of empty nesters. Therefore, demographic transition may not only increase housing demand, but also increase housing supply. Using an overlapping generations model, the present paper investigates＇ the impact of demographic transition on housing consumption. We find that there is a nonlinear relationship between the elderly dependency ratio and housing consumption in China. With the deepening of population aging, housing consumption will increase; when the elderly dependency ratio reaches a turning point, housing consumption will decrease. The turning point of the nonlinear curve also depends on population mobility. A greater degree of population mobility will result in a delayed turning point. Furthermore, the turning point of the nonlinear curve will emerge when China＇s elderly dependency ratio reaches a value of 32 percent in 2025. This means that over the next decade, China should continue to increase the level of housing supply,     

Size and Characteristic of Housing Bubbles in China＇s Major Cities： 1999-2010

There is some disagreement in the published literature regarding the definition and the measurement of housing bubbles in China. Extending the analytical framework of Black et al. (2006), the present paper measures the housing bubbles of China's 35 major cities from the second quarter of 1999 to the second quarter of 2010. The results indicate that the housing bubbles in China's 35 major cities were relatively small in the sample interval, but the bubbles in eastern metropolises, such as Beijing, Shanghai, Shenzhen, Hangzhou and Ningbo, have been relatively big since 2005. The changing tendency of housing bubbles in most cities highly corresponds with the changes in real estate policies. This paper decomposes the housing bubbles of the 35 cities, and finds a great proportion of irrational bubbles rather than rational intrinsic bubbles generated by price speculation. Based on empirical analysis, this paper proposes policy recommendations for preventing the generation and expansion of housing bubbles.     

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 Stock Market： Inefficiencies and Institutional Implications

The dramatic movements of China＇s stock market in the past two and a half years have renewed debate among academics over the efficiency of China＇s stock market. The present paper tests the efficiency of China＇ s stock market. The realization of efficient markets requires the effective operation of a complete set of macro and micro mechanisms. However, such mechanisms are not only incomplete in China＇ s stock market, but are also ineffective because of the prevalence of institutional deficiencies.     

Ownership Restructuring, Marketization and Wealth Inequality in Urban China： 1995 and 2002

This paper proposes a property transformation perspective to examine the mechanisms of wealth accumulation and wealth inequality creation during China's post‐1978 transformation. It examines how enterprise ownership restructuring, marketization and state politics have resulted in greater wealth inequality between cadres and ordinary workers, between public sectors/organizations and private sectors/organizations. Mainly drawing on data from the Chinese Household Income Project conducted in 1995 and 2002, we find that the property transformation process has created greater wealth disparity among different occupational groups and among those working in different work organizations since the mid‐1990s. However, it is inconclusive whether non‐housing wealth or total household wealth are increasing at the same pace across different occupations and work organizations with the growing market penetration and the spread of privatization.     

China‘s Economic Growth：New Trends and Implications

I. IntroductionSince the "reform and opening up" policy began in 1978, China has sustained high growth. This success is associated with a gradual market-oriented reform. A central feature of this gradual reform is that the dominant state-owned enterprises have not been directly privatized; instead, the government chose to gradually introduce market forces into the economy, and at the same time, gradually reduce restrictions on the development of market-oriented non-state-owned enterprises, especially rural collective enterprises.     

Contagion or Real Linkages？ Some Evidence from China＇s Emerging Parallel Markets

This paper empirically tests the existence of contagion using data on China's five parallel markets with different entry barriers for foreign capital. Taking the 1997 stock market crash as our experiment and using data on A, B and H shares, red chips and American depository receipts, the present paper tests whether these China‐backed market returns respond differently to foreign shocks during the pre‐1997 and post‐1997 crash period. Evidence suggests that the contagion effects are stronger in markets with fewer entry barriers. An important implication of our findings is that countries vulnerable to contagion could be justified to impose some limits on capital flows.     

US Presidential Election 2008： Policy Implications for US-China Trade and Investment

The next US president will be elected in November 2008. Since the relative stabilization of war in Iraq, the economy has become the national priority of the 2008 US election. In their campaign efforts, the Democrats have enjoyed greater momentum than the Republicans, in terms of polls, fund-raising and corporate support. After the Bush era, the next president will seek to restore America＇s leadership and to engage in multilateralism. Since the 1990s, China has been the most rapidly-growing US export destination. In terms of US-Shinese trade and investment, the next president, ira Democrat, will, among other issues, review trade agreements and has pledged to co-sponsor legislation that would allow US companies to seek anti-dumping duties on Chinese imports based on the perceived undervaluation of the Chinese currency. If a Republican, the next president will support global integration and oppose protectionist measures. The Democratic Congress is likely to oppose Republican policies in general and free trade policies in particular. Both scenarios imply increasing pressure on US-Chinese trade and investment relationships. Because these two nations now account for almost half of global growth, the state of the futureUS-Chinese bilateral relationship has worldwide implications.     

Energy Industry in China： Marketization and National Energy Security

I. Opening Up the Energy Market: Resultsand Impact on Energy SecurityNational energy security becomes an issue when domestic shortfalls in energy resourcesand output force a country to turn to other countries for energy supply. An open energymarket can hardly cause energy security problems, and an energy-poor country can meetits energy needs only by opening up its market. In the last decade, the oil demand on theChinese market has been growing robustly, and oil imports have kept rising on …     

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.     

Role of China in Global Carbon Market

I. Introduction The international response to climate change is governed by the United Nations Framework Convention on Climate Change, adopted in 1992, and its Kyoto Protocol, adopted in 1997, which entered into force in 2005. A basic principle has been to reduce greenhouse gas (GHG) emissions1 cost-effectively. Because GHGs mix uniformly in the atmosphere, a given emission reduction is equivalent from an environmental standpoint wherever the action is taken. This property of “substitut…     

Blue Box Policy Reform in the Doha Round Negotiations： Effects and China＇s Position

This paper uses an agricultural trade policy simulation model to quantitatively evaluate the effects of Blue Box policy reform on agricultural production and trade, and further provides specific proposals regarding China ＇ s reform position. The results indicate that, if the reform could achieve a reduction in distorting supports in more developed countries, China＇ s total agricultural production would increase, accompanied by a decrease in agricultural imports and a slight increase in exports. In terms of social welfare, producers would gain significantly, consumers would lose and government would not suffer greatly, which is in accordance with current agricultural policies in China. As a core member of G20, China should approve a subsidy level as low as possible required by Blue Box to achieve ＂substantial reductions in trade-distorting domestic supports＂.     

Budget Structure and Pollution Control： A Cross-country Analysis and Implications for China

In the published literature, the differences in environmental performance across countries are typically explained using the Environmental Kuznets Curve. The Environmental Kuznets Curve states that pollution initially increases with economic growth. Once GDP per capita reaches a certain level, the relationship reverses. In the present paper, we provide an alternative hypothesis, where budget structure plays an important role in explaining the variations in pollution across the world.＂ the lower the business-related taxes as a share of total tax revenue, the higher the property tax in total tax revenue and the higher the ratio of public health expenditure in total expenditure, then the stronger the incentive of pollution control and the lower the pollution level. Our empirical findings reveal that the budget structure does have an important impact on pollution control. The policy implication of this research is that effective control of environmental pollution requires changes in tax structure and expenditure assignment. This research has important policy implications for China ＂s tax system reform and pollution control efforts.     

Open Market Operations in China： Practice and Experience

On the basis of reviewing the reform on open mar-ket operations, this paper analyzes the framework, op-erational target and basic experience of open marketoperations of the People's Bank of China. The authorpoints out that open market operations need to be coor-dinated with the use of other monetary policyinstruments; the infrastructure of open market opera-tions should be strengthened, and the development ofthe money market and the bond market should be fur-ther promoted. The author ends this article with theoutlook for open market operations in the future.     

China＇s Penetration of the Korean Market： Stylized Facts and Welfare Effect

China＇s penetration of the world market has been impressive. This paper uses highly disaggregated Korean import data （from 1992 to 2008） to examine China ＇s penetration of the Korean market in the context of the composition of value （the extensive and intensive margins） and the product type （homogeneous and differentiated） in trade. The increase in Chinese imports has been attributed to the rapid increase in the import of new products （the extensive margin） and of existing products （the intensive margin）. However, the growth rate of new products decelerated in the 2000s. The growth in the intensive margin was due to quantity, not price. Chinese imports to Korea did not improve over the period in terms of quality. Although Chinese products became cheaper, they were more differentiated over time. Welfare gains were realized through the expanded introduction of new products from China. However, much of the gains from Korea＇s Chinese product import boom were realized in earlier years （1992 -2000） because even though imported products became more differentiated, the increase in the extensive margin was lower in more recent years （2001- 2008）.     

冯飞：一线城市高房价难寻支撑

随着中国经济回升态势逐渐稳固,中央近期对房地产市场也展开了密集调控,中国政府一个月内第5次出手调控房地产市场。1月10日国务院办公厅正式发布《关于促进房地产市场平稳健康发展的通知》,首次提出省级政府“问责制”,再次强调二套房贷首付必须超过40％等,其重点落在支持刚性购房者,打击投资和投机性需求。