nep-cna New Economics Papers
on China
Issue of 2008‒01‒26
three papers chosen by
Zheng Fang
Ohio State University

  1. Incremental Reform and Distortions in China’s Product and Factor Markets By Zhang, Xiaobo; Tan, Kong-Yam
  2. Globalization and the Sustainability of Large Current Account Imbalances: Size Matters By Joshua Aizenman; Yi Sun
  3. The Chinese Health Care System: Structure, Problems and Challenges By Jens Leth Hougaard; Lars Peter Østerdal; Yi Yu

  1. By: Zhang, Xiaobo; Tan, Kong-Yam
    Abstract: The purpose of economic reform is to reduce distortions and enhance efficiency. However, when reforms are partial and incremental, individuals and local governments are often able to capture the rent inherent in the gradual transition process. Young (2000) warned that such rent-seeking behavior might lead to increasing market fragmentation. Empirical studies have shown the opposite in the product market. This article argues that as the rent from China’s product market has been squeezed out due to deepening reforms, rent-seeking behavior may have shifted to the capital market. Further reforms are needed in the capital market to squeeze out these rent-seeking opportunities, just as those from the product and labor markets were squeezed out earlier.
    Keywords: Market integration; China; rent seeking
    JEL: O1 O53 D33 P23
    Date: 2007
  2. By: Joshua Aizenman; Yi Sun
    Abstract: This paper evaluates the sustainability of large current account imbalances in the era when the Chinese GDP growth rate and current account/GDP exceed 10%. We investigate the size distribution and the durability of current account deficits during 1966-2005, and report the results of a simulation that relies on the adding-up property of global current account balances. Excluding the US, we find that size does matter: the length of current account deficit spells is negatively related to the relative size of the countries' GDP. We conclude that the continuation of the fast growth rate of China, while maintaining its large current account/GPD surpluses, would be constrained by the limited sustainability of the larger current account deficits/GDP of countries that grow at a much slower rate. Consequently, short of the emergence of a new "demander of last resort," the Chinese growth path would be challenged by its own success.
    JEL: F15 F21 F32 F43
    Date: 2008–01
  3. By: Jens Leth Hougaard (Department of Economics, University of Copenhagen); Lars Peter Østerdal (Department of Economics, University of Copenhagen); Yi Yu (Department of Economics, University of Copenhagen)
    Abstract: In the present paper we describe the structure of the Chinese health care system and sketch its future development. We analyse issues of provider incentives and the actual burden sharing between government, enterprises and people. We further aim to identify a number of current problems and link these to a discussion of future challenges in the form of an aging population, increased privatization and increased inequity.
    Keywords: Chinese health care system; provider incentives; burden sharing; aging population; inequity
    JEL: H51 H75 I11 I18
    Date: 2008–01

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