MARKET WATCH

For two straight quarters, China has replaced Japan as the world’s second largest economy, but experts believe the Chinese economy is not without its flaws. The country remains a favorite destination for foreign investors as FDI pours in. China remains the largest foreign holder of U.S. Treasury securities. The auto market continues to burst with vitality as vehicle sales pick up across the nation. Chinese steelmakers are facing some serious headwinds as costs rise eats into their profits. PC giant Lenovo fares well, with quarterly profits soaring.     

Ready for RMB Reform

Now that the global recovery has taken hold and with the Chinese economy gaining ground,China's central bank-the People's Bank of China-has decided to proceed with reform of the renminbi(yuan)exchange rate regime and improve the flexibility.The central bank's spokesman on June 20 addressed a number of concerns over the issue in a statement posted on its website.Edited excerpts follow:     

China's WTO Membership and the Non-Market Economy Status: discrimination and impediment to China's foreign trade

This article provides a Chinese perspective on the terms of China's WTO accession, highlighting the negative impact of some discriminatory conditions that China accepted in order to join the WTO on its foreign trade and global competitiveness in the last decade. The author uses the non-market economy status of China as a case study to support the argument that these discriminatory conditions imposed on China upon accession have not only impeded the healthy development of China's foreign trade, but also violated the ‘non-discrimination’ principle of the WTO.     

MARKET WATCH

In an attempt to boost liquidity, China’s central bank decreases the reserve requirement ratio for the first time in three years. The November purchasing managers index tumbles below the boom-and-bust line of 50 percent, indicating downside growth risks. As they tighten delisting rules on the growth enterprise board, China’s securities regulator tries to protect interests of investors. The Ministry of Commerce has released a development outline for the service trade sector. Chinese shipbuilders face a bumpy road ahead due to weakness in demand. Credit card fever is sweeping through the country, though debt risks still loom large.     

MARKET WATCH

Major Economic Figures In January 2010 CPI In January,the consumer price index(CPI),a main gauge for inflation,rose 1.5 percent from a year earlier,the highest growth in nearly two years.     

Modern Take on a Master

Beijing Review:Why did you decide to translate The Analects?How long did it take? Lin Wusun:To be frank,when I was young,I had little interest in Chinese philosophy.     

Touching stones to cross the river: Evolving telecommunication policy priorities in contemporary China

This article, drawing on fieldwork in China, charts the ascendancy of Lian Tong (China Unicom), the first competitor to the incumbent Ministry of Posts and Telecommunications. Commencing with an historical overview of Chinese telecommunications, it suggests that Lian Tong's formation has been contingent upon support from key constituencies within China's political elite. The company's emergence mirrors technological trends and user pressure evident globally. It embodies the drive towards market liberalisation now evident within the Peoples’ Republic. While the Chinese policy community is sensible of the need to make haste slowly toward the goal of telecommunications competition — ‘touching stones to cross the river’ in the contemporary aphorism — the success of this ‘policy experiment’ depends both on the subtleties of Chinese politics and the construction of bold new regulatory frameworks. Lian Tong's genesis is symbolic of developments in the telecommunications sector, and maybe also more generally in the Chinese economy.     

中国交通的可持续发展(上)

交通运输是国民经济中基础性、先导性、战略性产业和重要的服务性行业,是可持续发展的重要支撑。新中国成立以来特别是改革开放以来,在中国共产党领导下,中国的交通运输秉持与经济社会协调发展、与自然生态和谐共生的理念,以建设人民满意交通为B标,自立自强,艰苦奋斗,取得了举世瞩目的发展成就,从根本上改变了基础薄弱、整体落后的面貌,为经济社会发展提供了有力保障,走出了一条中国特色交通发展之路。     

MARKET WATCH

China's Currency China's renminbi exchange rate reform will be a gradual process,but its impact on the markets has already been felt. The central parity of the renminbi (yuan)to the U.S. dollar reached 6.7980 on June 22, a substantial appreciation of 0.43 percent over the previous day, the highest since China unpegged the yuan to the U.S. dollar.     

PROGRESS DESPITE PROBLEMS

China focuses on building a stronger financial system to support the real economy Compared with the progress and status of China's economy and trade, its financial system seems to be much less impressive and powerful. Many analysts regard it as a major vulnerability in China's economic development. The basic facts, however, underscore the success of the system and its global importance today: China has the second largest stock market and bond market in the world。     

MARKET WATCH

Cooling the Rush China has pushed all the buttons to tame the red-hot property market where price surges are bringing worries of a bubble burst to a boiling point.     

China and Asian regionalism: Challenge and policy choice

Regionalism has become an interesting phenomenon in Asian international relations. Driven by fast growing trade and investment, Asian countries have developed variegated patterns of economic co‐operation and a complex level of interdependence among themselves. Although the growing Asian regionalism is very much an economics‐driven process, it has profound impacts on regional political organization. This analysis examines Beijing's changing attitudes toward Asian regionalism and its policy choice in the regional economic integration. It is argued that the integration of the Chinese economy into the regional structure is promoted by the government as well as driven by market dynamics. Although Beijing has let the Chinese economy develop into the regional ‘flying geese’ structure, the best policy choice for China, as many Chinese scholars have argued, would be a three‐circle strategy of integrating into the world economy and a strategy of ‘market for technology’ in regional economic co‐operation. This analysis also discusses the regional political obstacles impeding co‐operation across national borders. It is argued that healthy bilateral relations and more political will toward regional multilateralism on political issues would be instrumental for future regional prosperity and stablity in Asia.     

Made in China vs. Made by Chinese: Global Identities of Chinese Business

The interaction between two perspectives—China as a world factory and Chinese business knowledge—has been complicated by the ever greater tensions generated from the national—China—and the transnational actors—Chinese—in understanding the economic driving force behind the real meanings of the rise of China. The construction process of the rise of Chinese economic power puts the state in direct contact with regional and global economic/political changes. On the one hand, Chinese business knowledge, identities, economic and political interactions also give rise to the notion of network building and sub-regional development, which help transcend country-specific relations. On the other hand, the notion of the rise of China is still being re-constructed through the interplay between regional and global political economy.     

WB Advice

Despite the negative impact of the European debt crisis,the global growth outlook remains favorable,largely because of the strength of emerging markets.China,as the largest emerging economy,has contributed handsomely to the global economic recovery.In China,after a rapid start at the beginning of the year,growth is likely to ease,mainly because of a partial normalization of the macro policy stance and recent property measures,said the World Bank in its latest China Quarterly Update released on June 18.Edited excerpts follow:     

MARKET WATCH

Inflation continues to stretch policymakers’ nerves as consumer prices continue running high. Import growth has outpaced export,a reflection of China’s trade rebalancing.Consumption and investments are holding up, putting a solid floor under the slowing economy.Woes of the U.S. economy have sent a shiver throughout the globe, including China’s stock markets. The gloomy auto market has shown signs of recovery.     

MARKET WATCH

Consumer Efforts If it is true China has fully shaken off the economic downturn,consumption deserves much of the credit.     

由主权负债危机引发对地方政府过度负债的思考

世界金融危机爆发后,中国经济经过结构调整,内生动力不断增强并带动区域经济的快速增长。与此同时,地方政府超常规融资积聚的风险隐患也在迅速增加,巨额的地方政府负债极有可能成为诱发新一轮危机的重要因素,成为制约中国经济发展的主要瓶颈。弄清地方政府过度负债的主要风险,衡量地方政府的负债能力,界定风险转变为危机的临界点,明确地方政府适度负债规模水平是稳妥地化解地方政府过度负债风险,防范危机的重要途径。     

China's Sovereign Wealth Funds: origins,development, and future roles

China has established two of the world's newer large sovereign wealth funds (SWFs): the official China Investment Corporation (CIC), and the non-official and less transparent State Administration of Foreign Exchange (SAFE) Investment Company (SIC). Both provide alternative investment opportunities for China's exploding foreign exchange reserves, at US$2.4 trillion at the end of 2009, the largest in world history. This paper will address how China has accumulated its huge and growing foreign exchange reserves, and what roles these reserves, until 2007 managed only by the State Administration of Foreign Exchange (SAFE), have played in the establishment and development of China's two new SWFs. We will look specifically at why China's foreign exchange reserves have developed, and how the new SWFs are a part of broader efforts to provide investment alternatives for China's ballooning foreign exchange surpluses, particularly in light of the inflow of ‘hot’ foreign speculative funds. We will then point out some of the difficulties for China's financial officials of SWFs as they try to pursue multiple and sometimes competing goals, set by boards of directors representing different bureaucratic and economic interests, all within the context of a general lack of transparency and a rapidly growing economy. Finally, we will present our conclusions about the future roles of the two SWFs as well as of the policies being developed to decentralize foreign exchange reserve holdings while at the same time not slowing the growth of China's foreign trade surpluses, nor its foreign direct investments, nor its overall economic growth. We will also examine the effects of US-promoted Chinese currency appreciation on the future of China's foreign exchange reserves and its sovereign wealth funds.     

The China challenge: Theoretical perspectives and policy implications

Over the past few years there has been a heated debate in the West over the potential challenge of an increasingly strong and assertive China to the Asia‐Pacific region and to the world in general. This article offers a systematic analysis of the debate on China's emerging role in the international system and its security implications from the theoretical perspectives of realism and liberalism. While both international relations theories have provided valuable insights, neither of them alone is able to unravel the puzzle of whether a prosperous and powerful China will be a major force of stability or a threat to international peace. Drawing on the theory of trade expectations, this article shows the conditions under which high interdependence between China and its trading partners will lead to pacific or belligerent Chinese behavior. If Chinese decision‐makers’ expectations for future trade are high, they will be less likely to use force to deal with unresolved disputes with neighboring countries. If, however, they have a negative view of their future trading environment, they will be likely to take measures, including military actions, to remove any obstacles that might forestall the pursuit of great‐power status. For the moment, China's expectations of future trade are by and large optimistic, but there is evidence of growing Chinese suspicion of a Western ‘conspiracy’ to contain China which may alter Beijing's future perceptions. To ensure that the rise of China will not cause regional and global instability, the outside world should seek to integrate China into the international community by pursuing policies that will have a positive influence on China's expected value of trade. In the meantime, some elements of the balance of power strategy need to be introduced in order to curtail China's expected value of war.     

论“两廊一圈”的性质、法制条件和进程

中越“两廊一圈”经贸合作议题的提出,既是对多年来蓬勃发展的两国经贸关系的肯定,同时也显示两国经贸交往还潜在着巨大的可开发空间。“两廊一圈”性质上是中国—东盟自由贸易区之下的中越自由贸易区,它在内容和实施步骤上将以中国—东盟自由贸易区的相关协议为蓝本和框架,其建设进程不会快于中国—东盟自由贸易区时间表。