Abstract:This paper aims at providing a political economic explanation for China’s economic ascent from the perspective of social equality. Our key idea is that the equal social structure in China has led to the emergence of the disinterested government, i.e., a government that does not have consistent interests in any social groups, and such a government is more likely than a biased government to allocate resources to groups with higher productivity and thus promote economic growth. This explanation is presented in a repeated Stackleberg model analyzing the relationship between social equality and government policies in autocracies. Based on the results of the model, we provide evidence for disinterestedness of the Chinese government. In particular, we analyze several selective government policies that treat social groups differently and thus enlarge income disparities, but promote economic growth.
Key Words:Social Equality;  Disinterested Government; Economic Growth
JEL Classification:C72, O11, P26

Abstract:Using data of 28 China’s provinces during the period of 1987—2008, this paper studies effect of Township-and-Village Enterprises’ (TVEs’) development in reducing China’s urban-rural income inequality. A significantly positive effect is found, which supports the idea that, through the movement of its productions, TVEs can compensate partly for the welfare losses caused by Hukou restrictions on the movement of labor force between rural areas and urban areas. However, a more important finding is, the yearly effects are decreasing, with very small values after the year 1998. This result suggests that TVEs’ compensation effects may have already been fully utilized. This is due to significant disadvantages of factories located in rural areas on the highly competitive China’s manufacturing product markets. The policy implication of this paper is, only by reforming the current Hukou system and strengthening the movement of labor and other factors, rather than by furthering rural industrialization, can China finally reduce its urban-rural income inequality.
Key Words:Rural Industrialization; TVE; Urban-rural Income Inequality
JEL Classification:D31, O18

Abstract:China’s registration system has been the biggest obstacle to labor mobility. It is widely believed that reform for the system induced a great lot of permanent migration in recent years. However, there were few studies for the reform’s effect on rural workers mobility which is also an important part of urbanization. After the central government definitely made the objects of registration system reform clear as strictly control the scale of mega-cities and rational develop medium-sized cities and small cities in 1998, a new question raised: is the system reform effective for re-distribute farmer workers? This paper mainly discussed the effect by medium-sized city household registration reform during 2003—2006. The quantitative effect on farmer worker mobility acted by registration system reform was studied by using Difference in Difference regression with micro control variables. It found that there is little evidence for the significant effects of registration reform on farmer workers mobility. In addition, social network and increasing farming income have significant effects on farmer workers out of village.
Key Words:Registration System Reform; Labor Mobility; Difference in Difference
JEL Classification:J38, J43, O15

Abstract:How does trade openness influence the scale change of government expenditure？Compensation hypothesis and efficiency hypothesis put forward polarity judgment. The paper points out the source of contradiction outcomes in previous literature through using sys-GMM estimation and introducing the employment adjustment which ignored in Rodrik model. Moreover，trade openness improves the efficiency of actual local government’s investment and transfer payment. Furthermore，beside of inertia and planning, employment reallocation induced by expected external risk and trade openness influences investment expenditure significantly. Dependence rate, regional size and negative employment reallocation induced by trade influence consumption expenditure significantly. Transfer payment can be influenced by Wagner’ law, urbanization rate, dependence rate, trade and positive reallocation induced by expected external risk. Accordingly, we must avoid the meaningless expense of actual payment caused by negative and positive labor reallocation in the course of trade structure revolution and upgrading.
Key Words:Trade; External Risk; Factor Reallocation; Government Expenditure
JEL Classification:F43, H11, J63

Abstract:This article establishes a small open economy model, one  goal is the inquires into the financial accelerator existence in China open economy; the other goal is the analysis of the difference of financial accelerator effect under different exchange rate system, which is in view of macroeconomic undulation characteristic in China during 1997—2008. Through using the Chinese data and the ML method to estimate DSGE model, the result shows the likelihood rate examination accepts the former to reject the latter. The simulation result demonstrates that the data of the model with financial accelerator is closer to the actual data characteristic, which has once more confirmed the open economy finance accelerator existence. Financial accelerator effect is stronger under fixed rate of exchange, which explained partly macroeconomic variable undulation difference under the different exchange rate system from 1997 to 2008 in China. The financial accelerator mainly disseminates and enlarges the influence of economy attacked by investment efficiency and the monetary policy, also amplifies the impact from the currency demand and the overseas, but the amplification to the preference and technology is not obvious.
Key Words:Open Economy; Exchange Rate System; Credit Friction; Financial Accelerator; Economical Undulation
JEL Classification:E10, E30, C30, C60

Abstract:Based on the micro location theory of multinational firms (MNEs),and using the database of U.S. and European MNEs listing in “2007 Fortune 500”, this paper conducts Conditional Logit estimations to test empirically the main determinants of individual location choices conducted by 457 U.S. affiliates and 537 European affiliates within China over the period 1995—2007. The results present that agglomeration is the preferred strategy of the firms in our sample and their affiliates are highly agglomerated in the eastern region. The policy of using FDI as a remedy for reducing the East-West regional economic development gap seems not appropriate, especially in the Central region. Thus, at the end of paper, based on the results obtained, we give our advices to China’s government for reducing the regional economic development gap and using FDI rationally in lagging regions.
Key Words:Agglomeration Effects; U.S. and European MNEs; Micro Location Theory of MNEs; Conditional Logit Estimations
JEL Classification:F21, F23, L10, R12, R30

Abstract:This paper is based on that the new product technical efficiency (NPTE) is the effective standard for measuring industrial independent innovation efficiency through the development of directional distance function. From the viewing point of new product, the paper constructs an analysis framework that has both of differential and relation of the innovation efficiency and production efficiency, to evaluate the regional industrial independent innovation efficiency. We found that the average technical efficiency of Chinese provincial large and medium-size industries from 1999 to 2007 is almost 29% higher than NPTE, average industrial NPTE of three areas show that the eastern area>the middle area>the western area，and slowly rising trend in general. In recent years, the gap between TE and NPTE has been increased. Enterprise scale, FDI, import and R&D staff and digest absorb investment prompt the level of regional industrial NPTE, and R&D investment, foreign technology import and domestic technical buying have a significant negative effect, the effect of property reform and technology transformation are not significant. It is also showed that non-state property caused a negative correlation between R&D investment and NPTE.
Key Words:Independent Innovation Efficiency; New Product; Technical Efficiency; Directional Distance Function
JEL Classification:O18, O31

Abstract：Based on the examination of the reputation costs, group charateristics and operational environments of the Small and Medium Enterprises(SMEs), this paper constructs a group lending reputation model for the SMEs to analyze how banks could set up reputation costs to reduce credit risks by transforming the traditional loan-repayment games between banks and the SMEs into the reputation games among the SMEs themselves. This study concludes: valid reputation costs are the institutional foundations of the SMEs roup lending; reputation costs refer to the opportunity costs associated with the loss of privilege as a member conducting intra-group transactions due to default; the incentive conditions of banks endogenously define the market risk frontier; the group lending can extend the maximum market risk of bank loans; Under the multiple-player group lending, banks need to trade off between the benefits of expanding market risk limits and the shortcomings of increasing credit risks so as to determine the optimal member size of the multiple-player group lending.
Key Words： Dynamic Repeated Games; Subgame-perfect Equilibrium; Group Lending; Reputation Costs
JEL Classification：C79, G29

Abstract：In recent years, based on balanced panel data sample, most research on “performance-flow relationship” in domestic academic circles uses quarterly return as explanatory variable and has found that there is a “redemption anomaly” in China's open-end fund market. This study separately uses one year lagged raw return, one factor alpha (CAPM) and three factor alpha (Fama-French three factors model) as explanatory variable. Applying fixed effect unbalanced panel data regression model, we find that: one year lagged return has a significantly positive impact on fund flow. This shows investors generally chase those funds having a long term good performance, so the “redemption anomaly” is a sort of false impression. We further find that the star funds can not attract abnormal inflows, which suggests domestic investors are not keen to chase star funds. Finally, on the basis of empirical results, we analyze the performance motivation mechanism of fund market combining with Principal-Agent Theory and give some advices.
Key Words： Fund Market; “Redemption Anomaly”; “Performance-flow Relation”; Unbalanced Panel Data Sample
JEL Classification：D81, G14, G23

Abstract：Chinese listed firms are required to disclose the board voting results on management proposals. Using the unique data, we explore the independence of outside directors. We document that only 4% of firms have dissenting directors who vote against management proposals at least once, which is consistent with the claim by Mace (1986) that outside directors are not quite effective. Furthermore, we find that independent directors are more likely to vote against management proposals when firms perform poorly, and when independent directors have higher reputation, have financial or accounting background, and with a longer tenure. We further document that the firms with dissenting directors enjoy higher market value. Our findings suggest that independent directors become more effective during crises, and the monitoring by independent directors improve firm value.
Key Words： Independent Director; Board Independence; Board Voting; Firm Value
JEL Classification：G34，K22