nep-cna New Economics Papers
on China
Issue of 2005‒11‒19
seven papers chosen by
Fang Zheng
Fudan University

  2. Employment in China: Recent trends and future challenges By Ajit Ghose
  3. Globalization and Regional Income Inequality--Evidence from within China By Guanghua Wan; Ming Lu; Zhao Chen
  4. The Transition Process in China: a Theoretical and Empirical Study By C. Hsiao; P. Chen
  5. Economic Opening and Industrial agglomeration in China By Zhao Chen; Yu Jin; Ming Lu
  6. The end of the Multi-Fibre Agreement and its implication for trade and employment By Christoph Ernst, Alfonso Hernández Ferrer and Daan Zult
  7. China's capital account convertibility and financial stability By James Laurenceson; Kam Ki Tang

  1. By: Emma Xiaoqin Fan; Jesus Felipe
    Abstract: This paper documents the diverging patterns of capital accumulation, profit rates, investment rates, capital productivity and technological progress of China and India since 1980. It is concluded that the two Asian economies have followed very different growth patterns, and as a consequence, they face different challenges for the future. India's problem is how to accelerate growth, while China's is how to sustain it. India must address impediments to investment so as to increase its investment rate. China must deal with the question of whether investment can continue being the main source of growth given that profit rates and capital productivity are decreasing and that the economy has created substantial excess capacity.
    JEL: O10 O30 O40 O53 O57
    Date: 2005–11
  2. By: Ajit Ghose
    Date: 2005–10
  3. By: Guanghua Wan (UNU-WIDER, Helsinki, Finland); Ming Lu (Employment & Social Security Research Center, & China Center for Economic Studies, Fudan University); Zhao Chen (China Center for Economic Studies, Fudan University)
    Abstract: China¡¯s recent accession to the WTO is expected to accelerate its integration into the world economy, which aggravates concerns over the impact of globalization on the already rising inter-region income inequality in China. This paper discusses China¡¯s globalization process and estimates an income generating function, incorporating trade and FDI variables. It then applies the newly developed Shapley value decomposition technique to quantify the contributions of globalization, along with other variables, to regional inequality. It is found that (a) globalization constitutes a positive and substantial share to regional inequality and the share rises over time; (b) capital is one of the largest and increasingly important contributor to regional inequality; (c) economic reform characterized by privatization exerts a significant impact on regional inequality; and (d) the relative contributions of education, location, urbanization and dependency ratio to regional inequality have been declining.
    JEL: C1 C2 C3 C4 C5 C8
    Date: 2005–11–16
  4. By: C. Hsiao; P. Chen
    Abstract: In this paper we model the transition process in China. First we review the economic reform policies since 1978. Based on the review, a two-segment-model is constructed. The model can be viewed as a general equilibrium model, with a planned segment that produces some distortion in the model, and a market segment that tries to correct this distortion and keeps the whole economy in equilibrium. Then we examine diverse reform policies such as the price reform, the financial market reform, and the labour market reform. In the last section, the main conclusions of this study will be summarised and commented from a viewpoint of further development of the study.
    Keywords: Transition Economy, Economic Reconstruction, Industrialization
    JEL: O14 P10 P20
    Date: 2005–11–11
  5. By: Zhao Chen (China Center for Economic Studies, Fudan University,); Yu Jin (China Center for Economic Studies, Fudan University,); Ming Lu (Dep. of Economics, Employment & Social Security Research Center, & China Center for Economic Studies, Fudan University,)
    Abstract: This paper explores the causes of industrial agglomeration in China using the provincial panel data during 1987-2001, focusing on the effects of economic opening. The determinants of industrial agglomeration are tested by controlling three types of factors, those of economic policies, economic geography and new economic geography, respectively. In summary, we find: (1) Economic opening, which is also related with geography and history encourages industrial agglomeration; (2) Large market size, effects of forward and backward linkage, high level of urbanization, better infrastructure and less involvement of local government tend to facilitate industrial concentration; (3) Costal regions have geographical advantage in attracting firms. These findings not only support the new economic geography theory from evidence within China, but also emphasize the important role that policies like economic opening might directly play in industrial agglomeration. The most important policy implication of this paper is that by quickening up the step of integrating into world economy and deregulating, even those less developed regions might accelerate industrial agglomeration and thus decrease regional disparity.
    JEL: L
    Date: 2005–11–16
  6. By: Christoph Ernst, Alfonso Hernández Ferrer and Daan Zult
    Abstract: This paper illustrates the global evolution and performance of trade and employment in the textiles and clothing industry until 2005 and tries to forecast, with the help of a gravity model, its evolution after the end of the Agreement on Textiles and Clothing. The phasing out of the quota regime will mean a sharp reduction of distortions to trade in textiles and clothing and more transparency, but it also implies employment shifts. The study shows the already leading and increasing export position of China, including Hong Kong, SAR, and Macao, SAR, in particular in clothing, Pakistan’s dominant position in textiles, and the generally good trade performance of South and South East Asia. Other countries in both regions, smaller and less competitive, could potentially benefit from the new situation applying the right policies. The T&C industry of a number of other countries will suffer from increased competition, but they may have the capacity to survive in niche markets, mainly countries close to the US and EU market. Nevertheless, some countries will have great difficulties to maintain their T&C industry and will have to diversify their industrial production. This is a major concern for small and less developed countries previously benefiting from privileged access to the US and EU market, for example, sub-Saharan African countries. A fast adjustment of production to the new situation should be combined with active and passive labour market policies for workers during the transition period, to reduce the social cost of adjustment. It will be vital to coordinate, macro, trade and industrial policies with labour market policies.
    Date: 2005–10
  7. By: James Laurenceson; Kam Ki Tang (EAERG - School of Economics, The University of Queensland)
    Abstract: Capital account convertibility in China is on the rise. Some see the process as a means of circumventing domestic financial sector inefficiency while others view it as potentially exposing China to financial crises. In considering these different viewpoints, this paper attempts to quantify the impact that opening the capital account will have on the volume of China’s international capital flows. It is found that were China to fully open its capital account, gross non-FDI capital flows are predicted to rise by around 4.6 percent of GDP. While an increase of this magnitude would present a prudential challenge for China’s monetary authorities, it does not appear to be large enough to seriously call into question financial sector stability, either in China or abroad.

This nep-cna issue is ©2005 by Fang Zheng. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.