nep-cna New Economics Papers
on China
Issue of 2006‒12‒16
three papers chosen by
Zheng Fang
Ohio State University

  1. Can China’s Growth be Sustained? A Productivity Perspective By Zheng, Jinghai; Bigsten, Arne; Hu, Angang
  2. Foreign Direct Investment in China: Reward or Remedy? By Olena Havrylchyk; Sandra Poncet
  3. The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data By Charles Yuji Horioka; Junmin Wan

  1. By: Zheng, Jinghai (Department of Economics, School of Business, Economics and Law, Göteborg University); Bigsten, Arne (Department of Economics, School of Business, Economics and Law, Göteborg University); Hu, Angang (Center for China Studies, School of Public Policy and Management)
    Abstract: China’s unorthodox approach to economic transition has resulted in sustained high growth. However, in recent years Chinese economists have increasingly referred to the growth pattern as “extensive”, generated mainly through the expansion of inputs. Our investigation of the Chinese economy during the reform period finds that reform measures often resulted in one-time level effects on TFP. China now needs to adjust its reform program towards sustained increases in productivity. Market and ownership reforms, and open door policies have improved the situation under which Chinese firms operate, but further institutional reforms are required to consolidate China’s move to a modern market economy. <p>
    Keywords: Growth; Productivity; China
    JEL: D24 O47 O53
    Date: 2006–11–28
  2. By: Olena Havrylchyk; Sandra Poncet
    Abstract: In his book "Selling China" Huang (2003) states that a high level of foreign direct investment (FDI) in China is not necessarily a sign of strength, but can be partly attributed to the distortive nature of state policies that put restrictions on private enterprises. The Chinese financial system allocates resources to the least efficient firms – state-owned enterprises – while denying the same resources to Chinese private enterprises, forcing them to look for a foreign investor. We propose to analyze determinants of FDI in Chinese provinces to test the above hypothesis. We control for traditional determinants of FDI such as market access, labor costs, productivity, infrastructure, reform advances and banking sector size in order to assess the impact of inter-provincial heterogeneity in terms of the access that private enterprises have to credit.
    Keywords: China; banking sector; FDI; government intervention; banking system; credit; monetary policy; international integration
    JEL: F15 F22 G28
    Date: 2006–08
  3. By: Charles Yuji Horioka; Junmin Wan
    Abstract: In this paper, we conduct a dynamic panel analysis of the determinants of the household saving rate in China using a life cycle model and panel data on Chinese provinces for the 1995-2004 period from China's household survey. We find that China's household saving rate has been high and rising and that the main determinants of variations over time and over space therein are the lagged saving rate, the income growth rate, and (in some cases) the real interest rate and the inflation rate. However, we find that the variables relating to the age structure of the population usually do not have a significant impact on the household saving rate. These results provide mixed support for the life cycle hypothesis, are consistent with the existence of inertia or persistence, and imply that China's household saving rate will remain high for some time to come.
    JEL: D12 D91 E21 J10
    Date: 2006–12

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