¡¡¡¡¡¡¡¡¡¡¡¡Economic Research Journal (Monthly)Vol.42 No.7 July, 2007

¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ CONTENTS

Growth and Structural Changes in Employment in Transitional China

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.Cai Fangª« (ª©4ªª)

Choice of Economic Growth Patterns in China and Transition from Extensive Patter

n to the Intensive Oneª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Wei Xinhua and Hou Weiminª« (ª©15ªª)

Mechanism and Pattern of China's Industryª²Nurturingª²Agriculture: A Perspective of the Micro

Behavioral Agents

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..ª«An Tongliang, Bian Jiazhen and Lu Guoqing ª« (ª©23ªª)

Governing China's Local Officials: An Analysis of Promotion Tournament Model

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..Zhou Liª²anª« (ª©36ªª)

An Empirical Analysis on Differences of Two Methods for Measuring GDP

ª«Liu Yifang, He Juxiang, Liu Xiangli, Li Hong and Man Jiangyi

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ (ª©51ªª)

China's National Comprehensive Liabilities and Marketª²Oriented Reform

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Sun Tao and Zhang Xiaojingª« (ª©64ªª)

Regional Economic Growth and Differences of Energy Intensity in China

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Qi Shaozhou and Luo Weiª« (ª©74ªª)

Marketization, SOE Reform Strategy, and Endogenously Determined Corporate Go

vernance Structure

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Xia Lijun and Chen Xinyuanª« (ª©82ªª)

Consideration Determination in the Splitª²share Structure Reform and the Examina

tion of the

Effectiveness of Corporate Governance Mechanisms in China's Listed Companies

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zheng Zhigang, Sun Yanmei, Tan Songtao and Jiang Dezeng ª« (96ªª)

Influence of Macro Factors, Property Rights Institution and Market Structure o

ver the Efficiency

Structure of Chinese Commercial Banks

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Wang Cong and Tan Zhengxunª« (ª©110ªª)

The Difference of Portfolio Allocation between Stateª²owned Banks and Jointª²equity Banks in China

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Jia Chunxinª« (ª©124ªª)

Technology Structures of China's Exports and Their Changes: 1980¡ª2003

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Du Xiuli and Wang Weiguoª« (ª©137ªª)

The Stabilization of US Business Cycle:A Literature Survey

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Cao Yongfuª« (ª©152ªª)

Growth and Structural Changes in Employment in Transitional China

Cai Fang

£¨Institute of Population and Labor Economics, CASS£©

Abstract:By clarifying officially published statistics on labor market and empl

oyment combined with micro survey data, this paper tries to depict the employment growth and structural change in rural and urban China and to break the myths believed by domestic and international scholars such as ¡°zero growth of employment¡± and ¡°unchangeable rural surplus labor pool¡±. The paper provides exact statistics about China's labor market that previous studies fail to do so, explaining how labor market develops, employment in both rural and urban areas increases andits structure diversifies, urban unemployment alleviates and number of rural su

rplus laborers reduces, as a result of economic growth, reform and openingª²up. By examining demographic transition process in China, the paper also predicts the emerging trend of labor shortage, suggests a coming Lewisian turning point and reveals its policy implications to China's sustainable growth.

Key Words:Labor Market Development; Employment Growth; Surplus Labor Force; Lewisian Turning Point

JEL Classification:J210, J110, J230, R110

Choice of Economic Growth Styles in China and Transition from the

Extensive Style to the Intensive One

Wei Xinghua and Hou Weimin

(Department of Economics,Renmin University of China)

Abstract:

The characteristic of economic growth is varying in different development periods. At present,the styles of economic growth in China is still based on extensive growth and restrict its further development.It is a neccesary selection for China to go through the transition from the extensive style to the intensive one, but the transitions are not easy for a series contractions exist. From the view of  reality,the ways of transitions between the economic growth styles are both innovation of science and technology and of social system.

Key Words:Economic Growth; Efficiency; Scientific and Technological Innovation; Innovation of Social System

JEL Classification:O110£¬P200

Mechanism and Pattern of China's Industryª²Nurturingª²Agriculture:

A Perspective of the Micro Behavioral Agents

An Tongliang,Bian Jiazhen  and  Lu Guoqing

(Department of Economics, Nanjing University and Guangfa Securities CO.,LTD.)

Abstract:

On the basis of differentiating compulsive nurturing and spontaneous nurturing, while standing on China's rural areas, this paper constructs a model on the interactive behavior between government and industryª²funded enterprises from the particular perspective of the behavioral agents. Furthermore, centering on the transfer of rural redundant labor force, we also probe into the mechanism and pattern of industry nurturing agriculture and their harmonious development. Several proposals are raised, combining with an empirical case.

Key Words:Industry Nurturing Agriculture£» Dual Economy£» Industrial Development£» Spontaneous Nurturing£» Compulsive Nurturing

JEL Classification:H220£¬O130£¬Q120£¬R230

Governing China's Local Officials: An Analysis of Promotion Tournament Model

Zhou Liª²an

£¨Guanghua School of Management and IEPR, Peking University£©

Abstract:

This paper investigates the nature and characteristics of the governance structure of China's local governments, which is termed as ¡°promotion tournament model", and tries to link this model with China's growth miracle and many social and economic problems associated with the miracle. We argue that promotion tournaments, as an incentive system governing Chinese local officials, are a critical source of China miraculous growth, but in the meantime, due to its internal limitations, it is also the root of many profound and pressing problems challenging China's policy makers.

Key Words:Promotion Tournament; Incentives of Local Officials; China's Economic Growth

JEL Classification:H110, H770, P350

An Empirical Analysis on Differences of Two Methods for Measuring GDP

Liu Yifang,He Juxiang,Liu Xiangli,Li Hong and Man Jiangyi

(Graduate School, Chinese Academy of Sciences)

Abstract£º

Comparative Price Level is the index for measuring the warp of GDP between the rate and the Purchasing Power Parity (PPP). The closer to one the comparative price level is, the larger the warp will be. This paper explores the reasons why the warp exists between the two methods. Seven reasons induced by the rate were summarized, such as the division of the market, trade barrier and so on.At the same time, nine reasons induced by the difference of the price level were given, including pricing system and economical scale. Furthermore, these reasons were summarized as six factors: economic freedom, GDP per capital, growth of the economy, house consumption per capital, the openness degree of the economy,exchange rate arrangement. These factors are regarded as independent variables,and comparative price level is the dependent variable. With data of 88 countries from 2000 to 2003, the rationality of these independent variables was checked.Finally, the research describes the development trace of comparative price level by calculation of it under corresponding development level. As a result, the trend of comparative price level was concluded for developing countries.

Key Words£º International Comparison; Comparative Price Level; Rate of Exchange; Purchasing Power Parity

JEL Classification£ºE100, O110,O570

China¬ðs National Comprehensive Liabilities and Marketª²Oriented Reform

Sun Tao

(The People¬ðs Bank of China)

Zhang Xiaojing

(Chinese Academy of Social Sciences)

Abstract£º

While achieving remarkable achievements in safeguarding financial stability supported by decisive reform and openingª²up measures, Chinese government now faces new daunting challenges in fending off risks related to national comprehensive liabilities. Part of traditional liabilities (such as nonª²performing assets of banking sector) manifest themselves in new forms, while new members(suchas social security expense, potential losses resulting from the proª²cyclical effect of Basel II, and foreign exchange assets losses given depreciation of US do

llars) began to unfold across the economy. As the economy becomes more marketª²oriented and complex, and as its rising integration into the global economy, national comprehensive liabilities make it more vulnerable to macroeconomic shocks. Therefore, the resolution of these liabilities has important implications for financial stability. Beyond shouldering the necessary expenses for social development and safety, the government would make more headway on adopting marketª²oriented approaches to maintain strong momentum in economic growth, which would continue to serve as a strong foundation for financial stability.

Key Words£º Openingª²up; National Comprehensive Liabilities; Marketª²oriented Reform

JEL Classification£ºE580£¬E440,E390

Regional Economic Growth and Differences ofEnergy Intensity in China

Qi Shaozhou and Luo Wei

(Wuhan University; Hubei Branch of Agricultural Bank of China)

Abstract£º

We suppose that the difference of energy intensity between the Western region and the Eastern region in China is the function of the difference of percapita GDP between the two regions. Then we model the relationship between the two variables together with other regression variables and estimate the coefficients by panel data of 30 provinces from 1995 to 2002. Our findings are as follows. Firstly, the difference of per capita GDP tends to convergence between the Western region and the Eastern region. The difference of energy intensity between the two regions, as a whole, also tends to convergence with the convergence of per capita GDP although the convergence speed of the energy intensity is slower than the convergence speed of per capita GDP. Secondly, it is different that the energy intensity of individual province in the Western region shows convergence or divergence. The policy implication of this paper is that the government should encourage and guide different provinces to cooperate by taking advantage of their own energy endowment and the difference of energy intensity when the government makes the strategy of regional economic development. As a result, regional economic growth can be based on saving energy, regional balance and sustainability.

Key Words£º Per Capita GDP; Energy Intensity; Regional Difference; Convergence

JEL Classification£ºQ430, R110

Marketization, SOE Reform Strategy, and Endogenously Determined

Corporate Governance Structure

Xia Lijun and Chen Xinyuan

(Institute of Accounting and Finance at Shanghai University of Finance and Economics,

Center for Institutions and Governance at The Chinese University of Hong Kong;

Institute of Accounting and Finance at Shanghai University of Finance and Economics)

Abstract£º

Using the data of listed firms in 2001 to 2003, this paper investigates the endogenous determination of corporate governance structure of listed firms ultimately controlled by Chinese local governments. Specifically, we explore how the degree of regional marketization and the central government¬ðs ¡°seize bigdrop small¡± and ¡°strategic restructuring¡± of SOE reform strategies, based respectively on firm size and industry category, influence the ultimate controlling government¬ðs level, government¬ðs share ratio and government¬ðs shareholding meth

od. We find that, in the regions with higher degree of marketization, listed firms are more likely to be ultimately controlled by low level local governments, and the local governments are more likely to control small ratio of shares. However, large firms and the firms in regulatory industries are more likely to be ultimately controlled by high level local governments, and the local governments are more likely to control a block ratio of their shares. The effects of marketization and industry category on government¬ðs shareholding method are not robust, and

large firms are more likely than small firms to be indirectly controlled by local governments. The results together indicate that regional marketization and the central government¬ðs SOE reform strategy shape the corporate governance struct

ure of listed firms ultimately controlled by Chinese local governments.

Key Words£º Governance Structure; Endogenous Determination; Marketization; SOE Reform Strategy JEL Classification£ºG340, G320

Consideration Determination in the Splitª²share Structure Reform and the Examination of the Effectiveness of Corporate Governance Mechanisms in China's Listed Companies

Zheng Zhigang, Sun Yanmei,Tan Songtao

(School of Finance, Renmin University of China)

Jiang Dezeng

(Division of Research, Pacific Security Corporation)

Abstract:

Since the determination of consideration in the splitª²share structurereform is significantly affected by the corporate governance principles and practice currently enforced, it, therefore, provides a new opportunity to test the effectiveness of the current corporate governance mechanisms. Based on the consideration determination as the unique corporate governance event in China capital market practice, this paper examines the effectiveness of corporate governance m

echanisms of China' s listed companies and thus presents the new evidence to evaluate the status of corporate governance in China. In this paper, we show that, among the current corporate governance mechanisms, the existence of active investors outside the controlling shareholder has significant effects on the consideration determination and then be effective in corporate governance practice whileother corporate governance mechanisms such as issuing B or H shares, the board of directors and the role of debt in corporate governance still need to be improved.

Key Words:Splitª²share Structure Reform; Determination of Optimal Consideration; Cooperative Games; Corporate Governance

JEL Classification:G320, G380

Influence of Macro Factors, Property Rights Institution and Market Structure over the Efficiency Structure of Chinese Commercial Banks

Wang Cong

(Department of Finance, Jinan University)

Tan Zhengxun

(Zhu Hai College, Jinan University)

Abstract:

Based on the SFA, this paper estimates and calculates Xª²profit efficiency, scale economy, scope economy and their dynamic changes for the commercial banks in China from 1990 to 2003 and, analyzes how and to which degree the macro factors, property rights institution and market structure affect their efficiency. The results of the empirical study show that both the growth rate of GDP and that of fixed assets investment and that of money supply (M2) have positive effects on the Xª²profit efficiency of banks, while CPI and the efficiency situationviewed from the returns of all selfª²held capital of the stateª²owned and nonª²stateª²owned industrial enterprises above designed size as a whole have negative effects on the Xª²profit efficiency. Among all macro variables, the most important one seems to be the growth rate of the fixed assets investment. Against the same macroª²economic background, the Xª²profit efficiency for the stateª²owned banks and that for the jointª²stock ones have structural differences, on an ascending basis. Although both of them have the increasing scale efficiency, the scale efficiency for the stateª²owned ones is higher than that for the jointª²stock ones in mostof the years. In view of evolution, as the scale of these two types of banks improves, their scale efficiency is weakened and the difference between them is being converged gradually. Scope efficiency seems not to exist in the stateª²ownedbanks, but in the jointª²stock ones, it does exist to a certain extent. With time, the scope efficiency is decreasing step by step. The key factor causing those differences seems to be the property rights institution, but market competition also plays an important role on the efficiency of commercial banks, both of which affect this efficiency complementarily instead of substitutionarily. At the end of the paper, some constructive countermeasures and suggestions to solve the problem are figured out.

Key Words:SFA£» Commercial Banks£» Efficiency Structures

JEL Classification:O120£¬G210£¬G290

The Difference of Portfolio Allocation between

Stateª²owned Banks and Jointª²equity Banks in China

Jia Chunxin

(Guanghua School of Management, Peking University)

Abstract:

While the relationship between bank government ownership and performance is a hot topic, there are very few papers focusing on the relationship between government ownership and bank prudential behavior. Based on portfolio allocation proxies, this paper studies the prudential difference of China's stateª²owned banks and jointª²equity banks. Empirical results strongly support the hypothesis that better ownership leads to more prudential behavior. Meanwhile, state banks are getting more and more prudent due to bank system reform.

Key Words:

Commercial Bank£»Corporate Governance£»Bank Portfolio Allocation£»Bank Prudential Behavior

JEL Classification:

G210£¬G280£¬G340£¬O530

Technology Structures of China's Exportsand Their Changes: 1980¡ª2003

Du Xiuli and Wang Weiguo

(Department of Quantitative Economics, Dongbei University of Finance and Economics)

Abstract:

The essay devotes to constructing a set of measures to technology structure of exports and applies them to China at the product level during 1980 to 2003. The essay also gets some conclusions: during the reform era, the technology level of China's exports has been obviously increased, but has not converged to the level of world; the China's level of technology structure didn't improve significantly, but have different performances during different periods; the changing of technology structure of China's exports has unique characteristics.

Key Words:Technology; Exports Structure; Measure Methods; Vertical Intraª²industry Trade

JEL Classification:C810, F140, O570

The Stabilization of U.S. Business Cycle: A Literature Survey

Cao Yongfu

(Institute of World Economy and Politics, Chinese Academy of Social Sciences)

Abstract:

The U.S. economy has become more stable after World War¢ò.And since the midª²1980s, the reduction of U.S. business cycle volatility was also significant. The causes of stabilization are complicated, which have caused intense debate in the area of macroeconomics. This paper makes a literature survey on this topic and provides some policy suggestions for China.

Key Words:Business Cycle; Stabilization; Impulse; Propagation Mechanism

JEL Classification:E320, E370