nep-cna New Economics Papers
on China
Issue of 2006‒11‒18
thirteen papers chosen by
Zheng Fang
Ohio State University

  2. Myanmar's Economic Relations with China: Can China Support the Myanmar Economy? By Kudo, Toshihiro
  3. Balance-of-Payment-Constrained Growth: The Case of China, 1979-2002 By Yongbok Jeon
  4. International Dimensions of China`s Long Boom: Trends, Prospects and Implications By Thomas Rawski; Loren Brandt; Xiaodong Zhu
  6. When Health Care Insurance Does Not Make A Difference – The Case of Health Care ‘Made in China’ By Hendrik P. van Dalen
  7. An essay on economic reforms and social change in China By Lindbeck, Assar
  8. Explaining the Persistence of State-ownership in China By Imai, Kenichi
  9. An Asian Triangle of Growth and Cluster-to-Cluster Linkages By Kuchiki, Akifumi
  11. Trade Credits under Imperfect Enforcement: A Theory with a Test on Chinese Experience By Yanagawa, Noriyuki; Ito, Seiro; Watanabe, Mariko
  12. Integration under 'One Country, Two Systems' - The Case of Mainland China and Hong Kong- By Takeuchi, Takayuki
  13. Health Shocks, Village Elections, and Long-Term Income: Evidence from Rural China By Li Gan; Lixin Colin Xu; Yang Yao

  1. By: Thomas Rawski
    Date: 2006–10
  2. By: Kudo, Toshihiro
    Abstract: Against the background of closer diplomatic, political and security ties between Myanmar and China since 1988, their economic relations have also grown stronger throughout the 1990s and up to 2005. China is now a major supplier of consumer and capital goods to Myanmar, in particular through border trade. China also provides a large amount of economic cooperation in the areas of infrastructure, energy and state-owned economic enterprises. Nevertheless, Myanmar’s trade with China has failed to have a substantial impact on its broad-based economic and industrial development. China’s economic cooperation apparently supports the present regime, but its effects on the whole economy will be limited with an unfavorable macroeconomic environment and distorted incentives structure. As a conclusion, strengthened economic ties with China will be instrumental in regime survival, but will not be a powerful force affecting the process of economic development in Myanmar.
    Keywords: Myanmar (Burma), China, trade, border trade, economic cooperation, energy, oil and gas, International economic relations, International trade, International cooperation
    JEL: F14 P28 Q41
    Date: 2006–07
  3. By: Yongbok Jeon
    Abstract: The aim of this study is to empirically test the validity of Thirlwall’s Law in China during the reform period of 1979-2002. For the income elasticity of import demand, an aggregate import demand function for the Chinese economy is estimated using ARDL-UECM model and the bounds test. This study finds (1) that for 1979-2002, the Chinese economy has grown on average as fast as Thirlwall’s Law predicts, the average actual growth rate and predicted growth rate were, respectively, 9.25 and 8.55, which are statistically identical; (2) that the growth of GDP and of exports are cointegrated. Both (1) and (2) provide strong support for Thirlwall’s Law in China during the reform period after 1978. The supportive result of Thirlwall’s Law implies the relevance of demand-side approach to economic growth in China.
    Keywords: Chinese economy, balance-of-payment constrained growth, aggregate import function, trade multiplier, bounds test for cointegration
    JEL: F14 F43 O53
    Date: 2006–06
  4. By: Thomas Rawski; Loren Brandt; Xiaodong Zhu
    Date: 2006–10
  5. By: Thomas Rawski
    Abstract: Recent years have brought major changes in many dimensions of China’s large and dynamic economy. Issues of employment and unemployment, labor compensation, wage differentials, working conditions, migration, job mobility, and employment security figure prominently in these developments. This essay reviews recent developments in the Chinese labor scene, focusing successively on demographics, employment, unemployment, migration, productivity, wages, and distribution. The paper concludes with speculation about possible policy responses to China’s growing problems of unemployment and excess labor supply.
    Date: 2005–06
  6. By: Hendrik P. van Dalen (Erasmus Universiteit Rotterdam)
    Abstract: Does medical insurance affect health care demand and in the end contribute to improvements in the health status? Evidence for China for the year 2004, by means of the China Health and Nutrition Survey (CHNS), shows that health insurance does not affect health care demand in a significant manner. Counterfactuals suggest that full insurance coverage of the Chinese population will not radically change the health care decisions and may even enlarge the perverse effects of today’s health care system: insured persons are more likely to fall back on self-care when they are injured or ill than on the care of a local clinic. This effect is particularly strong in urban areas. In case of a severe injury hospital consultation is preferred to local clinic or self-care by most people, but still a substantial percentage (20 percent) resorts to self-care or ignores the illness. The high level of out-of-pocket expenses paid by both insured and uninsured patients lies at t! he root of this problem. Insurance does not offer real protection against unpredictable high health care expenditures and can lead people into a position of long-term poverty or serious liquidity problems.
    Keywords: health insurance; poverty; China; health care; market failure
    JEL: D12 H51 I11 I18 P36
    Date: 2006–10–11
  7. By: Lindbeck, Assar
    Abstract: The author applies a systems-oriented " holistic " approach to China ' s radical economic reforms during the past quarter of a century. He characterizes China ' s economic reforms in terms of a multidimensional classification of economic systems. When looking at the economic consequences of China ' s change of economic system, he deals with both the impressive growth performance and its economic costs. The author also studies the consequences of the economic reforms for the previous social arrangements in the country, which were tied to individual work units-agriculture communes, collective firms, and state-owned enterprises. He continues with the social development during the reform period, reflecting a complex mix of social advances, mainly in terms of poverty reduction, and regresses for large population groups in terms of income security and human services, such as education and, in particular, health care. Next, the author discusses China ' s future policy options in the social field, whereby he draws heavily on relevant experiences in industrial countries over the years. The future options are classified into three broad categories: policies influencing the level and distribution of factor income, income transfers including social insurance, and the provision of human services.
    Keywords: Economic Theory & Research,Banks & Banking Reform,Investment and Investment Climate,Privatization,Economic Systems
    Date: 2006–11–01
  8. By: Imai, Kenichi
    Abstract: In the recent decade China witnessed an upsurge of privatization of small and medium state-owned enterprises (SOEs). In contrast to the consequent sharp reduction in the number of firms, however, the estimated share of broadly-defined SOEs that includes limited liabilities companies controlled by the State has shown virtually no sign of decline. We explain the backgrounds of this seemingly paradoxical persistence of state-ownership by looking into two distinctive types of large SOEs: traditional SOEs that remain dominant in oligopolistic industries and manager-controlled SOEs surviving in competitive industries. The two types exemplify several factors constraining further progress of SOE reform such as, financing the costs of restructuring, redefining the role of the State as the single dominant shareholder, and balancing the interests of the State and managers as entrepreneurs. Sorting these issues out will take time, which means that instabilities associated with state corporate ownership will remain in place in the foreseeable future in China.
    Keywords: State-owned enterprise, Corporate governance, China’s economic reform, Public enterprises, Small and medium-scale enterprises, Industrial management, China
    JEL: L29 L32 P26
    Date: 2006–06
  9. By: Kuchiki, Akifumi
    Abstract: It is expected that an Asian triangle of growth will be formed in the coming few decades. China, India and ASEAN surround the Asian triangle, which is home to many industrial clusters. Multinational corporations will link these clusters together. Regional integration will help them in this task by lowering the barriers of national borders. This paper explains the necessity of regional integration for cluster-to-cluster linkages in the Asian triangle of growth.
    Keywords: Asian Triangle of growth, Regional integration, Cluster-to-cluster linkages, Economic growth, International economic integration, Industrial policy, ASEAN, Asia, China, India, Southeast Asia
    JEL: F23 F59 R12 R58
    Date: 2006–08
  10. By: Thomas Rawski
    Abstract: During the last four decades of the twentieth century, China`s economy produced a truly remarkable sequence of events. The Great Leap Forward of 1958-60 initiated a twenty-year interlude of widespread hunger and deprivation. Twenty years later, the reform policies of the late 1970s triggered a massive and unexpected economic boom that catapulted hundreds of millions from absolute poverty. This experience raises profound questions about links between culture, institutions and economy, a central focus of C.K. Yang=s distinguished research career.
    Date: 2002–05
  11. By: Yanagawa, Noriyuki; Ito, Seiro; Watanabe, Mariko
    Abstract: It is widely recognized that trade credit is an important financial mechanism, particularly in developing economies and transition economies where institutions are weak. This paper documents theoretical analysis and empirical accounts on what facilitates an effective supply of trade credit based on original surveys conducted in P.R. of China. Our theory predicts that trade volume and trade credit are increasing function of cash held by the buyer and enforcement technology of the seller. Furthermore, if the state sector’s enforcement technology is high, it has positive external effect to expand the volumes of trade credit and trades in the whole economy. From the data, we found that government made active commitment in enforcement of trade credit contract and the government owned firms are main supplier and receivers of trade credit, which suggest that enforcement by government and state sector were effective against presumptions in the previous literatures.
    Keywords: Law and finance, Economic growth, Incomplete contract, Enforcement, Trade policy, Credit, China
    JEL: G2 K0 O5 P31 Q5
    Date: 2006–06
  12. By: Takeuchi, Takayuki
    Abstract: Ever since the handover of the territory in 1997, Hong Kong has had its own unique law and itsown economic system and international legal personality, and has not been integrated withMainland China. The Basic Law guarantees the uniqueness of the Hong Kong SAR until 2047. But close economic ties between Hong Kong and the Mainland will promote closer economic integration. The Basic Law limits only a customs union and the introduction of a single currency, but not the formation of a Free Trade Agreement (hereafter FTA) and monetary union. FTA has already been realized in the form of the Closer Economic Partnership Arrangement (hereafter CEPA). The Hong Kong SAR government, including the bureaucrat as well as the Chief Executive Tung Chee Hwa, was opposed to, and hesitant towards, the formation of a regional trade agreement with the Mainland, but the business community made them to adopt a positive attitude towards the CEPA. It is unclear how much integration can been deepened, but it can be argued that the current policy of the Hong Kong SAR is too supportive of business, and an excessive degree of economic integration may threaten the uniqueness of Hong Kong. But if Hong Kong achieves democracy and enjoys complete autonomy, it will be easy for economic integration to co-exist with the ‘One Country, Two Systems’ approach, in the interests of the business community and of the citizens of the SAR.
    Keywords: Hong Kong, China, Integration, Politic, FTA, Economic systems, Economic policy
    JEL: F15 H77 K00 N45 P16
    Date: 2006–08
  13. By: Li Gan; Lixin Colin Xu; Yang Yao
    Abstract: Using a sample of households in 48 Chinese villages for the period 1986-2002, this paper studies the dynamic effects of major health shocks on household income and the role played by village elections in mitigating these effects. Our results show that in the first 15 years after a shock, a shock-hit household on average falls short of its normal income trajectory by 11.8% and its recovery would take 19 years. Based on the premise that shock-hit families impose negative externalities on richer families by borrowing from them, our political economy model predicts that the outcome of village elections would differ from that of a standard median voter model in that the elected village leaders tend to adopt pro-poor policies. Our empirical study finds that villages are more likely to establish a healthcare plan after the election is introduced. In addition, village elections reduce the probability of a household to borrow by 16.7% when one of its working adults is seriously sick. As a result, they reduce more than half of the negative effect of a health shock on household income.
    JEL: I12 O15 Z13
    Date: 2006–11

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