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on China |
| By: | Jose-Miguel Albala-Bertrand (Queen Mary University of London) |
| Abstract: | The aim of this paper is to learn about some patterns of sectoral and industrial structural change of the Chinese economy over the 1995-2010 period. To such a purpose, we set up a quantitative methodology via input-output modelling, which allows us to decompose gross output into some key demand sources or contributions. It can be shown that the trajectory of the main structural patterns over the period were both not smooth and pretty unbalanced and that they generally responded to both domestic policy and international shocks. Export demand and heavy industry appeared to be the main engines of the economy, which showed massive increases in their share of output, at the expense of domestic demand, services and agriculture. Despite the high growth rates over this period, the Chinese economy seemed to be in need of rebalancing. There is however some indication towards the end of our period that the economy was starting to go that way. |
| Keywords: | China, Industrial structural change, Input-output decomposition, Trajectories over 1995-2010 |
| JEL: | L16 O4 B4 E2 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp754&r=all |
| By: | Fuest, Clemens; Xing, Jing |
| Abstract: | In this study, we analyze the cyclicality of fiscal policies in China during the period 1978-2013. We find that the cyclicality of local government spending in China significantly affects the cyclicality of total government spending. By employing both time-series and province-level panel data, we show that local budgetary government spending was strongly procyclical during the 1980s, but it became counter-cyclical with respect to nationwide output fluctuations and acyclical with respect to region-specific output shocks since the mid-1990s. We argue that these are likely to be consequences of the 1994 fiscal reform, which revamped the fiscal relations between the central and local governments, reduced the procyclicality of local government budgetary revenue and brought in counter-cyclical intergovernmental transfers. Findings of this study contribute to the debate on how developing and emerging countries, in particular those with federal fiscal structures, could reduce the procyclicality of their fiscal policies. |
| Keywords: | fiscal federalism,tax reform,government spending |
| JEL: | H71 H72 H77 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:15068&r=all |
| By: | Wan, Guanghua (Asian Development Bank Institute); Wang, Chen (Asian Development Bank Institute) |
| Abstract: | This paper estimates income polarization in the People’s Republic of China (PRC) from 1978 to 2010 and decomposes the estimated polarization by population subgroup. In addition, a framework is proposed to disentangle a change in polarization into a growth and a redistribution component. This framework is then used to quantify the contributions of various income sources to a rise in polarization in the PRC between 2002 and 2007. The analytical results suggest that (1) income polarization exhibited a broadly increasing trend from 1978 to 2010; (2) income polarization was large and rising among rural citizens, while low and declining among urban citizens; polarization of migrants also declined; (3) geographically, income polarization rose in east and particularly central PRC, while west PRC was most polarized with little change over time; and (4) the rise in polarization between 2002 and 2007 was mainly driven by the investment income, followed by transfers. Conversely, business income is polarization-reducing, especially in rural PRC. To a lesser extent, wage is also polarization-reducing, especially among migrants. |
| Keywords: | polarization decomposition; alienation; identification; income distribution; PRC |
| JEL: | D31 D63 D74 O53 |
| Date: | 2015–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0538&r=all |
| By: | Buhara Aslan; Merve Mavus Kutuk; Arif Oduncu |
| Abstract: | As a result of deadlocked multilateral trade negotiations, many countries have commenced to establish bilateral and regional trade agreements. Among those agreements the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) are agreements with members from across the Atlantic and the Pacific respectively. This study focuses on the impacts of these agreements on Chinese economy under three scenarios by using the Global Trade Analysis Project database and a computable general equilibrium model. The results suggest that when only the TTIP is realized, Chinese economic variables are negatively affected. When both the TTIP and TPP are realized and China is excluded, the combined damage in Chinese economy is higher than the damage of the TTIP alone. On the other hand, inclusion of China in the TPP results in positively affected economic variables. In other words, positive impacts of participation of China in the TPP compensate for the negative impacts of the TTIP. |
| Keywords: | Free trade agreements, Transatlantic Trade and Investment Partnership, Trans-Pacific Partnership, China |
| JEL: | F13 F14 F15 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1523&r=all |
| By: | Akgüc, Mehtap (Center for European Policy Studies (CEPS)); Liu, Xingfei (Ryerson University); Tani, Massimiliano (IZA); Zimmermann, Klaus F. (IZA and University of Bonn) |
| Abstract: | To contribute to a scarce literature, in particular for developing and emerging economies, we study the nature of measured risk attitudes and their consequences for migration. We also investigate whether substantial changes in the risk environment influences risk tolerance. Using the 2009 RUMiC data for China, we find that rural-urban migrants and their family members are substantially less risk-averse than stayers. We further provide evidence that individual risk attitudes are unaffected by substantial changes in the environment and that risk tolerance is correlated across generations. |
| Keywords: | risk aversion, risk attitudes, migration, China |
| JEL: | J61 D81 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9347&r=all |
| By: | Ye, Ming; Meng, Bo; Wei, Shang-jin |
| Abstract: | The concept and logic of the "smile curve" in the context of global value chains has been widely used and discussed at the individual firm level, but rarely identified and investigated at the country and industry levels by using real data. This paper proposes an idea, based on an inter-country input-output model, to consistently measure both the strength and length of linkages between producers and consumers along global value chains. This idea allows for better identification and mapping of smile curves for countries and industries according to their positions and degrees of participation in a given conceptual value chain. Using the 1995-2011 World Input-Output Tables, several conceptual value chains are investigated, including exports of electrical and optical equipment from China and Mexico and exports of automobiles from Japan and Germany. The identified smile curves provide a very intuitive and visual image, which can significantly improve our understanding of the roles played by different countries and industries in global value chains. Further, the smile curves help identify the benefits gained by these countries and industries through their participation in global trade. |
| Keywords: | International trade, Exports, Globalization, Smile curve, Global value chains, APL, Fragmentation of production |
| JEL: | D57 F13 F15 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper530&r=all |
| By: | John Knight |
| Abstract: | In China political control is centralised and economic management is decentralised. This gives rise to a serious principal-agent problem, in which the agents are often better informed than the principal. China also has a semi-marketised economy involving much state intervention. This intervention serves both a political and an economic function. It assists the Communist Party to remain in political command and generates formidable patronage resources. It also provides the policy instruments, including incentive structures for officialdom, to maintain a ‘developmental state’. The combination of economic decentralisation and semi-marketised economy creates a problem of weak accountability and a breeding ground for rent seeking and corruption. For a quarter of a century China’s leadership gave overwhelming priority to the objective of achieving rapid economic growth. This policy was viewed as providing political legitimacy and securing the best protection against social instability. It is argued that the leadership was able to solve the principal-agent problem in its pursuit of economic growth. By contrast, the solution to the principal-agent problem failed in other respects, giving rise to societal costs. Little attention was paid to the dramatic socioeconomic changes –including rising inequality and economic insecurity, environmental degradation, mass migration, rent seeking and corruption – which accompanied economic growth and posed new challenges. It is argued that these changes help to explain the failure of life satisfaction scores to rise over the two decades 1990-2010. They can also help to explain the rise in indicators of social instability over that period. It is to be hoped that the new leadership’s current anti-corruption campaign together with its declared policy intention to reduce state economic intervention and increase reliance on competitive markets will strengthen deterrence and weaken opportunities for rent seeking and corruption. The paper carries the implication that China’s economy cannot be well understood except through the lens of political economy. In China political control is centralised and economic management is decentralised. This gives rise to a serious principal-agent problem, in which the agents are often better informed than the principal. China also has a semi-marketised economy involving much state intervention. This intervention serves both a political and an economic function. It assists the Communist Party to remain in political command and generates formidable patronage resources. It also provides the policy instruments, including incentive structures for officialdom, to maintain a ‘developmental state’. The combination of economic decentralisation and semi-marketised economy creates a problem of weak accountability and a breeding ground for rent seeking and corruption. For a quarter of a century China’s leadership gave overwhelming priority to the objective of achieving rapid economic growth. This policy was viewed as providing political legitimacy and securing the best protection against social instability. It is argued that the leadership was able to solve the principal-agent problem in its pursuit of economic growth. By contrast, the solution to the principal-agent problem failed in other respects, giving rise to societal costs. Little attention was paid to the dramatic socioeconomic changes –including rising inequality and economic insecurity, environmental degradation, mass migration, rent seeking and corruption – which accompanied economic growth and posed new challenges. It is argued that these changes help to explain the failure of life satisfaction scores to rise over the two decades 1990-2010. They can also help to explain the rise in indicators of social instability over that period. It is to be hoped that the new leadership’s current anti-corruption campaign together with its declared policy intention to reduce state economic intervention and increase reliance on competitive markets will strengthen deterrence and weaken opportunities for rent seeking and corruption. The paper carries the implication that China’s economy cannot be well understood except through the lens of political economy. |
| Keywords: | Accountability, China, Developmental state, Governance, Life satisfaction, Political economy, Social instability |
| JEL: | H10 H70 O53 P16 |
| Date: | 2015–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:758&r=all |