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Dilemmas of China's growth in the Twenty-First Century

Dilemmas of China's growth in the Twenty-First Century

Ligang Song (ed.)
Copyright Date: 2012
Published by: ANU Press
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  • Book Info
    Dilemmas of China's growth in the Twenty-First Century
    Book Description:

    Since economic reforms began in 1978, China has been a focal point for observing the effects of market liberalisation. China has not only truly become one of the 'emerging giants' in the world economy but also provided a successful example for transition from a centrally-planned to a market economy. Thus, there is a keen interest about what lies ahead for such a significant economic player. Dilemmas of China's Growth in the Twenty-First Century is a comprehensive treatment of China's economic achievements to date and prospects for the twenty-first century. Covering topics as diverse as economic stability and growth sustainability, WTO membership and its implications, income disparity, agricultural policy, trade and investment prospects, Dilemmas of China's Growth in the Twenty-First Century is a powerful work and essential guide to the latest trends and prospects for the Chinese economy.

    eISBN: 978-1-922144-59-1
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Illustrations
    (pp. vii-x)
  4. Abbreviations
    (pp. xi-xii)
  5. Contributors
    (pp. xiii-xiv)
  6. 1 Conditions and prospects for sustaining China’s economic growth Dilemmas of economic growth
    (pp. 1-10)
    Ligang Song

    Sustaining economic growth has been of paramount importance for securing social stability in China while the economic system has been undergoing fundamental transformation. Growth not only creates more employment opportunities, but relatively high growth rate for a sustained period of time during the transition, largely through raising the standard of living, has demonstrated convincingly that the gradualist approach to reform adopted in China since the late 1970s has worked.¹ This success provides confidence and assurance for the government in silencing resistance to reform and overcoming difficulties in the reform process.

    Yet, various dilemmas of economic growth exist in the context...

  7. 2 What are the legitimate worries about China’s WTO membership?
    (pp. 11-25)
    Wing Thye Woo

    There can be no dispute that China’s admission into the World Trade Organization (WTO) will result in an important improvement in its external economic security. Trade and foreign investment have constituted an important engine of growth since 1978. The annual review made by the US Congress concerning China’s normal trading relationship with the United States has made China’s economic growth vulnerable to the vagaries of American domestic politics. Now with WTO membership, the United States will not be able to shut off this engine of growth unilaterally without the action being a major violation of international law.

    While the case...

  8. 3 The dynamics of transition in ownership structure
    (pp. 26-39)
    Fan Gang

    Much research has shown how and why the non-state sector has been growing in China and the contribution it has made to the overall growth and development of the market system. Other research focuses on the problems of state-owned enterprises (SOEs) and how they should be further reformed.

    However, one aspect of the reform process seems to have not yet been fully explored in discussions about the economic transition in China: how the growth of the non-state sector has changed the conditions for the reform of SOEs in particular, and the state sector in general, and why it is necessary...

  9. 4 China’s WTO membership: Implications for the domestic economy
    (pp. 40-54)
    Wen Hai

    After more than 20 years of reform and 13 years of negotiation, China finally signed the agreement on World Trade Organization (WTO) accession with the United States on 15 November 1999, and with the European Union (EU) on 19 May 2000 and has now joined the WTO.

    Needless to say, China’s accession to the WTO will have a significant impact on both China and the world economy. There are at least three important reasons for economists, as well as policymakers, to study and understand the significance and implications of its WTO accession. First, China is a big economy, any changes...

  10. 5 China’s opening up of the banking system: Implications for domestic banks
    (pp. 55-72)
    John P. Bonin and Yiping Huang

    As several of the Asian economies have recovered from the East Asian financial crisis, several lessons have become clear. First, the proximate cause of the financial problems in many countries was a futile attempt to defend an overvalued currency. A second more fundamental cause was allowing a weak banking system to become overexposed to foreign exchange risk. However, the recovery of some but not all economies points to a deeper concern. The countries that had stronger financial institutions and undertook more rapid restructuring of their banking systems coped more successfully with the financial crisis. The clear lesson for China is...

  11. 6 Legal implications for regulation of trade in services of China’s accession to the WTO
    (pp. 73-119)
    Brett Williams and Deborah Cass

    During the Uruguay Round, the creation of a treaty relating to services trade found its way onto the agenda. A number of parties to the General Agreement on Tariffs and Trade (GATT) had observed that the services sector was becoming increasingly important within their economies and that services exports were becoming a larger part of their total exports. Consequently, they argued that further exchanges of market access for goods would not necessarily result in significant gains in trade for them and that in order to achieve a mutually advantageous and reciprocal distribution of benefits from further multilateral liberalisation, it would...

  12. 7 Income distribution in China: A macroeconometric approach
    (pp. 120-134)
    Jordan Shan

    Rapid economic growth in China since the 1980s has attracted worldwide attention, but there also has been increased awareness in the 1990s about China’s possible regional income inequality, before and after the reform era. There is growing literature on this issue, and the bulk of the literature is concerned with an empirical question: is there regional income inequality in China since the 1980s and what are the sources of this dispersion?

    This chapter adds to this empirical literature by applying a VAR model which uses VAR techniques such as innovation accounting and Granger causality to examine the causal linkage, where...

  13. 8 Towards estimating agricultural production relations for China
    (pp. 135-175)
    Peter Albersen, Günther Fischer, Michiel Keyzer and Laixiang Sun

    Fast economic growth has stimulated China’s demand for food and feed grains. While the country has an impressive record in raising its agricultural production, it is not entirely clear to what degree China can, or should, maintain food self-sufficiency, and whether eventual imports should consist of meat or feed grains. The answer to these questions is not only important for China. It has strong implications for world markets at large. In its World Food Prospects, the International Food Policy Research Institute (IFPRI) (Pinstrup-Andersen et al. 1999) anticipates that net meat exports to East Asia will be 28-fold in 2020, primarily...

  14. 9 Determinants of household grain stocks: Does price matter?
    (pp. 176-193)
    Guanghua Wan

    China is the largest grain producer and consumer in the world. This fact underlies the enormous interest in the production and consumption of grains in China. In particular, the publications of Lester Brown (1995) led to worldwide comments, speculation and policy debate on the Chinese grain sector (Huang et al. 1996; Ministry of Agriculture 1996). It is estimated that some 60-70 per cent of annual output or 270-315 MMT of grains are held as household stocks in rural China. Needless to say, this volume and its changes could have profound implications on the design and implementation of domestic policies, such...

  15. 10 Part-time farming trends in China
    (pp. 194-214)
    Zhang Yue Zhou, Daniel A. Sumner and Hyunok Lee

    Since the Chinese government instituted a strict policy restricting rural labour movement in the early 1960s, a huge labour force has been retained in agriculture. Currently, the labour force that is in excess of farming requirements is estimated in the order of over 200 million. To sustain China’s economic development, it is argued that this labour force needs to be absorbed into nonfarming activities (Zhou et al. 1992; Johnson 1999).

    Broadly, there are two major paths through which labour can be shifted out of farming activities: leaving the farm completely and moving to other industries; or remaining farm-based and where...

  16. 11 Is China abundant in unskilled labour?: The departure from the HOV Theorem and the implications
    (pp. 215-232)
    Ding Jianping

    Being a populous country, China will exert a significant impact on international markets with its labour-intensive goods. If measured by absolute quantity (amount of labour), no country in the world can rival China. As advocated by the Heckscher-Ohlim-Vanek (HOV) Theorem, countries tend to export goods that are intensive in the factor with which they are abundantly supplied. Constrained by the availability of data on natural resources and physical capital, we are only able to examine human capital stock, although the former features in China’s exports.¹ Similar to other developing countries, China has experienced the natural-resource exporting stage for a long...

  17. 12 Regional development in China: The role of FDI, exports and spillover effects
    (pp. 233-253)
    Qing Zhang

    This chapter develops a model of provincial growth in China taking into account the differing policy treatment of China’s regions, the contribution of foreign direct investment (FDI) and exports to provincial growth, and the spillover effects on different regions.

    The motivation for studying the growth of China needs little embellishment. The opening of China’s markets in 1978 created the almost unprecedented prospect of new market and investment opportunities for the rest of the world.¹ Until the East Asian currency crisis, China had fulfilled its growth potential by recording growth outcomes that made China the fastest growing economy in the world....

  18. 13 Decentralisation, economic growth and the local provision of public goods
    (pp. 254-270)
    Yu Chen

    Decentralisation is a widespread phenomenon in many countries, especially in developing countries and transitional economies. Whatever its origin, decentralisation impacts greatly on important aspects of economic development such as the mobility and allocation of resources, the provision of local public goods, macroeconomic stability, incentives and efficiency, equity, and so on. While decentralisation is widespread in developing and transitional economies, theories of decentralisation are mostly, if not exclusively, based on the experiences of developed countries. Therefore, assumptions such as the existence of adequate institutions may not be satisfied in developing and transitional economies. This should make us cautious when applying traditional...

  19. 14 The determinants of economic growth: Evidence from a panel of Chinese provinces
    (pp. 271-285)
    Yanrui Wu

    A recent resurgence of interest in economic growth has led to blossoming literature.¹ Among the many approaches proposed, cross-country growth regressions have been widely applied to examine the role of various structural and policy indicators in economic growth. The findings in this large and growing literature often conflict and are yet to be sorted out. For example, Levine and Renelt (1992) carried out a sensitivity analysis of the determinants of the average annual growth rate of GDP per capita for a sample of 101 countries during the period 1960-89. According to their extreme bounds analysis, among many, only three variables...

  20. 15 China in international action on climate change
    (pp. 286-316)
    Tingsong Jiang

    Since the First World Climate Conference was held in 1979, and especially during the 1990s, climate change has attracted growing attention because of its global and ubiquitous impact on the environment and economy. Some important developments have been achieved since then. For example, the United Nations Framework Convention on Climate Change (UNFCCC), established at the 1992 United Nations Conference on Environment and Development held in Rio de Janeiro, states that advanced industrialised countries (Annex I countries¹) will reduce their emissions to 1990 levels by 2000, although this is not a binding international agreement. In following Conferences of Parties (COP), countries...

  21. References
    (pp. 317-340)
  22. Index
    (pp. 341-352)