CONTENTS

On the Macro-control Objectives of the 11th Five-Year Plan and the Perspectives

     for the 12th Five-Year Plan¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ Macro-control Research Group   (4)

An Economic Analysis of Trade Clearing in RMB between China and ASEAN

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­    Li Shaorong and Li Siguang  (18)

Productivity Effect of International Fragmentation¡­¡­¡­¡­¡­ Liu Qinglin, Gao Yue and Han Junwei (32)

Path Converged Design Application to Production Efficiency of FDI in Regions¡­¡­¡­¡­¡­ Xu Bing (44)

Inflows of Speculative Capital, Expectation of Appreciation, and the Optimal Appreciation Path

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­  Qiu Junfeng (55)

State-owned Enterprises' Government Control Right Transfer

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ Yang Jijun, Lu Dong and Yang Dan (69)

Research on Pricing of Relationship Lending from Big Banks to Small Firms

¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ Deng Chao, Ao Hong, Hu Wei and Wang Xiang (83)

An Informational Consideration on Institution: Theory and Modeling¡­¡­¡­¡­¡­¡­¡­¡­  Xu Wenbin (97)

The Convergence Analysis of Differences of Regional Sectors Economic Growth

       and Energy Intensity¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­ Qi Shaozhou and Li Kai (109)

Driving Factors for Growth of Carbon Dioxide Emissions During Economic Development in China

       ¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­  Wang Feng, Wu Lihua and Yang Chao (123)

Fiscal Transaction, Ideological Constraints and Radical Nationalization£ºThe Political Economics

of China's 1950's¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­Zhang Wei and Wu Nengquan (137)

A Summary for the 2009 International Forum of Public Economy and Its Administration

¡­¡­¡­¡­¡­¡­¡­   Zhang Xin, Lei Genqiang, Tong Jinzhi, Wang Yiming and Zhang Minghong (152)

A Summary for the Forum of Reform and Development after Financial Crisis and the 4th Asian

Economic Cooperation and Innovation Meeting¡­¡­¡­¡­    Ye Dezhu, Jiang Hai and Zhang Jie (157)

On the Macro-control Objectives of the 11th Five-Year Plan

and the Perspectives for the 12th Five-Year Plan

Macro-control Research Group

(Institute of Economics, Chinese Academy of Social Sciences)

Abstract:Our paper mainly examines the implementation of macro-control objectives of the 11th Five-Year Plan and provides the policy suggestions as well as the relevant proof. The paper 1) Retrospects on the directive principles and main objectives of macro-control set by the 11th Five-Year Plan. 2) Presents the implementation of macro-control objectives. 3) Provides the policy suggestions for the economic growth objective of the 12th Five-Year Plan which includes three alternatives: first, set an relatively low objective as before; second, set a objective interval centering on the potential economic growth; or third, set different growth objectives in different years of the 12th Five-Year Plan in order to reflect the growth trend and fluctuations. 4) Offers the measurement and analyses on the above policy suggestions.

Key Words:11th Five-Year Plan; 12th Five-Year Plan; Macro-control Objectives; Economic Growth Objective

JEL Classification:E100, E300

An Economic Analysis of Trade Clearing in RMB between China and ASEAN

Li Shaorong and Li Siguang

(School of Economics, Peking University)

Abstract: This paper constructs a trade model of three entities to investigate the potential welfare effect of the forthcoming currency union between China and ASEAN on the world¡¯s main economies from the perspective of reducing trading costs. Through analysis, we come to the following conclusions: Firstly, the currency union between China and ASEAN will improve the welfare of the main economies in the world; Secondly, ASEAN will experience a larger decline in trading loss and a higher growth in output owing to its lower overall technology level; What¡¯s more, employing RMB in trade clearing between China and ASEAN is a Pareto improvement, because it satisfies the general principle of incentive compatibility for the main economies; Lastly, the superiority of the currency union lies in its geographic advantages and the similar production technologies employed by China and ASEAN.ª¤

Key Words: Clearing in RMB; Currency Union; Trade Loss; Pareto Improvementª¤

JEL Classification:F310£¬F360

Productivity Effect of International Fragmentation

Liu Qinglin, Gao Yue and Han Junwei

(Shandong University)

Abstract: International fragmentation has important impact on the productivity of participating countries. Using fragmentation index conforming to the characteristics of China, this article analyses the impact of international fragmentation on China¡¯s industrial productivity. The results are as the following: China¡¯s participation in international fragmentation has positive impact on industrial productivity; fragmentation of non-processing trade form plays a greater role than that of processing trade form; the effect of international fragmentation on industrial productivity is different for different industries, among which, mid and low-tech industries have the most obvious effect, subsequently followed by high-tech industries, and the last one is primary products, labor and resource-intensive sectors; fragmentation with developed countries has greater impact on industrial productivity than that with non-developed countries.ª¤

Key Words: International Fragmentation; Outsourcing; Industrial Productivityª¤

JEL Classification: F210£¬F430£¬O140

Path Converged Design Application to Production Efficiency of FDI in Regions

Xu Bing

(Research Institute of Quantitative Economics, Zhejiang Gongshang University)¡¼WTBZ¡½

ª¤ª¤

Abstract: Wei and Wu (2002) obtain two seemingly contradictory conclusions that foreign direct investment contributes to 90 percent and less than 20 percent of regional discrepancy between Eastern and Western region, respectively. Illuminated by the idea of Li Zinai£¨2008£©that the econometric population model specification should satisfy the rules of general and sole, this paper establishes Path Converged Design approach for model specification. With application of the approach, the study clarifies the mistake understanding of Qian (2007) to the studies of Wei (2002) and Wu (2002). Furthermore, the study finds out the results of Wei and Wu are the different effects of FDI on growth through capital factor and technical level respectively, implying the solution to reduce growth disparity between regions relies on whether FDI absorption can shift the crowdª²out effect to crowdª²in effect on domestic capital rather than on the technical effects it brings about. The approach in this study is also an alternative solution to three problems in theoretical modeling in endogenous growth proposed by Fine (2000).ª¤

Key Words: Foreign Direct Investment; Regional Growth Disparity; Path Converged Design; Capital's Crowdingª²in and Crowdingª²out Effectª¤

JEL Classification: F210, O180, C100

Inflows of Speculative Capital, Expectation of

 Appreciation, and the Optimal Appreciation Path

Qiu Junfeng

£¨Central University of Finance and Economics£©

Abstract: This paper examines the optimal appreciation path when speculative capital is endogenously affected by the appreciation policy. We examine two cases. The first is complete information and speculators know the target of the central bank. The central bank should appreciate quickly. Slowing down the appreciation will only attract more capital inflows. The second is incomplete information and speculators do not know the target. They rationally revise their beliefs based on the policy in every period. The model shows that incomplete information tends to slow down the appreciation process. A central bank with a high target may mimic the policy of a central bank with a low target so as to maintain low expectation. While a low target central bank may want to use a lower speed to signal the true information. A theoretical contribution of the paper is to show how to optimally design a dynamic policy when policies have the function of disclosing information.ª¤

Key Words: Exchange Rate£» Appreciation£» Capital Flows£» Asymmetric Information ª¤

JEL Classification: D82, F31, F32

State-owned Enterprises¡¯ Government Control Right Transfer

Yang Jijun, Lu Dong and Yang Dan

(Southwestern University of Finance and Economics)

Abstract:¡¼WTBZ¡½Focusing on state-owned enterprises¡¯ government control right transfer events from 2003 to 2007, the article studies the Government¡¯s motives of control right transfer as well as the market response and the operating performance difference caused by various types of control transfer. The research draws the following conclusions: (1)In recent years, political motives such as concerns for size and strategic industry are the main motives of property rights reform of state-owned enterprises, while economic motives are not obvious; (2)Market gives positive evaluation to state-owned enterprises¡¯ government control transfer events, but since investors can make a rational anticipation to the government control transfer driven by political purposes, thus the short-term cumulative abnormal return brought by privatization is not significantly higher than other types; (3)Privatization of enterprises improves operating performance effectively, while the control transfer in which the ultimate control right still retained in the government does not lead to significant performance improvement. Although the privatization has improved the state-owned enterprise¡¯s ex-post performance, the government has not shown any tendency to privatize the enterprises with poor performance out of the concern of ex-ante political concerns. It is a difficult dilemma which Chinese government faces in the progress of state-owned enterprises¡¯ reform. ª¤

Key Words: State-owned Enterprises; Government Control Right; Motives; Privatization; Performanceª¤

JEL Classification: G34,G38

Research on Pricing of Relationship Lending

from Big Banks to Small Firms

Deng Chao, Ao Hong, Hu Wei and Wang Xiang

(Business School of Central South University)

Abstract: Nowadays, the external environment of big banks and small firms has changed greatly. Big banks need to further exploit the market of small firms and small businesses also need comprehensive financial service offered by big banks. Deep into the symbiosis between big banks and small businesses, this paper finds that the relationship lending is the best way to connect big banks and small businesses, and that big banks have more advantages to grant relationship lending. We also find that the long-term cooperation between big banks and small businesses can bring big banks potential earnings-relationship rents. Based on the implicit contract of relationship lending, we formulate the pricing model of relationship lending, which can distribute the rents of relationship lending and realize the revenue compensation spreading periods. At last, we calculate the rents of relationship lending with the data of some small businesses from one big bank between 2004 and 2007, and demonstrate the process of pricing the relationship lending.ª¤

Key Words: Relationship Lending£» Big Bank£» Small Firms£»Pricing Model

JEL Classification: E47£¬G21£¬M21

An Informational Consideration on Institution: Theory and Modeling

Xu Wenbin

(School of Economics, Xiamen University)

Abstract: The paper reconsiders and models institution on the base of information theories. The paper thinks that institution should be viewed as a codification system in the first place, that when this system becomes common knowledge, the institution would function as a restriction mechanism on the group, that when this system becomes over-timing, the institution would have the characteristic of culture. The paper then tries to model the theory above. Based on a barter model, the paper introduces an institutional information variable, and proves that when this institutional variable goes close to 1, which means it is close to common knowledge, some stable equilibrium would always exist; and when the variable goes close to 0, the existence of equilibrium would have to depend only on a strong and timely punishment mechanism; and when the exchanges happen between two or more groups, the incentive of getting goods itself would be enough to lead to the so-called institutionalization.ª¤

Key Words: Institution; Information; Codification; Modelingª¤

JEL Classification: B15, C62, E11

The Convergence Analysis of Differences of Regional Sectors

Economic Growth and Energy Intensity

Qi Shaozhou and Li Kaiª¤

(Wuhan University)

Abstract£ºThis paper analyzes the relationship of energy intensity differences and productivity differences between the Eastern and Western region in China from 1997 to 2006. Based on lagged adjusted panel data model, we estimate empirically the convergence of energy intensity with productivity convergence of the province and six major sectors(agriculture, industry, construction, transportation / post and telecommunication, wholesale and retail trades and catering, other sectors of the tertiary industry) respectively. Our findings are as follows: Firstly, there is productivity convergence in the six sectors and province, of which the construction sector has the fastest convergence speed and the industry slowest. Secondly, the overall energy intensity gap between the eastern and western provinces is converging, that is, the energy intensity difference decreases as the productivity gap narrowing, but the convergence speed of the energy intensity is slower than that of productivity. Thirdly, the energy intensity differences for six sectors between the eastern and western provinces are differences. Agriculture, industry and construction show convergence and other sectors show divergence. Fourthly, there are great differences of the energy intensity convergence between each sector and the whole within an individual province in the western region, which suggests that the western province should adopt sectoral policy to promote its whole energy efficiency.ª¤

Key Words£º Convergence£»Sector£»Energy Intensity£»Panel Data Analysisª¤

JEL Classification£ºQ430, R110

Driving Factors for Growth of Carbon Dioxide Emissionsª¤

During Economic Development in China

Wang Feng^1,2£¬Wu Lihua² and Yang Chao³ª¤

(1. China Center for Energy Economics Research at XMU; 2. Department of Finance, School of Economics, ª¤Xiamen University; 3. Department of Finance, School of International Trade and Economics, UIBE)

Abstract£ºTo explore the driving factors in growth of CO₂ emissions from China¡¯s energy consumption has theoretical and practical significance for making emission reduction policies, developing low-carbon economy. In this paper, the logarithmic mean Divisia index decomposition method is used to decompose the growth rate of China¡¯s CO₂ emissions into the weighted contribution from 11 kinds of the driving factors during the period 1995 to 2007, furthermore six periods in the 13 years and each driving factors are studied respectively. The conclusions are: (i) China¡¯s CO₂ emissions experienced a 12.4% average annual growth rate during the period 1995 to 2007.The main positive driving factors are per capita GDP, number of vehicle, total population, economic structure and average household income. The respective average contributions are 15.82%, 4.93%, 1.28%, 1.14% and 1.11%. The negative driving factors are energy intensity of production sector, transportation routes length per vehicle, household energy intensity. The contributions are -8.12%, -3.29%, and -1.42%.(ii) Per capita GDP growth is the strongest driving force for the growth of CO₂ emissions, and China¡¯s CO₂ emissions closely relates to the economic development and people¡¯s living standard. (iii) A major driving factor for decline of China¡¯s CO₂ emissions during the period 1997 to 1999 is the energy efficiency improvement in the industrial sector, but the underlying reason may be technological progress driven by substantial increase in R&D expenditures and changes in ownership structure of industrial enterprises. (iv) The decline of energy intensity in production sectors is the most important factors for inhibiting the growth of CO₂ emissions, thus reducing the energy intensity of production sector is a key tool to achieve CO₂ emission reductions.

Key Words£ºCO₂ Emission; Driving Factors; Factors Decompositionª¤

JEL Classification£ºQ43, Q56

Fiscal Transaction, Ideological Constraints and Radical Nationalization£ºThe Political Economics of China¡¯s 1950¡¯s

Zhang Wei and Wu Nengquan

£¨School of Business, Sun Yatª²sen University£©

Abstract: After the founding of P.R.C in 1949, the central authority compromised between the socialist ideology and institutional constraints by implementing the new-democratic economy which consists of both public sector and private one. But the policy practice during 1949¡ª1953 rapidly revised the central authority¡¯s attitude towards the new-democratic economy. This led to a radical transformation to socialism. Contrast to the gradual privatization after 1978, the radical 1950¡¯s exhibited a symmetrical structure, such as nationalization vs. privatization, radicalism vs. gradualism, idealism vs. pragmatism. We argue that the radical nationalization in 1950¡¯s is a spontaneous reaction when a traditional state whose ¡°financing-governing¡± capacity trapped in a low level equilibrium encountered severe external threats.

Key Words: Fiscal Transaction; Ideological Constraint; Nationalization; Property Rightsª¤

JEL Classification: H600, P200