Global Imbalance, Financial Crisis and China's Economic Recovery

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Research Groupª« (ª©4ªª)

Development Potential Comparison between China and India

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zhang Yong, Wang Xi and Gu Mingmingª« (ª©21ªª)

Mechanism for Agriculture Development with Labor Selective Transfer

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Guo Jianxiong and Li Zhijunª« (ª©31ªª)

Parental Income and Return to College Education in Urban China

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ª«Yuan Cheng and Zhang Leiª« (ª©42ªª)

The Impact of FDI Characteristics on Economic Growth in China: An Empirical Research

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Guo Xibao and Luo Zhiª« (ª©52ªª)

Strategic Restructuring and Policy Adjustment of Chinese Processing Trade

¡­¡­¡­¡­¡­Yan Guoqing£¬Sun Qi£¬Zhong Hongsheng£¬Zhao Na and Jing Xianª« (ª©66ªª)

Environmental Dumping and International Unionized Oligopolies

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­..Ma Jie and Duan Qiª« (ª©79ªª)

Institutional Environment, Transaction Rule and Efficiency of Corporate Control

Transfer¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.Li Shanmin and Zhang Yuanchunª« (ª©92ªª)

Resale Option, Inflation Illusion and the Chinese Stock Market Bubbles

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.Chen Guojin, Zhang Yijun and Wang Jingª« (ª©106ªª)

Financial Ecological Environment, the Ownership Nature of the Ultimate Controller, the Governance Effect of Financing Debts

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.Xie Deren and Chen Yunsenª« (ª©118ªª)

The Fluctuations of China's Energy Efficiency: Theoretical Explains, Numerical S

imulations and Policy Experiments

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Wu Lixueª« (ª©130ªª)

The Level of Modern China's Financial Development

ª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Yan Hongzhongª« (ª©143ªª)

A Summary for the Forum of Society with Resourcesª²saving and Environmentª²friendlyª«¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Qiao Haishu and Wang Xiuhuaª« (ª©156ªª)

Global Imbalance, Financial Crisis and China's Economic Recovery

Research Group

(Institute of Economics, CASS)

Abstract:This paper examines the inherent relationship between the global imbalance and financial crisis from historical review and literature survey. Our paper sets up a twoª²country model featured by monetary hegemony showing that the financial crisis of 2008 is closely interrelated with the United States' expansionary monetary policy and the hegemony of U.S. dollar. This paper then analyses the impact of crisis and the policy response, focusing on the preconditions for China's economic recovery. Through international comparison, we argue that one of the Great Depression's lessons is the exorbitant government intervention in some area and the necessary condition for China's revival is economic flexibility, namely, resilient market mechanism.

Key Words: Global Imbalance; Financial Crisis; Economic Flexibility; Economic Recovery

JEL Classification:F32£¬F33£¬G01

Development Potential Comparison between China and India

Zhang Yong, Wang Xi and Gu Mingming

(Renmin University of China; China Development Research Foundation)

Abstract: Chinese and Indian reforms gain great success and become the important driving force to world economy. However, different factor's contribution to economic growth decided the different developing models of China and India. Chinese highª²speed growth comes its high level investment, embodied technologicalchange, the promotion of labor force focused department. At the same time, India relied more on the export of service department brought by technological change. Using each other's developing models for reference to China and India is a beneficial attempt. Chinese developing model is facing great challenge although China gains great success at present. As a result, the developing potential of China is inferior to India obviously. However, TFP can not reflect this point and improved neoª²classical technological change model testifies this aspect. If China wants to maintain sustainable development potential, the growth model transition is essential.

Key Words: Total Factors Productivity; Technological Change; Development Transition

JEL Classification:O570£¬O100£¬O400

Mechanism for Agriculture Developmentwith Labor Selective Transfer

Guo Jianxiong and Li Zhijun

(Center for Rural Development Research£¬Shaanxi Normal University)

Abstract£ºSelective transfer of the labor force presents a new challenge on the theory of agricultural development of Lewis, Fei and Ranis, which only exists in a static sense. A further need of deepening human capital in agriculture is given as a necessary condition for the agricultural sector¬ðs successful development. In a dynamic context, agricultural development of the new interdependent condition, i.e. deepening of human capital, may be endogenous in the process of selective transfer in certain conditions. We establish a labor transfer model, in which the human capital is involved endogenously. The aim of agricultural development policy is to strengthen the dynamic mechanism of increasing human capital based on improvement of labor market.

Key Words£º Labor Selective Transfer; Lewis, Fei and Ranis Model; Human Capital Deepening; Agriculture Development

JEL Classification£ºJ24, O15

Parental Income and Return to College Education in Urban China

Yuan Cheng and Zhang Lei

(School of Economics, Peking University; School of Economics, Clemson University)

Abstract: In this paper, we examine the influence of parental income on the return to college education in a framework of heterogeneous returns to education among individuals. The Roy model is employed to correct the ability bias and to estimate the potential incomes from obtaining a college education and a high schooleducation for each individual. We use the 2002 CHIP data and find strong evidence that the return to college education increases with parental income. Based on these findings, we discuss the efficiency and sustainability of National College Loan Policy and the possible measures that government may take to increase the return to college education for students from low-income families.

Key Words: Return to College; Heterogeneity; Selection Bias; Intergenerational Transmission of Income; College Loan

JEL Classification:C300, I200, J300

The Impact of FDI Characteristics on Economic Growth in China:

An Empirical Research

Guo Xibao and Luo Zhi

(Center for Economic Development Research, Wuhan University)

Abstract£ºThis paper constructs a growth model in which the quantity and characteristics of FDI are introduced. We test this model through panel estimation using provincial data in China from 1999 to 2006ª±We find that£º(1)The FDI and domestic investment both have positive effect on

economic growth, but the effect of FDI is larger than that of domestic investment; (2) Different characteristics of FDI have different effects on economic growth: the scale of single FDI and the proportion of FDI invested in manufacture have positive impacts on economic growth, but high exportª²oriented foreignª²funded enterprises and highª²tech foreignª²funded enterprises have negative impact on economic growth; (3) There are no interact effects between the quantity of FDI and the scale of single FDI or the export proportion of FDI, but significant negative interact effect between the quantity of FDI and the proportion of FDI in the investment of manufacture, showing they are substitutive relation. There is a significant positive relation between the quantity of FDI and the technical level of FDI. And the technical level of FDI must meet a critical value if the effect of the quantity of FDI on economic growth is positive.

Key Words£º FDI Characteristics; China Economic Growth; Empirical Research

JEL Classification£ºF21, O11, C23

Strategic Restructuring and Policy Adjustment of Chinese Processing Trade

Yan Guoqingª¬1£¬Sun Qiª¬1£¬Zhong Hongshengª¬2£¬Zhao Naª¬1 and Jing Xian3

(1ª± Zhejiang Wanli University; 2ª±Ningbo City College of Vocational Technology;

3ª± Ningbo Institute of Technical College, Zhejiang University)

Abstract£ºThe paper analyzes the problems on strategic restructuring and policy adjustment of Chinese processing trade. The research is important for us to deeply understand the key role that processing trade acts in national economy. As to solving processing trade enterprises¬ð predicaments under the financial crisis, consummating processing trade policy and promoting the transformational way of foreign trade growth, the research also has an important significance on theory and practice. The paper finds that the processing trade is highly related with China¬ðs economic growth, industrial competitive power, employment and technology progress, and longª²term coª²integration existed. The relationships between the above variables are robust after Granger causes and effects examination. Through further onª²theª²spot investigation and study on China¬ðs typical processing trade area ¨C knitting processing trade enterprises of Ningbo, Zhejiang, the paper deeply analyzes the problems on Chinese processing

trade enterprises. Finally, some advice and policy suggestions are put forward.

Key Words£º Processing Trade; Strategic Restructuring; Policy Adjustment

JEL Classification£ºO11, O16, O24

Environmental Dumping and International Unionized Oligopolies

Ma Jie and Duan Qi

(Guanghua School of Management, Peking University)

Abstract£ºThis paper studies whether environmental dumping is a robust environmental policy recommendation toward international unionized oligopolies. We introduce trade unions to Barrett (1994) model and show that: (i) When firms compete as Cournot competitors, governments engage in environmental dumping policies; and the extent to which environmental taxes deviate from the Pivogian taxes is bigger than in the case where there do not exist trade unions. (ii) When firms compete as Bertrand competitors, optimal environmental policies are determined by the interaction between trade unions¬ð bargaining strength and the degree of product differentiation. If trade union¬ðs bargaining strength is sufficient; or fixing trade unions¬ð bargaining strength, if the degree of product differentiation is sufficient, governments engage in environmental dumping policies. (iii) These imply that environmental dumping could be a robust policy recommendation toward international unionized oligopolies.

Key Words£º Environmental Dumping; International Unionized Oligopolies

JEL Classification£ºF180£¬J510£¬Q560

Institutional Environment, Transaction Rule and Efficiency of Corporate Control Transfer

Li Shanmin and Zhang Yuanchun

(School of Business, Sun Yatª²sen University)

Abstract: The legal rules governing the transfer of corporate control include market rule (MR) and equal opportunity rule. Market rule is the primary rule of corporate control transfers in China. This paper suggests that institutional environment has crucial influence on the transaction rule. The same rule under different environment institutes different effect. Accounting for the difference of governance environment, this paper establishes a comparative cost model for analyzing the costs of market rule under different governance environments. Our analyses suggest that under a poor governance environment, the market rule incurs high transaction cost. Improvement of institutional environment may reduce transaction cost and raise efficiency of resource allocation. Based on the data of sales of corporate control in China, we find the evident to support the hypothesis. Our research supports the view that without the coupling of institution environment and rule, the trade will incur high transaction costs, which reduce the efficiency of resource allocation.

Key Words: Corporate Control Transfer;  Transaction  Rule;  Institutional Environment

JEL Classification:G340, K220, D610

Resale Option, Inflation Illusion and the Chinese Stock Market BubblesChen Guojin and Zhang Yijun(Xiamen University)Wang Jing(China Power Finance Co.LTD)

Abstract: The stock bubble is defined as the stock price deviation from its real value which is determined by its future cash flow and discount rate. Stock resale option induced by heterogeneous beliefs about future cash flow and inflation illusion whereby investors mistakenly use normal discounted rates can provide coherent explanations of the bubble theoretically. Using the Chinese A shares data from 1997 to 2007, based on the bubble estimated by dynamic residual income value model, we found that the resale option and the inflation illusion do provide explanation for Chinese stock market bubble, and the resale option has more explanation power. The results coincide with the two basic characteristics of China stock market¡ª¡ªheterogeneous beliefs and restricted short sales.

Key Words: Bubble; Resale Option; Inflation Illusion

JEL Classification:E31, E44, G12, G14

Financial Ecological Environment, the Ownership Nature of

the Ultimate Controller, the Governance Effect of Financing Debts

Xie Deren and Chen Yunsen

(School of Economics and Management, Tsinghua University)

Abstract: This paper explores the relation among financial ecological environment, the ownership nature of the ultimate controller and the governance effect of financing debts by using the debt restructuring data of listed companies during 2001¡ª2004. We document that, (1) Compared with the listed companies located in the area where the financial ecological environment is relatively bad (hereafter, FENVª­-B), the positive relation between financing debt and the probability of

debt restructuring is weaker in the listed companies located in the area where the financial ecological environment is relatively good (hereafter, FENVª­-G). (2) In the FENVª­-B, compared with the nonª²stateª²controlled listed companies (hereafter, NSCEs), the positive relation between financing debt and the probability of debt restructuring is weaker in the stateª²controlled listed companies (hereafter, SCEs). (3) In the FENVª­-G, as to NSCEs, the relation between financing debt and the probability of debt restructuring is negative, but when it comes to SCEs, the relation is reversed to be positive. Our findings suggest that the financial ecological environment and the ownership nature of the ultimate controller have different effects on the governance role of the financing debt in listed companies. As a result, the reform of government objectives, government functions, and the ownership structure of the SCEs is not less important than the improvement of the financial ecological environment.

Key Words: Financial Ecological Environment£» Ownership Nature of the Ultimate Controller£»

 Governance Effect of Financing Debts£» Debt Restructuring

JEL Classification:G190£¬G340£¬G380

The Fluctuations of China¡¯s Energy Efficiency:

Theoretical Explains, Numerical Simulations and Policy Experiments

Wu Lixue

(Institute of Industried Economics,CASS)

Abstract: Based on the HP filtering analysis, the stylized facts and important influence of China¡¯s energy efficiency fluctuations are detected in the article, and then a dynamic stochastic general equilibrium model is developed to describe the mechanism of energy efficiency change in the short run. This simple RBC model depending on the endogenous capital utilization as the key point, together with three exogenous shocks from total factor productivity, energy price and government expenditure, accounts for 81 and 97 percent of volatility of out energy and capitalenergy efficiency during 1978¡ª2006 respectively. And the numerical experiments also show that the composite policy tools can regular the energy efficiency with the less welfare cost than the single one. This means that the diverse efforts to improve the energy efficiency, not only from the trend but also from the cyclical aspect, should be considered more seriously in the future.

Key Words:

Energy Efficiency; Cyclical Fluctuation; Capital Utilization; Policy Experiment

JEL Classification:Q430, E320, D240, E370

ª¦

The Level of Modern China's Financial Development

Yan Hongzhong

(Research Institute for Jinª²merchants Studies, Shanxi University; School of Eco

nomics, Peking University)

Abstract: The rapid development of financial and the formation of a modern financial system are the major characteristics in the process of the economic modernization. Based on the current study, the author discusses the process of financial development and its' structural change in modern China from the quantitative index angle. The article proves that the modern China's rapid financial development was seen from 1921 to 1936, because every index in this time had the rapid enhancement and the optimization. However, due to very low starting point and the time is too short to maintain growth, until 1936, the Chinese finance development's level still fell behind on the whole main capitalist countries more than half centuries.

Key Words: Modern China; Financial Development; Financial Structure

JEL Classification:G100£¬G290£¬N200