Over the past seven decades since the founding of the People’s Republic of China in 1949, China has continuously increased its import and export volumes along with improving its trade structure, becoming a major trading nation and making progress toward a trading power. In the 13th Five-Year Plan period (2016-2020), China has experienced acceleration in its foreign trade structural adjustment under its opening-up strategy, and the function of foreign trade has shifted from being a driver for growth to being a way to balance development. China is expected to continue its trade growth momentum and structural improvement and strengthen its trade competitiveness. In achieving this vision, China should make efforts to increase structural equilibrium, create a favorable external trade environment, and pave the way for trade growth and sustainable development.
By analyzing the development and industrialization of China’s manufacturing industry since reform and opening-up, this paper proposes China has played three roles in economic globalization- as an in-depth participant in specialization of the global manufacturing value chain, as an active facilitator of global inclusive and sustainable industrialization, and as a cooperative innovator in the new industrial revolution. It issignificant for comprehensively understanding the role of China in economic globalization.
Since the founding of the People’s Republic of China in 1949, China’s regional development strategy has experienced three stages - the balanced development strategy before reform and opening up in 1978, imbalanced development strategy since 1978, and the present coordinated development stage. Each stage has its own priorities and characteristics of historical context and offers valuable experience for China’s regional economic development. Reviewing the journey and historic characteristics of China’s regional economic development is of great theoretical and relevant significance to its balanced regional economic development in the new era. Experience shows that in the strategic choice of regional development, importance should be given to the proper handling of relationships between efficiency and fairness, government and market, equilibrium and disequilibrium, and central and local governments. In general, China’s regional economic development has achieved tremendous progress since 1949, particularly since 1978 as manifested in favorable regional development momentum and balanced regional development. Nevertheless, imbalanced and inadequate regional development remain prominent contradictions. In the new era, we must follow Xi Jinping thought on socialism with Chinese characteristics as guidance, implement the strategy of balanced regional development, and bring about a new development pattern characterized by equal access to basic public services, relatively balanced infrastructure accessibility and generally equal living standards.
Over the past seven decades since the founding of the People's Republic of China in 1949, China's industrial structure has experienced transformations in various stages, which is consistent with the general pattern of industrialization and China's domestic and international situations. These changes also have to do with China's reforms in building the socialist market economic system. China's seven-decade industrial structural transformation offers valuable experiences: In promoting its industrial development, China has persistently carried out economic reforms, kept pace with changing factor and demand structures, invested in technology importation and innovation, leveraged global resources and markets, and formulated development policies in line with specific industrial development stages. Despite industrial structural problems, China has set the stage for innovation-driven development, further opening up, and balanced regional development. China's industrial structure will keep evolving amid its transition toward a competitive industrial nation.
In 70 years since the founding of the People’s Republic of China, China has successfully transitioned from a closed economy to an open economy with the watershed year of reform and opening up in 1978 and modernized its social security system accordingly. This paper divides the transition of China’s social security system into seven stages before and after 1978. The traditional social security system was predicated on the dominant public ownership, a highly centralized economy, and “full employment.” It was congruous with the ownership structure, income distribution, and labor systems under the closed economy. The modern social security system is developed to meet the needs of an open economy and promotes economic development by giving play to consumption and investment, facilitating labor flow, and boosting productivity. The modern social security system requires further supply-side structural reforms to promote the high-quality development of the open economy.
Foreign and domestic technologies play different roles in a country's innovation. In recent years, Chinese firms have spent less on importing foreign technology and more on acquiring domestic technology. Based on the panel data model, state space model (SSM) and the Bayesian vector autoregressive model, this paper finds that the purchase of domestic technology plays a critical role in the innovation of high-tech firms with an elasticity coefficient higher than that of technology importation before 2010. China 's high-tech firms can effectively absorb purchased domestic technology, which also brings about an increase in their independent R&D input and contributes more to innovation output than imported technology. Performance of technology importation is lackluster but shows an improving trend. Technology importation is not correlated with innovation output and has a substitutive effect with independent R&D input. China is yet to enhance its absorption of imported technology. Elasticity coefficient of technology importation turned positive in 2007 and increased year by year. China should promote synergy between technology importation and domestic technology acquisition.
Based on China Family Panel Studies (CFPS) data and global MPI standard, this paper measures and analyzes multi-dimensional poverty in China. The study finds that the level of multi-dimensional poverty in China is not high and tends to decrease over time. Uneven regional development significantly affects multi-dimensional poverty. The poor are deprived in health, education and other aspects, but indicator contributions vary among specific groups of people. Overlap between economic poverty and multi-dimensional poverty has a trend of inter-temporal reduction. China 's development-centered poverty reduction policy has achieved great results and significantly improved the development capabilities of the poor. Development-oriented approach is China's important experience in poverty reduction, and forebodes China's bright prospect of achieving its goal to complete building a moderately prosperous society by 2020.
This paper calculates the China-U.S. trade balance from the national income perspective based on an input-output model that differentiates domestic and foreign-invested companies. The result shows that due to different degrees of dependence of both countries on foreign production factors such as foreign capital for the manufacturing of export goods, only 87.7% of the domestic value-added created by China's exports to the U.S. in 2012 was China's national income, whereas 96.2% of value-added in U.S. exports to China was U.S. national income. In the comparison of total export volume and export value-added, the home country S national income created by exports can more realistically reflect a country S gains from trade. In 2012, China's trade surplus with the U.S. stood at 102.8 billion US dollars in national income terms, which is 61% and 22% smaller than the results in gross and value-added terms, respectively. The implication is that the traditional trade balance accounting method seriously exaggerates the China-U.S. trade imbalance.
Since reform and opening-up in 1978, changes in China's industrial structure have generally followed the pattern of "Kuznets facts " but still exhibits some unique characteristics, which led us to raise the following three questions regarding China 's structural transformation: (1) Why did the share of China's agricultural and manufacturing employment reduce/increase intermittently rather than continuously? (2) Why did the share of China s agricultural employment increase during certain periods? When the share of manufacturing employment reduced, why did the workforce reversely flow into agriculture rather than move to the service sector? (3) Why did growth in the share of China's service sector employment decelerate before reaching its peak? Why did the share of employment in the industrial sector suddenly increase after an abrupt decline? This paper creates a multisector economic growth model that contains non-homothetic preferences and differentiated productivity, and incorporates the "two drivers" therein for a demand-side estimation and analysis. The result shows that China 's economic growth model driven by net export and investment is a critical factor for explaining the three questions regarding its structural transformation. This paper believes that only by implementing supply-side structural reforms, reducing the dependence on net export and investment, and achieving sustainable endogenous economic growth will China be able to expedite its industrial restructuring.
Over the past four decades of reform and opening-up, China has basically eradicated hunger and lifted over 700 million rural people out of poverty. China 's poverty incidence has dropped to about 3%. These achievements can be attributed to the following factors: First, farmers have regained their economic freedom that was lost in the planned economy era. Second, China 's top decision-makers have followed people 's will by transitioning into the market economy and thus achieved rapid economic growth. Third, the government has continuously enhanced infrastructure and human capital investments, and implemented a social protection system in rural and urban areas nationwide. Fourth, integrated poverty reduction measures have been carried out to assist poor people in disadvantaged regions and those with poor capabilities. Given the diminishing poverty reduction effect of pro-poor fiscal funds, it is necessary to avoid direct administrative interventions in the operational decision-making of poor households and broaden institutional space for rural cooperative economy. Meanwhile, China should remove inequalities in the rights between the urban and rural households, facilitate the labor migration of the poor, and promote the urbanization of rural people.
Reform of the corn stockpiling policy is a key initiative for advancing China's market-based grain stockpiling reform. It is a critical component of China 's exploration of a price formation mechanism for agricultural products. Evaluating the effectiveness of such reform is therefore of great relevance. Based on nationwide farm monitoring data of 2014, 2015 and 2016, this paper examines the effects of the corn stockpiling reform on the decision offamily farms to join cooperatives. Our finding suggests that after other factors that influence the decision of family farms to join cooperatives are controlled for, the probability of corn farms to join cooperatives in the Northeast and Inner Mongolia, where the corn stockpiling reform was carried out in 2016, is significantly higher compared with the probability of corn farms in non-reform areas that did so. The reason is that after the reform, corn producers must sell their corn to the market instead of to the State, bringing them sales problems, which could be mitigated to some extent by joining cooperatives. Thus, the corn stockpiling reform incentivized the market-based behavior of agricultural producers, giving play to the role of market mechanisms in regulating production and demand.
Over the past four decades of reform and opening up since 1978, China's GDP has been growing at 9.5% on an annual average basis. While some scholars believe that China 's economic growth is systematically overestimated, this paper carries out an estimation of China 's underground economy and finds that due to the existence of the underground economy, China S real GDP is systematically underestimated. China S official GDP statistics generally reflect a real picture of its economic growth. The size of China's underground economy is significantly influenced by total electricity consumption, the selfemployed ratio, labor participation rate and money supply. These findings are of great significance for policy-making.
Based on China's industrial enterprises-customs matched data, this paper utilizes two-tier stochastic frontier analysis method to estimate and verify the extent to which selection effect and competition effect influence exporting firms ' markup. Our findings suggest that the interaction between selection effect and competition effect ultimately causes actual firm markup to be higher than the baseline markup by 7.11%. Exporting firms ' actual markup is higher than the baseline markup by different degrees. In terms of the decomposition of selection effect, TFP explains for 28.05% of selection effect, and nonproductivity factors explain for the rest 71.95%. By controlling for the type offirms' export, the export-productivity paradox only exists for processing trade firms, which shows that with increasing trade facilitation, the policy incentives to encourage firms to export are major contributors to the low export markups.
Under a logical self-consistent theoretical framework, this paper discusses SOEs’ innovation efficiency and innovation conundrum facing Chinese local firms. By creating a theoretical model of endogenous technology level, this paper finds that credit discrimination and soft budget constraint have both a crowding out effect and compensatory effect on corporate innovation. When firms engage in less profitable innovation, the compensatory effect outweighs crowding out effect, and a higher share of SOEs will promote the overall level of innovation. On the contrary, when firms engage in more profitable innovation, the compensatory effect is smaller than crowding out effect, and a higher share of SOEs will diminish overall innovation. In this sense, SOE innovation exhibits a threshold characteristic. Then, this paper carries out an empirical test using the inter-provincial panel data of 1997-2013, which proves our assumption. Finally, this paper arrives at conclusions and policy implications.
Based on the China Customs Database and the China Industrial Enterprises Database, this paper estimates the proportions of imports and exports by air of Chinese firms and variables that may influence such proportions. Through OLS regression and seemingly unrelated regression (SUR), this paper analyzes the possible determinants of the share of trade by air. Our findings suggest that the TFP of firms is positively correlated with the share of trade by air. The ratio of value-added in exports is positively correlated with the share of imports by air and negatively correlated with the share of exports by air; the average distance of transport is significantly positively correlated with the share of trade by air in full-sample and grouped regressions. Rising TFP increases the share of imports and exports by air the most for processing trade firms, particularly for firms in the eastern region and foreign-funded firms. An increase in the ratio of value-added in exports increases the share of imports by air the most for general trade firms, and also significantly influences the use of air transport by firms in the eastern region and foreign-funded firms. These conclusions offer valuable policy references for promoting trade in various parts of China and especially the inland regions.
Since the founding of the People’s Republic of China in 1949, the Chinese government has made great achievements in reducing poverty through human capital development (education, healthcare, gender equality, maternal and infant health, and prevention and treatment of iodine deficiency), infrastructure construction (transportation, electric power, ICT application and access to safe drinking water), improvement of living conditions (toilet hygiene, stove renovation and resettlement) and rural social security (“five-guarantees” system, subsistence allowance, rural pension insurance, natural disaster relief and agricultural insurance). Since the 18th CPC National Congress in 2012, the Chinese government has made remarkable progress in eradicating poverty and enhancing village governance. However, serious challenges will
In the new normal, China must develop a new economy in order to foster new engines of growth. The new economy differs from the traditional economy in many respects, such as its underlying drivers and technical, industrial and organizational characteristics. This paper reveals six aspects of the mechanism of the new economy, including firm entry strategy, new opportunities, market demand, transition of production factors, industry support and the role of the government. In addition, the operation of the new economy is explained in terms of its underlying drivers, internal operations and external environment. In the new economy, fundamental changes have occurred in monopoly, information asymmetry, externalities, public goods and information security necessitating a new regulatory approach. Regulatory reform is therefore inevitable. China should steadfastly transition from regulatory tightening to deregulation, from economic regulation to social regulation, from discriminatory regulation to fair competition, from the positive list to the negative list, from ex-ante review and approval to ex-post supervision, and from specialized regulation to integrated regulation. Innovations must be encouraged through the use of “regulatory sandboxes.”
Controversies exist in literature regarding what indicators should be employed to measure China’s fiscal decentralization. This paper measures China’s fiscal decentralization by the sharing ratios of county-level VAT and corporate income tax (CIT). This approach avoids such problems as homogeneous denominator, and reflects the intricate interactions between governments at different levels. Based on extensive sources including the National Fiscal Statistical Information at Prefecture and County Levels and China County (City) Socio-Economic Statistical Yearbook over the 1998-2007 period, our estimation and analysis led to the following findings: (1) Since 2002, counties have retained a falling share of revenues; (2) a multidimensional horizontal comparison reveals a pattern in the county-level tax sharing ratio, i.e. counties in central and eastern regions retain a higher share of tax revenues compared with those in western and northwestern regions. These findings explain the fiscal difficulties at the grassroots level, and can be used toconduct a quantitative analysis of the determinants and economic effects of China’s fiscal decentralization.”
Using the multidimensional poverty index (MPI), this paper measures the intertemporal change in poverty in China’s rural areas during 1995-2013, decomposes major poverty reduction factors, and creates a correlation between poverty reduction factors and national pro-farmer and poverty reduction policies. Our findings suggest that multidimensional poverty has been greatly alleviated in rural China on all fronts beyond the income dimension. Specifically, the burden of out-of-pocket medical expenses contributed the most to the overall poverty of farmers in the 1990s; this gap was subsequently mitigated by the New Rural Cooperative Medical Insurance System. Lack of economic empowerment - the second most prominent manifestation of poverty two decades ago - has been alleviated with public welfare improvements. In the present stage, health and healthcare are the primary difficulties facing poor farmers multidimensionally. Sub-groups such as elders, those less educated and those living in western China or in poor counties suffer from a high degree of poverty. This implies that multidimensional poverty is concentrated among the underprivileged groups and in less developed regions, whom should be policy priorities. Robustness tests suggest that the paper’s conclusion still holds after changing the proxy variables of the subdimensions, revising weights or removing some dimensions.
Since reform and opening-up in 1978, the service sector has become the largest industry in China’s economy. Compared with developed countries, however, China’s service sector, especially modern services, remains rather undeveloped in terms of its aggregate size and internal industrial structure. The underlying reason is that the international OEM model under an export-oriented strategy created both technology spillovers and crowding-out effects on domestic service firms. With the deepening global division of work, such a market crowding-out effect is outweighing the technology spillover effect. This paper suggests that China’s service sector must shift towards a domestic consumption-based strategy, utilize domestic and foreign production factors, and promote service sector innovation and development in differentiated monopolistic competition.