nep-cna New Economics Papers
on China
Issue of 2007‒05‒12
fifteen papers chosen by
Zheng Fang
Ohio State University

  1. China's Growth to 2030: Demographic Change and the Labour Supply Constraint By Rod Tyers; Jane Golley
  2. Rural Poverty in China: Problem and Policy By Gregory C. Chow
  3. Social Assistance Receipt and its Importance for Combating Poverty in Urban China By Bjorn Gustafsson; Deng Quheng
  4. The Chinese government's new approach to ownership and financial control of strategic state-owned enterprises By Mattlin, Mikael
  5. China's Entrepreneurs By Linda Yueh
  6. China's Growth to 2030: The Roles of Demographic Change and Investment Premia By Rod Tyers; Jane Golley
  7. Do sentiment indicators help to assess and predict actual developments of the Chinese economy? By Mehrotra, Aaron; Rautava, Jouko
  8. An Economic Analysis of Health Care in China By Gregory C. Chow
  9. Chinese postsocialist transformation: economic opening and external constraint By El Karouni, Ilyess; Charles, Sébastien
  10. The US-China Trade Imbalance: Will Revaluing the RMB Help (Much)? By Nicolaas Groenewold; Lei He
  11. Substitutability and protectionism: Latin America's trade policy and imports from China and India By Facchini, Giovanni; Olarreaga, Marcelo; Silva, Peri; Willmann, Gerald
  12. China and the knowledge economy : challenges and opportunities By Wang, Shuilin; Zeng, Douglas Zhihua
  13. The 3G Standard Setting Strategy and Indigenous Innovation Policy in China: Is TD-SCDMA a Flagship? By Hui Yan
  14. China y Argentina en la política bilateral, 1989-2006 By Gustavo Cardozo
  15. Inter-Regional Output Spillovers of Policy Shocks in China By Nicolaas Groenewold; Guoping Lee; Anping Chen

  1. By: Rod Tyers; Jane Golley (College of Business and Economics, Australian National University)
    Keywords: Chinese economy, demographic change, labour market and economic growth
    JEL: C68 E27 F21 F43 J11 J13 J26
    Date: 2006–06
  2. By: Gregory C. Chow (Princeton University)
    Abstract: This paper describes the economic conditions of rural China regarding poverty. By dividing the problem of rural poverty into three components it explains why rural poverty is China’s No. 1 economic problem in spite of the significant improvement in the living standard of the rural population. After discussing the solution proposed by the Chinese government it raises two policy questions, one concerning a proposal to eliminate the operational functions of township governments in the streamlining of the local government structure and the second on the possibility of controlling the abuse of power by local party officials that infringes on the rights of the farmers. A comparison with the conditions in India is provided.
    Date: 2006–09
  3. By: Bjorn Gustafsson (University of Göteborg and IZA); Deng Quheng (Chinese Academy of Social Sciences)
    Abstract: Since the second half of the 1990s economic restructuring in urban China has led to widespread joblessness and income insecurity. The rapid expansion of the system of social assistance, Di Bao, can be understood from this perspective. Using a survey covering large parts of urban China in 2002, we investigate factors affecting receipt and how receipt affects urban poverty. Results from estimating probability models indicate that social assistance receipt is strongly linked to joblessness among household members, the household’s expenditure burden, as well as the lack of financial assets. Further, a long education of the household head and membership in the Communist Party reduces the probability of receiving social assistance while having been sent to rural China during the Cultural Revolution increases it. For some types of households, receipt of Di Bao differs greatly across cities in China. The social assistance payments appear strongly targeted to the poor. However, as the Di Bao payments typically are small and many of the urban poor are not receivers, much urban poverty remains.
    Keywords: social assistance, poverty, China, cultural revolution
    JEL: I32 I38 P36
    Date: 2007–04
  4. By: Mattlin, Mikael (BOFIT)
    Abstract: This paper reviews recent regulatory and policy changes that affect the Chinese central government's ownership and authority over the capital allocations of strategic state-owned enterprises (SOE). The paper examines the reform of the central government's relationship with key SOEs as a consequence of the establishment of the State Assets Supervision and Administration Commission of the State Council (SASAC) in 2003, the coming introduction of a centralised operating and budgeting system for SOEs, and the government's ongoing re-evaluation of its ownership policy. SASAC appears to have the potential to develop into a major actor in China's domestic capital allocation, with an active role in strategic financing and restructuring of key sectors of the Chinese economy. The data reviewed for this paper strongly suggests that the Chinese central government aims to retain significant ownership control over key SOEs and, by extension, over a major part of the domestic economy. The new operating and budgeting system is set to significantly enhance central government control over SOEs' capital allocation.
    Keywords: state-owned enterprises; privatisation; corporate governance; China
    JEL: G32 G38 P26 P31
    Date: 2007–05–04
  5. By: Linda Yueh
    Abstract: This paper investigates the traits of the self-employed entrepreneurs in urban China, an economy rife with informational and institutional imperfections, under-developed financial markets, but a growing and important non-state sector. The self-employed make on average 20% more than non-entrepreneurs, but are similar in their age, marital status, educational attainment, and socio-economic background. Fewer are Communist Party members and more have experienced unemployment. Social networks are significant in entrepreneurship, while women and older workers are less likely to become self-employed unless they have experienced unemployment. Motivation and drive, as do attitudes toward risk, are also determinative factors.
    Keywords: Asia, China, Self-employment, Entrepreneurship, Social networks
    JEL: J44 O53 O12
    Date: 2007
  6. By: Rod Tyers; Jane Golley (College of Business and Economics, Australian National University)
    Abstract: China's economic growth has, hitherto, depended on its relative abundance of production labour and its increasingly secure investment environment. Within the next decade, however, China's labour force will begin to contract. This will set its economy apart from other developing Asian countries where relative labour abundance will increase, as will relative capital returns. Unless there is a substantial change in population policy, the retention of China's large share of global FDI will require further improvements in its investment environment. These linkages are explored using a new global demographic model that is integrated with an adaptation of the GTAP-Dynamic global economic model in which regional households are disaggregated by age and gender. Interest premia are integral with projections made using these models and in this paper their influence on China's economic growth performance is investigated under alternative assumptions about fertility decline and labour force growth. China's share of global investment is found to depend sensitively on both its labour force growth and its interest premium though the results suggest that a feasible continuation of financial reforms will be sufficient to compensate for a slowdown and decline in its labour force.
    Keywords: Chinese economy, demographic change, investment risk and economic growth
    JEL: C68 E22 E27 F21 F43 J11
    Date: 2006–05
  7. By: Mehrotra, Aaron (BOFIT); Rautava, Jouko (BOFIT)
    Abstract: This paper evaluates the usefulness of business sentiment indicators for forecasting developments in the Chinese real economy. We use data on diffusion indices collected by the People’s Bank of China for forecasting industrial production, retail sales and exports. Our bivariate vector autoregressive models, each composed of one diffusion index and one real sector variable, generally outperform univariate AR models in forecasting one to four quarters ahead. Similarly, principal components analysis, combining information from various diffusion indices, leads to enhanced forecasting performance. Our results indicate that Chinese business sentiment indicators convey useful information about current and future developments in the real economy. They also suggest that the official data provide a fairly accurate picture of the Chinese economy.
    Keywords: forecasting; diffusion index; VAR; China
    JEL: E32 E37 P27
    Date: 2007–05–04
  8. By: Gregory C. Chow (Princeton University)
    Abstract: After describing the institutions for health care in China as they evolved since 1949, this paper presents statistical demand functions for health care. It applies the demand functions to explain the rapid increase in health care demand and the resulting rapid increase in price when supply failed to increase. The failure in increase in supply was traced to the system of public supply of healthcare in China. The reform experience of Suqian city in the privatization of healthcare is reported to demonstrate the positive effect of privatization on supply. The government’s health care program for the urban and rural population is described and an evaluation of it is provided.
    Date: 2006–08
  9. By: El Karouni, Ilyess; Charles, Sébastien
    Abstract: This article is an attempt to show that China's post-socialist transformation involved a change in its growth regime. Indeed, during the Maoist era, it took the form of a "forced growth" as theorized by Kornai (1972). In addition, "export aversion" was one of the main characteristics of Chinese external economic relations. Today, it is not the case anymore since China follows an export-led growth strategy. Nevertheless, this situation could be particularly difficult to manage with respect to its dependence on external demand in a context of low domestic-demand.
    Keywords: Changement institutionnel; transformation postsocialiste; Chine; export-led growth
    JEL: F19 B52 P33
    Date: 2007
  10. By: Nicolaas Groenewold (UWA Business School, University of Western Australia); Lei He (UWA Business School, University of Western Australia)
    Abstract: The large US-China trade imbalance is a common cause for concern and regularly blamed on the undervaluation of the RMB. We estimate a simple model of the trade balance and simulate the long-run effects on the trade balance of RMB revaluations in the range of 10-50%. We find that improvements in the trade balance following plausible revaluations are likely to be modest.
    Date: 2006
  11. By: Facchini, Giovanni; Olarreaga, Marcelo; Silva, Peri; Willmann, Gerald
    Abstract: This paper examines the trade policy response of Latin American governments to the rapid growth of China and India in world markets. To explain higher protection in sectors where a large share is imported from these countries, we extend the `protection for sale' model to allow for different degrees of substitutability between domestically produced and imported varieties. The extension suggests that higher levels of protection towards Chinese goods can be explained by high substitutability between domestically produced goods and Chinese goods, whereas lower levels of protection towards goods imported from India can be explained by low substitutability with domestically produced goods. The data supports the extension to the `protection for sale' model, which performs better than the original specification in terms of explaining Latin America's structure of protection.
    Keywords: Latin America, Protectionism
    JEL: F10 F11 F13
    Date: 2007
  12. By: Wang, Shuilin; Zeng, Douglas Zhihua
    Abstract: The rapid pace of economic growth in China has been unprecedented since the start of economic reforms in late 1970s. It has delivered higher incomes and made the largest single contribution to global pove rty reduction. Measured by international poverty lines, from 1978-2004, the absolute poor population in rural areas has dropped from 250 million to 26.1 million. Such gains are impressive and have been driven largely by a set of market-oriented institutional reforms, strong investment, and effective adoption and application of various knowledge and technologies, especially foreign ones through trade and foreign direct investment. While enjoying tremendous success, China also faces many challenges that need to be addressed to sustain its long-term development. These include weak institutions, low overall educational attainment, weak indigenous innovation capacity, poor links between research and development and industries, and so on. This paper provides an analysis of some strengths, weaknesses, opportunities, and challenges to China ' s knowledge economy in the areas of economic incentives and institutional regime, human capital, innovation system, and information infrastructure.
    Keywords: Tertiary Education,Agricultural Knowledge & Information Systems,ICT Policy and Strategies,Population Policies,Technology Industry
    Date: 2007–05–01
  13. By: Hui Yan
    Abstract: In the time of “network economy”, industries and the public have stressed several “battles for dominance” between two or more rival technologies, often involving well-known firms operating in highly visible industries. In this paper, we are going to focus on the Chinese self-developed standard TD-SCDMA to perceive the implication and target of the nation’s policy and strategy. The motivation of the research starts from the interesting fact we observed: TD-SCDMA is named as the Chinese made standard, however the Chinese hold core patent technology is still about 7%, while most of the rest part is still taken by other foreign companies. The “faultage” between the small share reality and a self made standard sweet dream implies a well plotted strategy. In order to understand it, we firstly raise the question of why the Chinese government postpones the 3G decision again and again. Then we go further to probe why the standard-setting of TD-SCDMA has aroused wide attention as a strategic tool to fulfill “indigenous innovation”, and finally becomes part of national science and technology policy to increase international competitiveness? We are going to use economics theories to understand the essence of the creation of TD-SCDMA, and its relation to China’s interests.
    Keywords: 3G; Standard; Innovation: China
    JEL: O31 L96
    Date: 2007
  14. By: Gustavo Cardozo
    Abstract: El presente trabajo analiza la evolución de las relaciones bilaterales sinoargentinas en las últimas décadas, centrándose en los aspectos políticos y económicos. Si bien la historia de las relaciones entre ambos Estados no es nueva, los determinantes de la guerra Fría no permitieron un desarrollo dinámico de los vínculos económicos, aún cuando Beijing y Buenos Aires pudieron encontrar intereses comunes y manifestar posiciones mutuas en los organismos multilaterales. Luego de la década de los 90, China y Argentina pudieron transformar las ventajas políticas en una mayor materialización de las interacciones económicas, las cuales pueden resultar funcionales a una estrategia de diversificación de los patrones de inserción internacional que permita reducir los riesgos de una nueva relación “Norte-Sur” en el esquema de poder mundial del siglo XXI.
    Keywords: China, argentina, south south cooperation, economy, bilateral relations
  15. By: Nicolaas Groenewold (UWA Business School, University of Western Australia); Guoping Lee (School of Economics and Finance, Xi'an Jiaotong University); Anping Chen (School of Economics and Finance, Xi'an Jiaotong University)
    Abstract: In China inter-regional per capita output disparities are large and persistent and increasingly a matter for policy concern at the highest levels of government. Interregional spillovers are an important ingredient in the design of regional development policy. Yet little is known about the direction, magnitude and timing of output spillovers from one region to another. In this paper we focus on spillovers from policy shocks. We use a conventional three-region disaggregation of the Chinese economy and extend existing literature by explicitly introducing policy variables into a VAR model of regional outputs. We find that both policy variables have significant and positive effects on output in each of the regions when entered separately. In the short run both policy variables have a greater effect on the coastal region than on the other two and the effect in the central region is larger than in the western region, giving some credence to the common presumption that at least part of the expenditure boosts in the poorer inland regions find their way to the coastal provinces. These results are generally confirmed when we use the whole model to simulate the effects over time of the policy shocks. A shock to the coastal region not only has no beneficial spillovers to the other regions but actually depresses the output of the inland provinces. This is also true of a shock to the central region which comes at the expense of the western region. Only the western region has consistent positive spillovers on the other regions; looked at another way, a boost to the western region is shifted partially to the other regions.
    Date: 2006

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