China's Future Economic Regionalization

This paper investigates China's economic growth potentials and limitation up to 2020 and recommends a trend of economic regionalization. A sustainable growing economy is a necessity for China's future stability. The growth sustainability of the Chinese economy depends essentially on its continued commitments to institutional reform and economic deregulation. China's relaxation of government intervention in economic activities has led and will be leading China to decentralize its central governmental authority over economic planning and control. This will consequently stimulate the emergence of regional economies in Mainland China. In the next two decades, there will likely be 10 regional economies with relatively independent industrial structures emerging in Greater China (or the Chinese Economic Area of Hong Kong, Macao, Taiwan and the Mainland) as a result of economic liberalization and decentralization.     

Is China's Western Region Development Strategy on Track? An assessment

China's government launched the Western Region Development Strategy in 2000 with the aim of boosting economic development in 12 provinces, municipalities and autonomous administrative regions in the western part of the country. This paper presents the results of an assessment of the progress made so far and makes suggestions for better performance in the future. We conclude that although the western region has experienced impressive rates of economic growth, regional disparities in China have continued to widen in spite of the western regional strategy. We also develop a regional growth model to determine the major drivers of regional economic growth in the western region of China. Furthermore, the sources of regional disparities are examined using Morduch and Sicular's regression-based decomposition approach. These models are used for suggesting a more targeted package of regional development policies for the period beyond 2010.     

China–Africa Trade Patterns: causes and consequences

China's trade patterns with African countries have made Beijing the focal point of new anti-Chinese resistance narratives in Africa. Unlike the Maoist era, when China's trade policies served its leaders' political goals, now they aim to access markets as part of China's larger domestic development strategy. China's state-run firms can channel China–Africa trade through extra-market decisions that influence flows, yet, ultimately, Beijing's ability to direct trade with Africa is constrained by market forces. Despite suggestions that shared illiberalism drives China–Africa trade the author concludes that five interrelated causal factors overwhelmingly determine China–Africa trade: China's comparative advantage in labor-intensive and capital-intensive production; Africa's abundant natural resource endowments; China's rapid economic growth; China's emphasis on infrastructure building at home and in Africa; and the emergence of economies of scale in China's shipping and light manufacturing sectors.     

China and the Asian Economies: mutual acceptance,economic interaction and interactive dynamics

The objective of this article is to explore the economic relationship between China and the surrounding dynamic Asian economies. It delves into China's influence over the Asian economies and whether this relationship has evolved in a market- and institution-led symbiotic manner. The three principal channels of regional integration analyzed in this article are trade, FDI and vertically integrated production networks. Another issue that this article explores is the so-called China ‘threat’ or ‘fear’ in Asia. The China threat implied that China was crowding out exports from the other Asian economies in the world market place. Also, as China became the most attractive FDI destination among developing countries, it was understood that China was receiving FDI at the expense of the Asian economies. These concerns were examined by several empirical studies and the inference was that they were exaggerated. The article concludes that China methodically expanded and deepened its economic ties with its regional neighbors. At the present juncture, China's integration with the surrounding Asian nations is deep. Both China and its dynamic Asian neighbors have benefited from this synergy.     

Information Exchange,Headquarters Economy and Financial Centers Development: Shanghai,Beijing and Hong Kong

Over the past several years, China has consistently maintained economic growth and at the same time emerged as a new global giant in the international arena, despite the distractions caused by the global financial crisis, which was triggered by the US Sub-prime Mortgage Crisis of 2007 and the recent bond crisis that emerged in the European Union in 2011. Concurrent with China's growing interaction with the global economy and robust growth of its domestic economy, competition for the status of national and even international financial centers in the region has become fierce. This study focuses on a ‘local’ examination of internal conditions for the emergence and growth of Chinese financial centers over the next 10–20 years. Cities contending for the top slot in the roster of Chinese cities, like Beijing, Shanghai and Shenzhen, are striving to become international financial centers and are trying to compete with Hong Kong. This study investigates the development potentials, future prospects and division of functions between different financial centers within China regarding Hong Kong, Beijing and Shanghai, with special reference to the role of information and locations of MNCs' regional headquarters.     

China Goes to Africa: a strategic move?

Entering the twenty-first century, particularly under the reign of Hu Jintao, China began to pursue an increasingly pro-active diplomacy in Africa. Most analysis on China's offensive diplomacy in Africa focuses on Beijing's thirst for energy and raw materials, and for economic profits and benefits. That is why it is often called ‘energy diplomacy’ or ‘economic diplomacy’ as if China, just like Japan in the 1980s, became another ‘economic animal’. But if one looks at the history of the PRC's foreign policy, Beijing has seldom pursued its diplomacy from purely economic considerations. Is this time any different? This article exams China's diplomacy in Africa from a strategic and political perspective such as its geo-strategic calculations, political and security ties with African countries, peacekeeping and anti-piracy efforts in the region, support for African regionalism, etc. It argues that China's diplomatic expansion in Africa, while partially driven by its need for economic growth, cannot be fully understood without taking into consideration its strategic impulse accompanying its accelerating emergence as a global power. Africa is one of China's diplomatic ‘new frontiers’ as exemplified by new Chinese leader Xi Jinping's maiden foreign trip to Africa in 2013.     

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.     

China's Approaches toward Regional Cooperation in East Asia: motivations and calculations

This paper explores how China's strategic motivations and calculations have both motivated and constrained its participation in East Asian regional cooperation. It argues that China's participation in regional economic and security cooperation is motivated first of all by the calculation of China's domestic interests to create a peaceful peripheral environment for its economic growth and political stability, particularly its frontier security and prosperity. The realist interests to enhance China's position in power competition with other major players in the region, particularly Japan and US, also play an important part in China's strategic calculation. These interest calculations, however, also set limits on China's participation in regional cooperation. These interest calculations have also shaped China's preference for an informal approach, emphasizing voluntarism and consensus building rather than legally binding resolutions, toward regional cooperation. This soft approach is a major barrier for many regional institutions to move beyond the stage of talking shops to effectively resolve conflicts in the region.     

Total Factor Productivity Growth and its Spatial Disparity across China's Township and Village Enterprises

What lies behind China's recent economic prosperity is the unexpected success and development of her township and village enterprises (TVEs). The proportion of China's total industrial output produced by the TVEs increased from 9 to 42% between 1978 and 1994. The incredible development of the TVEs, along with the declining in importance of the SOEs in recent years, undoubtedly suggests that the TVEs are the engine of growth of the Chinese economy, and their continuous success will have a tremendous impact on the economic development of China in and beyond the twenty-first century. What remains questionable, however, is whether or not this rapid development of the TVEs is at the same time exacerbating China's spatial disparity by encouraging inequality in productivity and production efficiency of these enterprises across different provinces. This study aims to answer this question by examining the changes in total factor productivity (TFP) of TVEs located in different provinces between 1988 and 1993 with particular reference to the corresponding spatial disparities of these changes. The Malmquist output based productivity index, which allows for the decomposition of productivity growth into changes in technical efficiency over time and shifts in technology over time, is the technique adopted here.     

Beijing's new thinking on security strategy

Beijing is refocusing its foreign strategy in the Asian Pacific region. This article examines Beijing's new thinking on security strategy in the post‐Cold War Asian‐Pacific region. Drawing from the recent strategic debate in China, the author discusses three defining areas in the new security strategy: military strategy, defense development strategy, and foreign policy and security strategy. It is argued that thinking in security strategy has become more regional oriented, sophisticated and compatible with foreign policy. The implication of China's defense modernization for regional security is controversial. In the short run, China's military posture will not change balance of power at the regional level, but it will significantly affect outcomes of future territorial conflicts on China's periphery. In the long run, Beijing's role in Asian‐Pacific security remains uncertain.     

The Trans-Pacific Partnership (TPP): the Chinese perspective

The Trans-Pacific Partnership (TPP) was accepted by the Asia Pacific Economic Cooperation (APEC) as one among other pathfinders, for a comprehensive Free Trade Area of the Asia Pacific (FTAAP). Though the TPP negotiations do not include China at the moment, she has declared her interest in the TPP and is paying close attention to it. In fact, many question the likely success of the TPP with China's exclusion from it, given her prominence in the region. To provide insights for leveraging trade opportunities with the TPP economies, China's export potentials with the TPP are empirically tested and compared with those of alternative economic configurations in East Asia which China is a party to, namely the ASEAN+1, ASEAN+3 and ASEAN+6. The empirical findings suggest that China's participation in the TPP will offer better market access for final goods, an important trade opportunity that is somewhat limited in partnerships through regional initiatives. Even then, the paper contends that the payoffs to China following the TPP deal remain intangible and at best speculative given the coverage (or substance) and depth of the agreement.     

China's Rise in Southeast Asia: implications for the United States

During the past few decades, China's economic success has permitted it to pursue a greater role on the international stage. China is recognized both as a regional and aspiring global power. Nowhere is this more evident than within Southeast Asia, where China's more active diplomacy is reflected in growing trade relations, proposals for stronger security ties, and the signing of numerous cooperative agreements on issues as varied as environmental protection, drug trafficking, and public health. As a whole, the region has received China's activism with both enthusiasm and trepidation. China has expended significant effort to assuage the fears of its neighbors by adopting a foreign policy approach that is active, non-threatening, and generally aligned with the economic and security interests of the region. This positive diplomacy has clearly yielded some success, most notably in the trade realm, where China is rapidly emerging as an engine of regional economic growth and integration that may well challenge Japanese and American dominance in the next three to five years. In the security realm, China's diplomacy, while rhetorically appealing to regional actors, has yet to make significant inroads in a regional security structure dominated by the United States and its bilateral security relationships. Most significantly, however, if China is to emerge as a real leader within Southeast Asia, it will also need to assume more of the social and political burden that leadership entails. As China continues to advance itself as a regional leader, its policies on issues such as health, drugs, the environment and human rights will face additional scrutiny not only for their impact on the region but also for the more profound question they raise concerning the potential of China's moral leadership. For the United States, China's greater presence and activism suggest at the very least that it cannot remain complacent about the status quo that has governed political, economic and security relations for the past few decades. Shared leadership within Southeast Asia will likely include China in the near future, with all the potential benefits and challenges that such leadership will entail.     

Understanding Growth in China's Regional Economies

This paper applies growth equations to examine the impact of region-specific factors on China's growth in the 1980s and 1990s. In particular, this study focuses on investigating the role of capital formation, initial conditions, labour productivity, human capital, openness, infrastructure, foreign capital and economic reform in China's regional growth. It is found that those variables account for 70–90% of China's growth in the past decades. The robustness of the findings in this study is tested by estimating alternative models.     

Uneven Opening of China's Society,Economy, and Politics: pro-growth authoritarian governance and protests in China

This article evaluates China's model of development, especially its main component, i.e. its model of governance. It suggests that China's model of development is marked by an imbalance between fast opening of the economy and the society and sluggish opening of the political system. The Chinese society has become much more open, reflected in the Chinese growing awareness of their legal rights. The Chinese economy has become highly internationalized and open, but much of Chinese politics is closed. China's governance is marked by pro-growth authoritarianism. The Chinese state is effective in opening up the economy, promoting reform, and generating economic growth, but offers weak protection of people's rights and ineffectual mitigation of social grievances. These imbalances help produce social protests. Viable solutions are discussed.     

Discussion of 'Four Contradictions Constraining China's Foreign Policy Behavior'

Chinese foreign policy behavior is constrained by different sets of contradictions, but at the same time these contradictions serve to inspire and focus Chinese foreign policy, both in negative and positive ways. As China transitions to a developed country that is fully integrated into regional and global economic, political and security regimes, these contradictions may become less salient, however. With the growth of China's comprehensive national power, the Chinese will come to view their country less as a poor nation and more as a great power and thus this dual-identity syndrome should diminish in importance as a factor constraining China's foreign policy behavior over time. The contradictory impetus behind Chinese foreign policy that derives from the desire to benefit from pursuit of 'open-door' policies and the compulsion to protect state sovereignty will similarly likely become less important as China's power grows, but only if there is mutually acceptable settlement to the Taiwan problem and Beijing's confidence in its ability to secure its territorial integrity is enhanced. A stronger, more confident China will also likely become more actively involved in regional and global issues on a pragmatic, rather than principled basis. Finally, while bilateral ties will remain important to Beijing, its participation in multilateral fora will no doubt increase, including in the security sphere, as it becomes more experienced and self-assured in multilateral interaction. Ultimately, bilateral and multilateralism may take on the role of parallel tracks in Chinese diplomacy with little tension between them.     

Performance Legitimacy,State Autonomy and China's Economic Miracle

Theories that explain post-Mao China's economic success tend to attribute it to one or several ‘successful’ policies or institutions of the Chinese government, or to account for the success from economic perspectives. This article argues that the success of the Chinese economy relies not just on the Chinese state's economic policy but also on its social policies. Moreover, China's economic success does not merely lie in the effectiveness of any single economic or social policy or institution, but also in the state's capacity to make a policy shift when it faces the negative unintended consequences of its earlier policies. The Chinese state is compelled to make policy shifts quickly because performance constitutes the primary base of its legitimacy, and the Chinese state is able to make policy shifts because it enjoys a high level of autonomy inherited from China's past. China's economic development follows no fixed policies and relies on no stable institutions, and there is no ‘China model’ or ‘Beijing consensus’ that can be constructed to explain its success.     

Economic Reform and Social Welfare: The Chinese perspective portrayed through a social survey in Shanghai

This article starts with a brief comparative analysis of China and East Europe in terms of their stark differences in approaching economic reform and social welfare. Perhaps China has the benefit of learning, from the 1989 Tiananmen Incident, of the undesirable social costs incurred by economic reform. Henceforth, it has adopted a pragmatic and gradualist approach towards economic reform. This article reports the findings of an attitude survey in Shanghai, which by and large are compatible with the gradualist approach of the Chinese Government toward economic reform and social welfare. The survey finds that the Chinese in Shanghai positively rate economic reform in light of the benefits that it has brought about, but they are also aware of the large income disparities caused as a result. In the light of the evidence, the article suggests that China's economic reform has not transformed people's beliefs to be in line with the market system. The Chinese are still, in general, in favor of a large role for the state in welfare and they themselves are not willing to shoulder heavier welfare responsibility. In the concluding section, the article explains this mixed pattern of public perceptions and pinpoints the likely developmental trend of China's welfare system.     

Discussion of 'The Rise of China in Chinese Eyes'

In a response to Yan Xuetong's paper, 'The Rise of China in Chinese Eyes', Ted Osius (writing in August 1999) discusses Dr Yan's perspective on Chinese history and the question of whether China's rise will be peaceful. Mr Osius argues that, while we cannot know for certain what China's future holds, the Clinton‐Gore Administration has been clear in its goal of integrating China into the leadership ranks of the world community.     

Impact of the US Credit Crunch and Housing Market Crisis on China

Similarities between the US, the UK and the Chinese housing markets, including the movements of interest rates and house prices, and the exposure of some Chinese banks to the US mortgage securitization market, have triggered concern about whether China could experience a US-style credit and housing market crisis. Significant differences between China and Western economies make that unlikely in the near future. China's booming house market has been supported by fast economic growth, rapid urbanization and high domestic savings. Chinese banks have also been less exposed to mortgage defaults than their Western counterparts. However, the relative underdevelopment of the financial system—credit monitoring and asset securitization—may expose China to domestic mortgage lending-related crises.