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The Changing Quality of Employment and the Sequencing of Reforms in China
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Nomaan Majid, World Economics, September 2019
The paper charts the process through which employment has been transformed in China. Measures of employment quality captured by estimates of regular and non-regular employment and unemployment are used to form a view of the changing employment situation. The increase in the share of regular employment in total employment, from 40.1% in 1990 to 62.7% in 2011, is staggering for the most populous country in the world. This is what lies behind the improvement in employment in China. This paper argues that factors behind the improvement in employment in China can be traced to sequenced policy shifts in sector growth strategies on one hand, and the gradual removal of effective constraints on the physical movement of labour on the other. In other words China has managed its process of structural change.
China’s Monetary Policy Functions from the Core Inflation Perspective
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Yu Li Zhu & Lu Chang Rong, World Economics, September 2019
Based on the open-economy new Keynesian model, this paper studies the influence of core inflation on the central bank’s monetary policy reaction rules by optimising the multi-target welfare loss functions, and draws three conclusions. Sustainable balance of payments should be considered as a goal rather than a tool for monetary policy. The central bank should focus more on core inflation than normal inflation in its daily operations. An authoritative core inflation sequence should be established as a focal point in the policymaking process. In addition, we emphasise that the central bank should accurately judge the impacts of real exchange rate changes, and adjust how frequently it intervenes in interest rates.
The Comparative Analysis on the Population Control Policies in China and India
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Min-kyung, KIM, World Economics, March 2019
Population is a source of a nations’ strength and national security, but some overpopulated countries in Asia are trying to lower their population growth, even implementing population control policies. This paper conducts a comparative study of China and India to explore the effectiveness of their population control policies, and its findings suggest that education can be one of the strongest methods to curb the population explosion, reducing its side effects by giving Kerala case. This study suggests that further attention must be given to more cases in China and India related to the correlation between the level of education and population growth. Also, the case of Kerala will be needed to be researched more in-depth and yield more concrete recommendations to facilitate an added value to this field.
Rare Earth Elements
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Sotiris N. Kamenopoulos, World Economics, June 2018
Rare Earth Element Reserves are estimated at 130 million metric tons while global production/processing capacity was approximately 126,000 metric tons in 2016, 95% controlled by China The US authorities and academics mistakenly treat Rare Earth Elements as “one group, one product”, but final high-tech products only use the appropriate elements providing desired characteristics. Disaggregation reveals that the U.S, the EU’s and Japan’s economies and national securities are 100% dependent on 30% of the naturally occurring elements on the Periodic Table of Elements and Chemistry. A comparative review between 1980 and today shows that the conditions are in place which will lead to the manipulation of the Rare Earth Elements market by the dominant player, China.
How Accurate Are the National Balance Sheets for China?
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James L. Chan, World Economics, September 2017
The accuracy of data on China’s national balance sheets has attracted much less attention than that of the Gross Domestic Product reports. China’s Bureau of National Statistics has not released official national balance sheets, but two Chinese research teams have produced estimates for recent years. A detailed analysis of these reports by the author reveals varying degrees of discrepancies for the whole Chinese economy and its components, and for different types of assets and liabilities. The System of National Accounts was claimed by researchers as a common framework, but non-standard classifications and disclosures of assets and liabilities from diverse data sources mean that many issues must be resolved before China’s wealth can be measured accurately.
What Makes Maddison Right
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Jan Luiten van Zanden & Debin Ma, World Economics, September 2017
The ‘Great Divergence debate’ in economic history relates to the question of when China fell behind the levels of well-being in Western Europe. A recent paper published in this journal argues that existing historical data cannot answer this question and criticizes estimates of Angus Maddison of GDP per capita based on limited evidence. The authors believe, in contrast, that critiques, assessments and summaries on the state of the Great Divergence debate even if flawed are in the original spirit of the Maddison research. Maddison’s work is less about right or wrong than about trying to achieve better or best estimates by overcoming the current constraint on data and methodologies over time.
Why Maddison was Wrong
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Kent Deng & Patrick O'Brien, World Economics, June 2017
Much academic debate in Western and Chinese universities has engaged in testing the hypothesis that standards of living in China did not fall behind those of the populations of the national economies of Western Europe until late in the eighteenth century Unfortunately, the data for China accessible in secondary sources do not provide historical runs of estimates either for GDP or for total population, let alone for any purchasing-power-parity rates of exchange estimates. Angus Maddison used short-cut methods to circumvent these difficulties, but a platoon of distinguished economists have found his methods and estimates to be conceptually and statistically unacceptable as historical evidence. The data currently available for China are and may well remain too fragmentary, ambiguous and insecure to sustain a Kuznetsian perception for investigation into the historical origins of the Great Divergence.
Dissecting China’s Property Market Data
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Meiping (Aggie) Sun, World Economics, March 2016
This paper analyses Chinese property market data to evaluate recent trends in the market and to make prognoses for the future. It considers whether or not the existence of high prices and at the same time an enormous rise in residential supply in terms of floor space under construction means that there is a ``bubble'' in China's property market which may burst, similar to what happened in Japan in the early 1990s. Evidence that the price of new homes moves almost perfectly with sales of new residential floor space rather than with completed floor space suggests that the housing market is behaving normally and follows mini boom and bust cycles like other industries. The analysis finds that there are low maintenance costs for buyers after purchase due to the lack of annual property tax and negligible depreciation of bare-shelled housing units which limits the risk of default. Although recently developers are under pressure to raise more revenue mainly due to high interest-rate borrowing from shadow banks, the author considers that the probability of a systemic collapse of housing market is minimal given existing taxation systems, easing monetary policy and the continuing urbanization process.
Data Manipulation of Inflation Statistics Artificially Raises Real GDP
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Christopher Balding, World Economics, June 2014
Baseline Chinese economic data are unreliable. Taking published National Bureau of Statistics China data, three problems appear. First, base data on housing price inflation are manipulated. Second, the NBSC misclassifies most Chinese households as private housing occupants. Third, the NSBC applies a straight 80/20 urban/rural private housing weighting. To correct for these manipulative practices, I use third party and related NBSC data to correct the change in consumer prices in China between 2000 and 2011. I find that using conservative assumptions about price increases, the annual CPI in China should be adjusted upwards by approximately 1%. This reduces real Chinese GDP by 8–12% or more than $1 trillion in PPP terms.
Poor Economic Statistics Fuel China’s Low Consumption Myth
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Jun Zhang & Tian Zhu, World Economics, June 2013
The generally held belief that China’s consumption is too low is a myth based on inadequate theory, a misreading of official statistics and the use of market exchange rates for making international comparisons. Chinese official statistics underestimate consumption expenditure on housing, they omit consumption paid for as benefits by the corporate sector, and there are a number of problems with the household expenditure surveys employed. An adjustment for statistical issues suggests that the rate of consumption is 60–65% of GDP, not the 48% based on the widely quoted official statistics figures, and is quite similar to the level experienced by other East Asian economies.
Measuring African GDP
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Joe Downie, World Economics, June 2011
There is much speculation about the growth potential of African economies. But in the light of unreliable official statistics and the highly selective information often presented by investment companies with an incentive to highlight the positive, this article aims to provide some extra analysis to add to the recent widespread comments on high growth rates within the continent. Problems are noted with official economic data and the strengths of Purchasing Power Parity (PPP) measures for GDP comparisons are noted. GDP figures for Africa and five other major economic areas are analysed for the three decades to 2010 in terms of GDP growth and GDP level by decade. These figures are then viewed in per capita terms, drawing attention to significant population growth within the continent, and therefore less impressive per capita figures. A closer look at the location and distribution of economic activity within the African continent highlights the high concentration of economic activity within a small number of countries. However, it is concluded that the future prospects for African growth are still generally positive. Despite the heavy reliance on oil exports in some countries, headline GDP figures also reflect incidences of broad-based growth which looks set to continue so long as Asian demand remains high and good economic policies are pursued.
Why is the Chinese Saving Rate so High?
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Guonan Ma & Wang Yi, World Economics, March 2011
China’s saving rate is high from many perspectives – historical experience, international standards and model predictions. Furthermore, the average saving rate has been rising over time, with much of the increase taking place in the 2000s. What sets China apart from the rest of the world is that its rising aggregate saving has reflected high savings rates in all three sectors: corporate, household and government. Our evidence casts doubt on the proposition that distortions and subsidies account for China’s high saving rate. Instead, we argue that tough corporate restructuring (including pension and home ownership reforms), a marked Lewismodel transformation process (where the average wage exceeds the marginal product of labour in the subsistence sector) and rapid ageing process have all played more important roles. Such structural factors suggest that the Chinese saving rate may peak over the coming years.
Maddison and Wu: ‘Measuring China’s Economic Performance’
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Yuri Dikhanov & Eric V. Swanson, World Economics, March 2010
Angus Maddison and Harry Wu (2008) claim that, in 2003, China’s GDP was 73% of that of the United States on a purchasing power parity (PPP) basis. Rejecting the results of the 2005 International Comparison Program (ICP), they construct their own PPP using a 1986 GDP estimate for China (Ren & Chen 1995) which they adjust upwards, and then extrapolate to 2003 using their revised growth rates for China, which they adjust downwards. This note examines the validity of their adjustments and assumptions, and finds them to be inconsistent with recommendations both from the perspective of index number theory and recommended national accounting practices. The 2005 PPP estimates from the ICP, which Maddison and Wu reject, produce a more plausible estimate of the size of China’s economy relative to that of the US (43% in 2005).
Measuring China’s Economic Performance
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Andreas (Andy) Jobst & Harry X. Wu, World Economics, June 2008
China is the world’s fastest growing economy and is also the second largest. However, the official estimates of the Chinese National Bureau of Statistics exaggerate GDP growth and need adjustment to conform to international norms as set out in the 1993 System of National Accounts (SNA). This paper presents and discusses the necessary adjustments. The two major contributions are new volume indices for the industrial sector and for "non-material" services. Finally, in order to measure the level of Chinese GDP in internationally comparable terms, the authors use a measure of purchasing power parity (PPP) instead of the exchange rate.

Displaying: 1-14 of 14