The Rise of Public–Private Partnerships in China: An Effective Financing Approach for Infrastructure Investment?

The rise of public‐private partnerships (PPPs) in China has spurred heated debates about their purpose and effectiveness. This article traces the fluctuation of China's PPPs over several decades and finds that PPPs have played a supplementary role in China's infrastructure investment, as a response to the pressures of fiscal shortfalls and government debts. The resurgence of PPPs in recent years aims to bridge the infrastructure gap and alleviate ballooning local debts. These expectations, however, are hard to realize. China's PPPs mainly involve state‐owned enterprises and place increasing financial burdens on the government. The central government has taken measures to attract private sector investment to mitigate the financial risk, but the prospects for PPPs remain unclear.     

China in the dynamic Asia‐Pacific region

The Chinese economy has experienced spectacular growth in recent years. Despite its huge trade and investment potential, China today remains an insignificant player in the world economy. But the emerging Chinese economy has already profoundly changed the pattern of trade and investment flows in the Asia‐Pacific region. Over the years, the Chinese economy has been steadily integrated with its neighbouring economies of Japan, the NIEs and ASEAN, which are all well known for their dynamic growth. The growing integration of the Chinese economy, with its huge economic potential, into the Asia‐Pacific region will enhance the region's prospects for further growth. Most Asia‐Pacific economies take a positive view of China's increasing economic involvement in the region as a new source of economic opportunity. It is in such a regional rather than the global context that the immediate effects of China's recent economic upsurge should be gauged.     

China–ASEAN economic relations after establishment of free trade area*

This paper aims to contribute to an understanding about the major changes in China–ASEAN economic relations after establishment of the China–ASEAN Free Trade Area (CAFTA) in 2010. First, China's merchandize trade balance with ASEAN has shifted from deficit to surplus since 2012. This reflects China's improving comparative advantage in manufacturing production vis-à-vis ASEAN as a whole. Second, with China's wage hike, ASEAN investors can no longer take advantage of China's cheap labor force. Concurrently, China's investment in ASEAN has been increasing and become more diversified, ranging from energy to manufacturing and services. Singapore has remained the most important investment destination for Chinese investors and the largest foreign investor in China among ASEAN countries. Third, China has comparative advantages in providing construction, telecommunications, computer and information services and other business services to ASEAN. On the other hand, ASEAN, led by Singapore, has opportunities in the financial services and tourism markets in China. Finally, the development of economic regionalism, notably the Regional Comprehensive Economic Partnership and Trans-Pacific Partnership, will remain critical for the CAFTA's relevance in regional economic integration, as well as China–ASEAN relations in the future.     

China's engagement in South America and Africa's extractive sectors: new perspectives for resource curse theories

Abstract

China's engagement in South America and Africa's extractive sectors has increased significantly in the last decade. How comparable are the African and South American cases from a developmental perspective? This article explores resource curse theories, arguing that the ‘curses’ often associated to extraction are historically produced dynamic processes that need to be reevaluated in light of China's direct and indirect impacts on resource-endowed countries. It elaborates a framework to compare the developmental dynamics entailed by China's involvement in the South American and African extractive sectors, distinguishing between external, internal and intrinsic ‘curses’. The article holds that China's growth and investment have strengthened the position of resource-endowed countries in the international economy, revitalizing resource industries and improving terms of trade for commodities. Concurrently, the expansion of extractive activities has brought about increased environmental and economic sustainability challenges. Divergences between the African and South American cases are best observed at the national levels, where China's non-interventionist approach has different developmental implications depending on internal trends within investment host countries.     

‘Land grabbing’ or harnessing of development potential in agriculture? East Asia's land-based investments in Africa

Abstract

Large-scale foreign investment in Africa's abundant but largely underutilized arable land has been criticised by international NGOs and social movements as ‘land grabbing’, which limits access of smallholder farmers to land, deprives local people of their livelihoods and threatens local and national food security across the continent. By way of contrast, many host governments and some leading international development agencies regard land-based investments as beneficial for development in terms of providing the necessary capital and technological know-how for modernising the region's neglected agriculture including take-off in agribusiness and agro-industrialisation, which is vital to much needed economic diversification in many African countries. East Asia's participation in the global land rush on Africa is examined from the standpoint of these two different perspectives: while China's growing presence and involvement in trade and investment in mining, energy and infrastructure in Africa is well known, less recognised is its involvement and those of other East Asian countries such as South Korea, Malaysia, Singapore and Vietnam in agriculture through large-scale land acquisitions. The development consequences and policy implications of these foreign land-based investments are analysed from a political economy perspective, which identifies motives, interests and benefits of the different actors and addresses the question of governance in terms of transparency and appropriate institutional arrangements to safeguard land rights and food security. In the bigger picture, the paper argues that the negative consequences of land grab has to be seen alongside the benefits flowing to Africa from growing economic relations with China and other dynamic East Asian economies and learning from the development experiences of those countries. African countries however need to re-assess the current approach and relationship with foreign land-based investors and decide how best this trend can be used to forward their economic and social agendas.     

Acting one way and talking another: China's coercive economic diplomacy in East Asia and beyond

Over the last two decades, China has experienced one of the most dramatic and sustained periods of economic growth in world history. China's use of economic statecraft provides an important venue in which to examine the role of unacknowledged ‘coercive diplomacy’ within the context of China's ‘peaceful rise discourse.’ In contrast to Western countries, which have overtly used sanctions and other forms of economic coercion, China has publicly denied any such policies while at the same time quietly pursuing them. China's denial of using coercive economic statecraft has muted the reactions of neighboring publics and government, but it cannot entirely forestall them. Without seriously undermining China's ‘peaceful-rising’ image, a more explicit statement from Beijing regarding its coercive economic measure could provide deterrence and assurance to China's neighbors in resolving the disputes. This article first surveys existing literature on economic statecraft focusing on the coercive aspects of such strategies. Second, it presents an in-depth case study on how China uses economic leverages over its neighbors in East Asia: North Korea, Japan, and the Philippines. Finally, it highlights the limits of China's economic statecraft within the constraints of China's ‘peaceful rise’ discourse. It concludes with implications for Asian politics and beyond.     

Response and responsibility: China in East Asian financial cooperation

Abstract

China's behaviour in East Asian financial cooperation has overall changed from passively responding to external pressures to taking proactive initiatives, which are highlighted by Chinese elites as evidence of a sense of responsibility. China has taken varied positions towards proposals for Asian financial regionalism, from ‘silent’ objection, to lukewarm or superficial support, to enthusiastic participation and substantial contribution, and this variance has not always taken place in a chronological order. Despite much speculation over the trajectory of China's role in East Asian regionalism, there has not been a study focused on China's policymaking towards East Asian financial cooperation. Therefore, this paper fills the gap by analysing the factors and policymaking processes that have led to those varied positions. It argues that China, recognising the momentum in the region to enhance cooperation, has replaced the blunt dismissals of proposals, particularly those from Japan, with a more subtle approach that is aimed at ensuring China's influence and promoting the image of a responsible great power; that the extent to which it can contribute to this process is mainly constrained by its economic conditions, particularly the financial institutions.     

Relationship between R&D grants,R&D investment,and innovation performance: The moderating effect of absorptive capacity

The main sources of regional innovation investment in China are government direct investment and indirect grant. The positive relationship between innovation investment and regional innovation performance has been recognized by scholars, but the relationship between direct investment, indirect grant, and innovation performance and the mechanism of their impact on innovation performance need to be clarified. This study uses 5‐year data from China regional innovation, using multiple regression analysis, found that government grant and actor's investment can facilitate performance, but the government grant for innovation investment has a crowding‐out effect, absorptive capacity positively moderated the relationship between Research and Development (R&D) and innovation performance but play a negative moderate role between government grant and innovation performance. On the basis of the empirical result, China's regional governments need to focus on institutional and environmental development in the future, pay more attention to the structural problems of innovation input, promote flow of talents orderly, and rationally build regional knowledge chain, so as to enhance efficiency of innovation more effectively.     

Fiscal Decentralization,Flat Administrative Structure,and Local Government Size: Evidence and Lessons from China

This paper examines the effects of fiscal decentralization and flat administrative structure on local budget size and program outlays. We test three related theoretical hypotheses in China's adoption of province‐over‐county scheme of financial administration. We provide evidence that both decentralization of expenditure and decentralization of revenue increase the size of local budgets; that the impact of the former far outweighs that of the latter with local budgets on a rising trajectory; and that discretion grants localities more means to increase their budget. These results show that as China's reform deepens the proportion of local outlay on administration declines because of more local discretion from eliminating the prefecture bypass between the province and counties. But neither decentralization nor increased local discretion has allocated more local resources for education, and both contribute to increasing outlay on economic development. The paper formulates tentative policy recommendations that carry potential application for other countries. Copyright © 2016 John Wiley & Sons, Ltd.     

China's aggressive ‘periphery diplomacy’ and South Korean perspectives

In this special section, the present article reviews South Korean perspectives on China's ‘periphery diplomacy’ with a focus on Chinese behaviour with respect to the East China Sea maritime territory and the Asian Infrastructure Investment Bank (AIIB). By analysing research papers published by various Korean research institutions and academic journals, this article demonstrates that most Korean scholars hold that as long as China's growth goes on, the tensions between the US and China are likely to intensify. The article also shows that one of the primary concerns of South Korean scholars lies in the question of how South Korea should respond to changing regional orders and a rising China. The article argues that South Korea's strategic dilemma is reflected in a regional structure in which competition between two great powers has recently forced the periphery to impose bilateral ties on.     

China's security agenda after the cold war

The end of the cold war has changed China's basic perception of world politics and its conception of national security. In the cold war era, Chinese leaders tended to view national security from the perspective of global balance of power and China's strategic relations with the two superpowers. It was in Beijing's security interests to maintain a comfortable position in a strategic triangular relationship with the Soviet Union and the United States. When the Soviet Empire and the East European communist regimes collapsed, the structure of the postwar international system dissolved, and the old parameters for Beijing's security strategy disappeared. The Chinese leadership suddenly found itself in a totally new world in which China needed to reorient and redefine its security strategy on a new strategic axis.

Beijing's security strategy after the cold war is redefined by its domestic priorities, growing foreign economic relations, the new security environment in Asia, and concerns over territorial disputes. In a sense, the myopic conception of security based on war and peace is fading away. Beijing's thinking on national security becomes more inclusive, diverse, and complicated. The nature and intensity of external threats has changed. China's growing economic ties with the outside world have redirected Beijing's attention to economic interests and security. The Chinese leadership realizes that its security is affected not only by the military forces of other countries, but also by political, economic, societal, and environmental factors in international relations Beijing needs to employ both traditional military defence and non‐military actions to safeguard its territorial integrity and to realize its full capacity in world affairs.

The purpose of this paper is to analyse China's security agendas after the cold war. It first examines the impact of the end of the cold war on China's thinking on national security, then discusses Beijing's threat perception and changing defence strategy. This is followed by an examination of domestic stability considerations and economic interests in Beijing's security strategy. Finally, it discusses the implications of China's growing power for regional security.     

Going out: China's food security from Southeast Asia

Abstract

China's new five-year plan recognised the looming insecurity in its agricultural sector. On the one hand, the country faces a diminishing arable land supply; on the other, a large population with rapidly increasing diets. Although large-scale trade and investment in this sector has been developing since the mid 1990s between China and a variety of African states, it is a relatively new addition to the more established China-Southeast Asian economic relationship. This article seeks to explore the impact that China's agricultural investments are having on two Southeast Asian countries – Indonesia and the Philippines – where there has been a marked increase in activities by Chinese firms in agricultural produce. The findings from these two case studies – and a series of smaller studies of the situation in other regional states – are used as a benchmark to clarify some of the consequences of China's agricultural investment from Southeast Asia for regional food security.     

Toward a ‘harmonious society’ through corporate social responsibility

The objective of this paper is to examine how corporate social responsibility (CSR) practices of foreign multinational enterprises in China contribute to China's national priorities, by discussing the relationships between CSR and the building of a ‘harmonious society’ in China. This paper is based on personal reflections, extensive literature review, and 8 years of experiential field work in China by the author. Many CSR programs are found to superficially complement China's harmonious society policy. Only four exemplars out of 20 multinational enterprises surveyed are committed to fostering green growth, improving livelihood, developing outwardly into the west, and promoting a general integration of Chinese business into global markets through social innovations and collaborative projects. The paper posits that it is possible to use CSR as a change agent in China when enlightened public concerns are brought back to business operations through the involvement of non-government organizations, local government, and local citizens and a greater degree of transparency of information. Copyright © 2014 John Wiley & Sons, Ltd.     

India's security partnership with Singapore

Abstract

In recent years, India and Singapore have developed a strong bilateral security and economic partnership that has assumed a central position in India's strategic engagement in Southeast Asia. Having sought strategic engagement with India for many decades, Singapore has now successfully positioned itself as India's leading political partner and economic gateway to the region. At the same time, India and Singapore have actively pursued close defence ties, including frequent joint training and the assumption of an active maritime security role by India in Southeast Asia. The recent decision by India to allow the Singapore air force and army to operate long term training facilities on Indian territory represents a significant development in Indian strategic practice and may presage a more permanent Indian security presence in East Asia. This article will examine these developments and consider to what extent the emergent security relationship between India and Singapore should be seen as a desire to balance China's growing economic and political dominance of the region and to what extent it reflects a ‘natural’ strategic sphere for India stretching from Aden to Singapore and beyond into East Asia.     

State Capitalism,Chinese‐Style: Strategic Value of Sectors,Sectoral Characteristics,and Globalization

Scholarship on the institutional foundations of Chinese‐style capitalism emphasizes the impact of liberal reformers and China's participation in international organizations, devolution of economic decision making and local experimentation, and the proliferation of market actors to explain their origins. This article investigates distinct patterns of sectoral variation in market governance in China today, examining the extent and scope in which dominant forms of market coordination and distribution of property rights reflect variation in national goals of economic power, security, and growth; structural sectoral attributes; and the path‐dependent effects of institutional arrangements. The reinforcement of state coordination and the dominance of state ownership and shareholding in strategic industries, such as telecommunications, and the relinquishment of state control and the dominance of market stakeholders in nonstrategic sectors, such as textiles, characterize the rise of bifurcated capitalism in the period before and after China's accession to the World Trade Organization.     

Interjurisdictional Competition and Intracity Fiscal Disparity across Chinese Prefectural Cities

Fierce competition among county‐level governments has substantially increased disparities in public service provision and housing markets across urban China. The role of the changing intracity administrative structure deserves scholarly, attention in this process. Building on an interdisciplinary literature of public choice and cadre promotion theory, we propose that interjurisdictional competition enlarges the intracity fiscal disparity under China's transitional administrative and fiscal systems. Results from fixed‐effect panel data modeling confirm that cities with higher level of interjurisdictional competition are associated with higher intracity fiscal disparity. This study demonstrates how transition and decentralization of the centralized fiscal system have long‐term, intended and unintended, impacts on fiscal inequality and urban stratification. With continuous urban sprawl, jurisdictional annexation, and large‐scale urban‐to‐rural migration, our study suggests that policies attempting to equalize public service distribution within cities need to consider the administrative structure at the local and regional levels.     

China's defence industries

Abstract

The implementation of foreign direct investment (FDI) policies in China shows that domestic considerations were not the only factors shaping the course of China's opening up to the world economy. Foreign response was often taken into account as the Chinese government felt its way through the process of reform. Focusing on Japanese FDI in China, this article explores the liberalization of China's FDI regime and traces the impact of China's negotiations with and accommodation to pressure from foreign business and governments.     

Conceptualizing economic security and governance: China confronts globalization

Abstract

With the expansion and deepening of globalization, as well as China's entry into the World Trade Organization, the nexus between economic growth and national security has gained prominence in China since the mid-1990s. How to ensure socio-economic security while maintaining its robust economic growth is now the most serious concern of the Chinese Communist Party (CCP) and the Chinese government. This paper addresses three questions: first, it explores why and how the transformation of economic growth and national security as two separate logics to a single domain evolved conceptually over the past two decades in China; second, what kinds of insecurities are generated by China's robust economic growth coupled with the expansion and deepening of globalization, and in which way and to what extent do they challenge China's government; third, what kinds of mechanisms or policy instruments have been adopted by China's government to address emerging economic insecurities while maintaining robust economic growth. The paper concludes that in the case of China, globalization has posed new challenges to economic security, but given that economic insecurity has its particular salience in individual countries, national institutional adjustment or adaptation becomes increasingly important for each country to govern in the interests of economic security while maintaining economic growth.     

The changing political economy of Taiwan‐Southeast Asia relations

This paper examines the possibility that the United States could ‘capture’ the Asia‐Pacific Economic Cooperation (APEC) forum and use it to impose America's economic agenda on the region. It discusses Washington's ability to shape the choices of APEC's East Asian members at APEC negotiations to reflect US interests through employing its military, economic, cultural, and ideological resources as instruments of leverage and influence. While interdependence constrains Washington's use of military and/or economic leverage to influence the choices of APEC's East Asian members, the complex bargaining and consensual decision‐making features of APEC further prevent Washington from imposing its agenda on APEC. On the other hand, Washington's capture of APEC could be facilitated if East Asian policy‐making elites were socialized through the APEC process to accept American norms. This would tend to lead to preference convergence since the values of both the US and East Asia would coincide. The analysis suggests, however, that American norms are unlikely to prevail within APEC in the near to medium term primarily because APEC's East Asian members consider East Asian norms to be superior. American culture and especially ideology are not sufficiently attractive to East Asian elites and are thus unable to be used as instruments of influence. For these reasons, the paper concludes that the United States will find it difficult to impose its economic agenda on the region through APEC.     

Think tanks in transitional China

There is a growing interest in China's think tanks within and outside China. But many questions remain to be answered. How have their roles changed over time? Why are some think tanks more active than others in some areas, but less so in others? To answer such questions, the authors classify China's think tanks according to organisational structure, as a key explanatory concept. A longitudinal review shows that since the 1970s the organisational structure of think tanks has evolved gradually from semi‐official to civilian, with the evolving structures playing different roles and complementing one another. Following analysis of four case studies of China's think tanks, two of which are semi‐official and two of which are civilian, the article draws a picture of the complex relationship between organisational structure, strategy and behaviour of China's think tanks. Copyright © 2007 John Wiley & Sons, Ltd.