nep-cna New Economics Papers
on China
Issue of 2007‒02‒03
six papers chosen by
Zheng Fang
Ohio State University

  1. Economic Reforms and Income Inequality in Urban China By Okushima, Shinichiro; Uchimura, Hiroko
  2. Transport Sector and Regional Price Differentials: A SCGE Model for Chinese Provinces By Ando, Asao; Meng, Bo
  3. Environmental impacts of international trade: The Case of Industrial Emission of Sulfur Dioxide (SO2) in Chinese provinces By Jie He
  4. Sources of Investment Inefficiency: The Case of Fixed-Asset Investment in China By Duo Qin; Haiyan Song
  5. Influence of Social Institutions on Inequality in China By Uchimura, Hiroko
  6. Distribution System of China's Industrial Clusters: Case Study of Yiwu China Commodity City By DING, Ke

  1. By: Okushima, Shinichiro; Uchimura, Hiroko
    Abstract: This paper reports the results of an analysis of changes in income inequality, and in its determinants, in urban China since the economic reforms that began in 1978. The intention is to identify new characteristics of economic inequality. It first shows that income differentials acrossand in provinces widened and that their economic rankings were becoming fixed during the period from 1988 to 1995. Second, age was the major factor in inequality in 1988, while education became the important factor in 1995. Third, education significantly contributed to increasing inequality during the period. Fourth, the higher education-level groups had less within-group inequality. These changes reflect the penetration of the market mechanism into China after the reforms. However, this will be problematic without equality of opportunity.
    Keywords: Asia, China, Income inequality, Economic reform, Education, Urban, Income distribution, Economic policy
    JEL: D31 J31 P20
    Date: 2006–10
  2. By: Ando, Asao; Meng, Bo
    Abstract: With regression formulas replaced by equilibrium conditions, a spatial CGE model can substantially reduce data requirements. Detailed regional analyses are thus possible in countries where only limited regional statistics are available. While regional price differentials play important roles in multi-regional settings, transport does not receive much attention in existing models. This paper formulates a spatial CGE model that explicitly considers the transport sector and FOB/CIF prices. After describing the model, performance of our model is evaluated by comparing the benchmark equilibrium for China with survey-based regional I-O and interregional I-O tables for 1987. The structure of Chinese economies is summarized using information obtained from the benchmark equilibrium computation. This includes regional and sectoral production distributions and price differentials. The equilibrium for 1997 facilitates discussion of changes in regional economic structures that China has experienced in the decade.
    Keywords: SCGE model, FOB/CIF prices, Transport sector, Chinese regional economy, Transportation, Econometric model, Local economy, Prices, International trade, China
    JEL: C68 O5 R13 R15
    Date: 2007–01
  3. By: Jie He (GREDI, Département d'économique, Université de Sherbrooke)
    Abstract: To get better understanding on trade’s impact on environment, we construct a four-equation simultaneous system, in which emission is determined by the three economic determinants: scale, composition and technical effects and directly by trade. Supposing the three economic determinants are also endogenous to trade, we check in the following three functions the indirect impacts of trade on environment through the intermediation of the three effects. The model is then estimated by 29 Chinese provinces’ panel data on industrial SO2 emission (1993-2001). Our estimation results reveal totally opposite role of export expansion and accumulation of manufactured goods import in industrial SO2 emission determination. The results do not support “pollution haven” hypothesis; the reinforced competition faced by exporters is a positive factor encouraging technology progress in pollution abatement. China’s actual comparative advantage resides in labor-intensive industries, exporting to world market actually helps to reduce pollution increasing caused by its heavy-industry-oriented industrialization strategy, which is traditionally supported by government-intervened import activities.
    Keywords: : international trade, industrial SO2 emission, simultaneous system, scale effect, composition effect, income effect, Hypothesis of “Porter” and “Racing to the bottom”, China.
    JEL: Q56 Q53
    Date: 2007
  4. By: Duo Qin (Queen Mary, University of London); Haiyan Song (Hong Kong Polytechnic University)
    Abstract: This study attempts to measure the inefficiency associated with aggregate investment in a transitional economy. The inefficiency is decomposed into allocative and production inefficiency based on standard production theory. Allocative inefficiency is measured by disequilibrium investment demand. Institutional factors are then taken into consideration as possible explanatory variables of the disequilibrium. The resulting model is applied to Chinese provincial panel data. The main findings are: Chinese investment demand is strongly receptive to expansionary fiscal policies and inter-provincial network effects; and although there are signs of increasing allocative efficiency, the tendency of over-investment remains, even with improvements in production efficiency.
    Keywords: Over-investment, Efficiency, Disequilibrium, Soft-budget constraint
    JEL: E22 E62 H74 P3 C23
    Date: 2007–01
  5. By: Uchimura, Hiroko
    Abstract: This study analyses the impact of changes in social institutions, i.e. in the informal and formal social security system, on income inequality in China. This study uses an inequality decomposition analysis approach comparing household survey data for 1988 with 1995.Three main results emerge from the analysis: first, it findsthat the family based social security is losing its importance mainly through the changes in employment pattern in a household. This change contributes to rising income inequality. Second, thestudy shows that the introduction of new formal social security system helped to equalise the distribution of retired household members' income in urban areas in 1995. Third, however, these changes have only benefited a restricted number of persons. Benefits for rural migrants are low and most of the rural population has still no access to the new system.
    Keywords: Income Inequality, Social Institutions, Family, Social Security, Household, Income distribution, China
    JEL: D31 O15 P20
    Date: 2006–10
  6. By: DING, Ke
    Abstract: This paper discusses the issue of upgrading industrial clusters from the perspective of external linkages. It is taken for granted that in most developing countries, due to the limited domestic market and poor traditional commercial networks, industrial clusters are able to upgrade only when they are involved in global value chains. However, the rise of China’s industrial clusters challenges this view. Historically, China has had a lot of industrial clusters with their own traditional commercial networks. This fact combined with its huge population resulted in the formation of a unique external linage to China’s industrial clusters after the socialist planning period ended. In concrete terms, since the 1980s, a traditional commercial institution . the transaction market . began to appear in most clusters. These markets within the clusters get connected to those in the cities due to interaction between traditional merchants and local governments. This has resulted in the formation of a powerful market network-based distribution system which has played a crucial role for China’s industrial clusters in responding to exploding domestic demand. This paper explains these features in detail, using Yiwu China Commodity City as a case study.
    Keywords: Industrial cluster, Transaction market, Merchants, Network, Yiwu, Distribution, Industrial structure, Commerce, Market, China
    JEL: L67 L81 O14 O53
    Date: 2006–10

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