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on China |
| By: | Joseph P.H. Fan; Jun Huang; Felix Oberholzer-Gee; Mengxin Zhao |
| Abstract: | We examine the diversification patterns of almost all publicly listed non-financial companies in China during the 2001 to 2005 period. More than 70 percent of the firms in our sample are diversified. We document that patterns of diversification strongly depend on firms’ political connections. Former local bureaucrats are more likely than other CEOs to enter multiple industries. This effect is particularly pronounced in state-owned enterprises (SOEs) that operate in weak institutional environments. These companies are particularly prone to entering low-growth, low-profitability, and unrelated industries. Consequently, the performance effects of diversification differ sharply across SOEs and private firms. While the latter earn a premium from diversifying their operations, SOEs do not. Our results are consistent with the view that provincial and local governments push Chinese SOEs into unattractive sectors of the economy and that politically connected CEOs use their relationships to build corporate empires. |
| Keywords: | Corporate Diversification; Institutions; China |
| JEL: | D23 G32 G38 K42 P26 P31 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2008-3&r=cna |
| By: | Yan-Leung Cheung; P. Raghavendra Rau; Aris Stouraitis |
| Abstract: | We analyze related party transactions between Chinese publicly listed firms and their stateowned enterprise (SOEs) shareholders to examine whether companies benefit from the presence of government shareholders and politically connected directors appointed by the government. We find that related party transactions between firms and their government shareholders seem to result in expropriation of the minority shareholders in firms controlled by local government SOEs or with a large proportion of local government affiliated directors on their board, and in provinces where local government bureaucrats are less likely to be prosecuted for misappropriation of state funds. On the other hand, firms controlled by the central government (or with a large proportion of central government affiliated directors) are benefited in their related party transactions with their central government SOEs. |
| Keywords: | Law and economics; Government ownership; China; State-Owned Enterprises (SOE); Related party transactions; Political connections |
| JEL: | G15 G34 K33 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2008-11&r=cna |
| By: | Li, Lixing |
| Abstract: | This paper examines a distinctive mechanism of providing incentives to local governments – upgrading counties to "cities". In China, awarding city status to existing counties is the dominant way of creating new urban administrative units, during which the local government gets many benefits. Using a large panel data set covering all counties in China during 1993-2004, I investigate the determinants of upgrading. I find that the official minimum requirements for upgrading are not enforced in practice. Instead, economic growth rate plays a key role in obtaining city status. An empirical test is then conducted to distinguish between a principal-agent incentive mechanism and political bargaining. The findings are consistent with the hypothesis that the central government uses upgrading to reward local officials for high growth, as well as aligning local interests with those of the center. This paper highlights the importance of both fiscal and political incentives facing the local government. The comparison between incentive mechanism and bargaining sheds light on an important question about China’s politics of governance: where does power lie in China? |
| Keywords: | economic growth; incentive mechanism; bargaining; political centralization; fiscal decentralization; county-to-city upgrading; central-local relationship |
| JEL: | H77 H11 O40 R11 P26 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8594&r=cna |
| By: | Jikun Huang; Yu Liu; Will Martin; Scott Rozelle |
| Abstract: | Tariffs on agricultural products fell sharply in China both prior to, and as a consequence of, China's accession to the WTO. The paper examines the nature of agricultural trade reform in China since 1981, and finds that protection was quite strongly negative for most commodities, and particularly for exported goods, at the beginning of the reforms. Since then, the taxation of agriculture has declined sharply, with the abolition of production quotas and procurement pricing, and reductions in trade distortions for both imported and exported goods. Rural well-being has improved partly because of these reforms, and also because of strengthening of markets, public investment in infrastructure, research and development, health and education, and reductions in barriers to mobility of labor out of agriculture. Many challenges remain in improving rural incomes and reducing rural poverty. |
| JEL: | F1 O1 Q17 Q18 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13958&r=cna |
| By: | Ari Van Assche; Chang Hong; Veerle Slootmaekers |
| Abstract: | In this paper we argue that export data are an inadequate tool to measure a country’s international competitiveness when external trade is dominated by export-processing trade. Export data do not necessarily reflect the value produced in an exporting country, but rather capture the gross value of the products that leave a country’s ports. We demonstrate that, in the case of China, this leads to an upward bias in both the perceived quantitative and qualitative threats to the Western economies. |
| Keywords: | China, export-processing trade, technological intensity, trade balance |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:20508&r=cna |
| By: | Sigurdson , Jon (European Institute of Japanese Studies); Palonka, Krystyna (European Institute of Japanese Studies) |
| Abstract: | This working paper offers insights on science and technology in China with supporting official and interview data. The paper, as evidenced from the title, is indicating the future role of Chongqing and its evolution primarily focusing on the period of rapid development of the Municipality after Chongqing became a political entity on the same level as provinces of China. This has coincided with the planning, construction and completion of the Three Gorges Dam Project involving the resettlement of 1,000,000 people – most them coming to the rural areas Chongqing Municipality. Three major sub-themes are highlighted. First, the city played important role during more than 2000 years of its history (in 1981, for example it became first inland port in China open for foreign commerce). In the XX century Chongqing was national capital during the Second World War and the Japanese invasion (Nationalists government). Since then it enjoyed higher political status and economic independence than any other city of the same size in whole western China. Second, the municipality’s geographical position and demographic condition makes it quite unique in West China. It has a population of 31 million, an area of 82 square km, a population density of 379 persons per km2 and a location at the upper reaches of Chang (Yangtze) River. This makes it the gate of Southwest China. Third, Chongqing has a strong basic multi-faced economy in the region. Central investment since the 1950s has assisted the development of a relatively strong modern industrial base in the city. Despite the post-Mao reform era’s impact on social and economic disparities as between the coastal areas and the west, Chongqing remains one of the China’s strongest city economies. Its industrial output value ranked 11th among the 35 biggest city economies in China in 2000, though it ranked behind the top ten most industrialized coastal cities, all of which had attracted much greater foreign investment during the reform era. The campaign to Open up the West provides Chongqing with the opportunity to act as the growth pole for a number of less industrialized provincial-level units in north-west and south-west China. Fourth, the initiatives by central authorities and the extraordinary task of Three Gorges Dam project required among other great tasks also relocation of over 1,2 million people, the rebuilding of two cities, eleven county towns and one hundred sixteen townships from the site of Three Gorges Dam water reservoir. Until 2005 there were already almost one million residents resettled. Less than 20 per cent moved outside Chongqing municipality and the majority was to be accommodated within the region of Chongqing Municipality. |
| Keywords: | Regional development; clusters; Regional innovation System (RIS); Development block; competence block; technology system; High Technology Parks; Overview of Science and Technology; FDI |
| JEL: | I18 I23 L53 O31 O32 R58 |
| Date: | 2008–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:eijswp:0239&r=cna |