China's urban housing market development: Problems and prospects

This study analyzes the predicaments and prospects of China's urban housing market development. To this end, it examines the pre‐reform housing system in China's urban sector, presents major reform efforts, and investigates most recent reform designs and price subsidy schemes. The author maintains that China's housing market can be expected to develop vigorously as both fundamental factors and policy directives favor such a development.     

Municipal leadership and interest‐oriented mass participation: The process of housing reform plan in Shanghai 2

In the light of China's leadership transformation—from revolutionary to technocratic—in the reform era, this paper attempts to explore the new leadership through a case study of making of the Shanghai housing reform plan in 1991. After delineating housing problems and previous reforms in the mega‐city, this paper examines the process of the making of China's most comprehensive housing reform hereto, which inevitably invited conflicts of interests among social groups, especially between the ordinary urban residents who were in disadvantageous positions and the cadres who by and large benefited from old housing policies under China's planning system. The principal conclusion of the paper is that the ways of making the housing reform plan indicate that the current leadership is more responsive to ordinary people's interests and opinions than the Maoist leadership, even though both have much in common as the former inherites the latter.     

China's land disposition system

This paper studies the present land disposition (requisition and acquisition) and land use rights transfer system in China with emphasis on its marketization and its institutional arrangement concerning the central state and the local government. China's current land property right system is first described. It finds that although the communist government gained full control over the Chinese Mainland in 1949, it had never constitutionalized the state ownership of land until December 1982. Since then, the State owns all urban (nonagricultural) land and the rural collectives jointly own agricultural land. Only the user rights of urban land are allowed to be transferred. China's land administration system, its historical evolution, and its institutional configuration are then studied. Institutional difficulties associated with this system are also discussed. This paper proceeds further to study China's land requisition approval system. The role of the local government in land transactions is also discussed. The rest of this paper inquires into the marketization of land transactions in China. Discussion on the trend of China's land market development, suggestions for its improvement and remarks for future studies conclude this paper.     

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.     

WTO and China's Financial Services Sector

Financial services, particularly securities markets, insurance and commercial banking, have played a crucial role in China's post-1978 economic reforms. China has so far established a market structure and a legal framework, and has a growing understanding of how financial services operate in the modern world economy. We will review China's progress in financial services reforms over the last 22 years, describe the commitments China has made to gain WTO entrance, and then evaluate the potential benefits and costs to China's financial sector of WTO accession. We conclude that even with the substantial challenges presented by greatly increased post-WTO foreign competition, China will benefit from the WTO because of a number of factors including a growing pool of well-trained personnel, lessons learned from domestic and foreign development experiences, increasing Chinese economic strength, and continual advancement of China's financial infrastructure.     

China's Agrarian Reform and the Privatization of Land: a contrarian view

Many reporters and scholars outside China advocate the privatization of land ownership in China as a necessary step for the transformation of China's agriculture system into a modern, large-scale, market-oriented and technology-intensive one. Chinese scholars advocating land privatization, for their part, typically argue that land privatization would better protect farmers’ rights and interests. We present a contrarian view to these calls for land privatization. Under China's current system of collective land ownership and individualized land use rights, agriculture has modernized rapidly in China in a way that has avoided privatization's many downsides. Land privatization, by contrast, would only exacerbate class inequality and social tension in rural China and further weaken farmers’ positions in dealing with more powerful actors. Through analyzing six dimensions of this issue—increasing investment in land and agricultural productivity, promoting scaled-up modern agriculture, protecting farmers’ land rights and preventing land grabs, enhancing rural livelihoods, and facilitating rural migrants’ integration into cities—we maintain that strengthening the current system is superior to privatizing rural land.     

Stock market integration in Hong Kong and China

The Hong Kong Stock Exchange currently ranks sixth in terms of trading volumes in the world while China's fledgling securities industry at Shanghai and Shenzhen Stock Exchanges combined is barely more than 7 years old. With 1997 handover of Hong Kong to China, the securities industries of the two sides ought to integrate into one market. However, the Basic Law governing Hong Kong maintains unchanged British Common Law system as well as the life style of Hong Kong capitalist society, at least for the next 50 years. To understand how the stock exchanges operate under such a situation and how they cooperate in the future is the theme throughout this paper. This paper first describes the market backgrounds separately in Hong Kong and China. It intends to answer how, what and why China needs Hong Kong market and how, what and why Hong Kong, at a different level, needs China's. Then it deals with the interactions or cooperation in the primary market operations. The paper also deals with broader issues such as the RMB convertibility with respect to the integration of the stock exchanges and tries to forecast the future trend in the regional as well as international perspectives. It concludes that as part of the ‘one country, two systems’, the SEHK will be stronger as it has an added value to China's financial window to the world.     

Xiao‐kang: Deng Xiaoping's socio‐economic development target for China

Ever since xiao‐kang or XK, literally meaning a ‘relatively comfortable life’, was first slated by Deng Xiaoping in 1979 to be China's main development target, the concept has become a codeword for China's socio‐economic development. It was incorporated in several major Party documents and formally adopted as the key development target by three consecutive Five‐Year Plans. What is the real meaning of XK? This paper analyses China's first XK Index which was published in 1992, based on a cluster of economic and social indicators relating to income, food consumption, housing, and human resource development. It will be seen that XK is actually a normative concept, fuzzy and grossly imprecise, especially when applied to a transitional economy like China. What constitutes XK to Deng may well be perceived differently by the new generation of Chinese. Such is the continuing social challenge of China's economic development.     

Foreign banks in the People's Republic of China

Many foreign banks are attracted to the PRC economy, as a result of its continuing economic growth and financial liberalisations. This paper provides an empirical analysis of the factors contributing to this development and of the features of those foreign banks choosing to enter this market. In addition, a survey questionnaire permits an assessment of the attractions and weaknesses of the PRC banking market as perceived by foreign banks. It has been shown that large, financially sound foreign banks have helped to stimulate trade and investment in the PRC. However, China's restricted movement of capital and inadequate legal framework has reinforced the need for international banking services from Hong Kong.     

Chinese Corporate Governance and Prospects for Reform

A critical element in China's current economic reform program is the creation of modern corporate governance structures in its corporations. Many of China's largest firms are caught between market incentives and political pressures, creating a situation ripe for managerial inefficiency. This article examines the financial and regulatory structures necessary for an efficient corporate governance system to function in China, and it assesses how these structures currently operate in the economy. The article identifies key failures in fostering modern corporate governance practices, which in turn jeopardize central elements of the government's reform program. The article includes a case study of the governance practices of PetroChina Company Ltd, the internationally listed subsidiary of China National Petroleum Corporation. The success or failure of the government's efforts to create proper governance mechanisms will carry important economic and political ramifications for China. Indeed, the successful implementation of corporate governance reforms may mark the final stages of China's evolution into a market economy.     

Multiscale and Multimechanisms of Regional Inequality in China: Implications for regional policy

Research on regional inequality in China has generated controversial findings. This paper reveals that the trend for the last four and a half decades shows no clear divergent, convergent, or inverted-U patterns. I argue that regional inequality in China is sensitive to geographical scale and influenced by multiple mechanisms, and that the global and domestic contexts for China's regional development have changed dramatically. In particular, China's triple transitions-decentralization, marketization, and globalization-have fundamentally changed the mechanisms underlying regional development. Changes require new thinking on regional development strategies in China, which should emphasize developing non-state sectors, fully utilizing human resources, enhancing geographical targeting, and reforming urban and regional planning institutions.     

Market reforms,globalization and social justice in China

The pursuit of social justice is an important goal of public policy in China under socialism. The embrace of market reforms and increasing globalization has radically transformed China's redistribution regime as well as distorted old commitments to social justice. This paper reviews China's attempt to realize the goal of social justice, including its changing rhetoric, strategies and actions. I shall first set out the historical context by adducing the salience of development and justice in the period before and after the market reforms. This will be followed by an analysis of the state reform discourse in justifying market reforms and their function in development and human welfare. An evaluation of social and redistribution policies and their implications, including the intellectual and public debates on efficiency and equity, will be presented. In the final section, recent critiques on the market and worries associated with China's entry into the WTO will be considered.     

The political economy of banking reforms in China, 1993–1997

The weakness of China's banking system poses a serious threat to the sustainability of the country's economic development. This article measures the extent of this weakness and analyzes its causes. It focuses especially on the structural changes in the banking sector, the economic crisis of 1992–1993, and the subsequent financial reforms implemented. The evidence gathered by the author shows that the banking reforms initiated since 1994 have produced mixed results. Although central bank autonomy and bank supervision have improved, political, economic, and institutional constraints have prevented the government from taking more decisive measures to re‐capitalize banks, restructure the debt of state‐owned enterprises, and increase competition in the banking sector quickly. Despite the apparent effectiveness of the short‐term measures taken to bolster public confidence in the banking system, China's banking reform will be a difficult and prolonged process.     

The neo‐authoritarian dilemma and the labor force: Control and bankruptcy vs freedom and instability

Neo‐authoritarian leaders confront one of their greatest dilemmas when attempting to decide what to do about China's non‐agricultural labor force. Should leaders continue to maintain short‐term order and stability by providing comparatively comfortable employment and benefits to a state‐sponsored workforce, even as two‐thirds of all state enterprises are experiencing financial difficulties and central government deficits are rising? Or should they permit the development of a free market for labor, even though the full implications of a free market — hundreds of millions of surplus rural laborers flooding the cities, tens of millions of surplus urban laborers laid off — are so destabilizing that they are difficult to contemplate? This article discusses the extent to which a neo‐authoritarian program to reform the labor market has succeeded in practice, and it assesses the destabilizing effects of the program. Specifically, it outlines the goals of neo‐authoritarians as they struggle to reform the labor market; the daunting problems that they confront in this struggle; and their limited successes to date. Despite some successful reforms, the article concludes that ‘the neo‐authoritarian dilemma’ with respect to the labor force — stability vs economic modernization — has not been solved.     

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's Distinctive System: can it be a model for others?

The idea of the ‘Beijing Consensus’ does not accurately describe what has happened in China, nor does it represent a consensus among Chinese economists and policy-makers. This article presents six distinctive features of China's economic development, and argues that while each provides important lessons, none are easily copied by other developing countries. The intertwining of state and market in China is at the root of China's most distinctive developmental features. However, the specific character of the Chinese system and the way in which government and business relations have been structured cannot be readily replicated in other countries.     

Expansion of Chinese Social Health Insurance: who gets what,when and how?

This article asks ‘who gets what, when and how’ from China's recent social welfare expansion. Little research to date examines the overall landscape of China's social health insurance, which has changed dramatically since 2003, and the distributive consequences and implications thereof. Drawing on public survey data and fieldwork for empirical support, this article finds that China's recent social health insurance expansion does significantly expand people's access to social health insurance. However, the expansion, which entails health insurance fragmentation and increasing benefit disparities, not only reinforces existing social cleavages such as the rural–urban divide, but it also generates new divisions within urbanites and workforce. Moreover, multiple social cleavages that cross-cut class differences have been institutionalized into China's social health insurance system. This reflects authoritarian regimes' ‘divide and rule’ tactic in social welfare provision.     

The Political Economy of Compassion: China's ‘charity supermarket’ saga

With a focus on Tianjin, this article examines the recent widespread establishment of ‘charity supermarkets’ in China's cities. Inspired by the example of certain ‘thrift shops’ in the US, charity supermarkets were set up for the purpose of assisting the urban poor. Several contrasting contemporary discourses within China concerning poverty, charity, business, and the proper roles of the market, state, and community in the delivery of social welfare are explored. The differing perspectives revealed throw an interesting light on why China's charity supermarkets have not, so far, developed as anticipated. This interesting urban social experiment is analyzed as a case study in the potential to achieve effective ‘mutual empowerment’ of state and society in the contemporary Chinese context.     

The Closed Doors of Courts: China's judicial filtration of financial litigations

In China, courts may refuse to accept certain legal actions involving financial matters without any solid or explicit legal grounds. An analysis of such a phenomenon should help scholars to understand the functioning logic of China's judicial power. This article suggests that there are a number of reasons behind the filtration system, including a lack of applicable legal rules, a weak ability of the courts to understand complicated financial matters, the background of the economic system transition, the political consideration of ‘maintaining social stability’ and judiciary self-interest. Filtration has inevitably had a negative effect on China's financial markets, and reform is thus necessary.     

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.