Li Daokui
执行主编：李稻葵
出版：世纪出版集团 上海人民出版社
版次：2007年6月第1版
印次：2007年6月第1次
What a tumultuous time the year 2005 has turned out to be. A little over the second half mark, the rosy garden of economics was already under a shroud of some murky substance, and thickening as time went by. "Rethinking of the reform" was the proper name of it labelled by those long in the tooth, primed to dust off with their noble "ism" in the thankless battle of hammer and sickle. True to form, a quixotic romance of the old war-horses.
That aside. In time, however, that rousing logo had taken a quirky turn, morphing into some rallying cry that helped rustle up sizable forces of hostile hodgepodge determined to take on the entire cohort of academic economists. All of a sudden came the surging rumpus in all directions, so persuasive that even those serenely-looked professors began to run for cover. It was all too obvious, by then, that the academy pack was under a siege. Ghastly still, there was fire and brimstone staring them right in the face as the wild-eyed tub-thumpers ran amok, starting to pick them off one by one like in the duck hunting.
A poignant scene to revisit, but it was not without its plausibility. As it is, the country at present is in the middle of the transition. Like all the ripping changes, it inevitably brings with it not just the winners, but sadly the losers, the sceptics and its fierce critics, who have been up in arms almost from the way in. Clearly, something somewhere at some opportune moment has to be evoked just to help set their unsettled minds more or less at ease. Little wonder, then, the folks who have seen the better days chose to put on some rare show of unity under the banner that spoke their pieces, now that they have had to cast about for some fancy ways of venting their state of wrath.
What really boggles the mind, however, is of their actual prey that took the form of the eggheads of academy rather than the fatheads of the powers that be who are, in fact, the can-doers frequently caught red-handed. Well, part of the clarity may lie with the state of the regime that still renders it a nervy and pricey bent of wagging and pointing the finger at the Party reign. Plus, it was not entirely unjust, as they may have insisted, to take the economists as fall guys picking up all the tabs. After all, the blueprint of the reform was the handiwork of that brainy tribe that has since been accused of being bought over by the vested interests.
Hitting a sticky patch, all right. Yet, that cacophonous clamour won’t be noisy enough to take the shine off the sure-footed stride that has at length seen those little arcane models of the dismal science greatly tailored to the domestic use. In the year alone, there were at least three areas where we have witnessed the progressive headways sustained. First was the up-tick of a notch or two in the quality of recruitment. Thanks to rapid economic growth and improved conditions in home research, a lot more fully trained talents blooded in teaching and research overseas were attracted to home-grown outfits in the trade.
Then, it was the cerebral ambiance, so rich has it grown that there are now more pleasant places for the highbrows of the profession to dawdle their hours away, hobnobbing, back-patting, or simply pressing the flesh around. Indeed, it is no longer a head-scratching undertaking, typically for members of chattering class, to get a foot in some economic conferences, periodic gatherings, or even a few noisy jamborees if one chooses. Finally was the continued change for the better in the appraisal system for the papers produced. Not only has it measured up, or in some cases got closer, to some international norm, but also been taken up by broader society and spreading. The papers enclosed in this book, for example, no longer crop out of one or two majors of the field. Rather, they are widely scattered across the landscape.
That said, this edition of Economics in China, with all the flying colours of papers, is another way of pepping up those that unwittingly took the rap on the knuckles over the year. Altogether, there are 18 pieces chosen in line with the principle similar to that of the previous editions, which takes in three benchmarks. One is the focus of study that ought to be closely related with the on-going reform. Two is the rigor as well as the norm applied to modus operandi in either academic or practical endeavour. And the last is the general value inherent that would lend itself to the build-up of knowledge and experience in the line of specialty. Long-winded, all the same. Give or take here and there, however, it sounds not far from "localisation of alien culture", does it? Well, in economics of course.
And finally, some words spared for the culling process that, in the minds of some readers, could be flawed one way or another as I may have missed out some of the worthy while bundled in others of the lesser. No holding forth in ifs and buts over it, since it happens from time to time in this kind of work. Wouldn’t it be true, as the old saying goes, that the beauty is in the eyes of the beholder? What is weighing more heavily on my mind, however, is my gratefulness to such Journals and magazines as Economic Research, World Economy, Administrative World, Economic Quarterly, Economics Daily, China Social Sciences Review, and New Political Economic Review, as they have offered crucial support for the success of the task. And also my appreciations of such individuals as Messrs Liu Linlin, Mei Song, Feng Junxin, Yi Xingzhong, and others for their professional assistance throughout.
Now, at long length comes what we have to pen for in this space. Admittedly, the entire courtship went fiendishly hard with me. Yet, there has been little love lost between me and the stories in the bag, which, unlike the harshness on the way, should be easy on the ears. Or, should they? Read on to get the sense of it.
Right through the country’s nice and easy run of "peaceful rise", as some folks would like to intone, one of the glaring streaks of home economy has been its sustained level of high rate of saving and investment in the midst of the neck-breaking pace of growth. Intuitive, though, it has been short of the proof in numbers. High Rate of Saving, Investment and Growth over the Period of Transition in Labour Force, by Li Yang and Yin Jianfeng, is one attempt to make up for it with the help of their little contraption dubbed "vector auto-regression model" (VAR). The study not only rolled out the perceived origin of the phenomenon, but also came up with a novel account of the economy availing itself of external capital markets to its advantage.
Just as a witty remark has it that many hands make the light work, so is the run-away economy that has by far been fuelled with influx of cut-rate coolies on hand from the backwoods of the land. High rate of growth begot high rate of saving as extra income got tucked away under a mattress, now that there were not many a place worthy of investment with a shabby state of the financial system. Yet, without high rate of outlays in plants and tools, the speedy expansion would be curtailed with the consequence of oodles of the labour left idle. It became, in point of fact, the case of needs must of cozying up to the capital markets offshore while awaiting thousands of flowers to blossom on the home turf. There, then, came in the picture of state officials bending over backwards to pull in foreign direct investments while their central bank comrades scrambling to pile up stocks of US treasuries, Euro bonds, or things of that ilk by shovelling out loads of savings the other way.
What a topsy-turvy world of activity. Yet, we have to leave there and get down to the nitty-gritty of scholastic task of a different sort. For a long while, the fief of the comparative literature on the firm performance has been in the state of triumvirate, dominated by three schools of thought. Each, though, dwells on one of the three measures as competition, ownership and governance while ignoring the rest with the pedantic hubris. Not surprisingly, they have been taken down a peg or two in recent time as gathering doubt reaches its crescendo over the predicting power and hence, usefulness of their much ado.
In the work, Competition, Ownership, Corporate Governance: Their Importance and Interactions, Messrs Hu Yifan, Song Min and Zhang Junxi were poring over the World Bank statistics of 736 native firms, across seven sectors over the period of 1996-2001, to assess the relative importance of the three measures. Their findings are quite intriguing. While, as expected, all three did pay their ways to the performance with a lesser tribute from the competition, the ownership in the form of privatisation was somehow paired up with each of the other two in a zero-sum play-out. Counter-intuitive? Not that it makes the state of nature count. Nonetheless, the study does suggest that the three schools of view are indeed lack of sorcery by themselves, as some kind of combos is needed.
A brilliant idea you may say. Yet, it could have hit its cul-de-sac, languishing in the limbo of paper world, save that Messrs Lu Ting and Liu Xiaoxuan had come along with their empirical study, A Model of Ownership Structure – Reform and its Impact. The work, focusing on the impact of privatisation on the firm performance, has literally seen to that little pretty at long last basking in the sun. Based on the survey data in the later half of the 90s, they found that efficiency gains between the privatised and the non-privatised firms were seriously large enough to merit some market-based fix in ownership structure. And most importantly, it was a type of privatisation and its resulting governance structure that mattered most in the firms’ performance.
Care, however, has to be taken in these number-crunching exercises since there are always drawbacks, such as data limits, factor oversights, formular choices and many others intrinsic in this kind of modelling. The similar inquiry, Ownership Structure Reform of SOEs, by Mr. Li Ji and his colleagues, for example, have produced quite an opposite brainwave with different set of data collected from 500 or so corporations. Oddly as it goes, the fully privatised firms under the present market conditions did not possess the supposed cost-advantage over their state-owned counterparts in welfare largesse, except that they were more likely to take on higher risk by diversifying their operations. The upshot was then clear that the strategy of going private should be taken with the extent of market maturity in mind.
A mortal blow to the spirited laissez faire? Certainly, it does not make a comfortable reading for them. Still, room remained for a swift comeback as they might yet be embroiled in the fracas over the proper way of assessing the issue of the kind. One idea is to take a state-owned firm as a public project whose appraisal result is then weighed against its actual stock value so as to see the net effect of state intrusion on its market performance. A commonly used method in gauging public projects is that of cost-benefit analysis (CBA) that could, in this case, drag in such values as welfare, operational risks, budget constraint, and what have you. With social fallouts in mind, a little CBA could thus have a big role to play, wielding the telling pixie-dust of NPVs (net-present value) in its projecting charm for any of state-owned something it comes across.
State ownership, Operational Risks, Soft-budget Constraint and Firms’ Performances, by Li Tao, is one of bold cracks, which has gone to great lengths to do just that. Based on the statistics of listed state-owned companies, it found that amongst the poorest performers – the bottom 30% of the firms investigated, all values in NPV were popping up high in the positive area, whereas no clear evidence of net-plus from the similar activities shown in the top 10% of them. It was blindingly obvious that the state meddling, for whatever purposes or intents, had taken its toll on the firms’ internal rate of return. The question that follows is: what is the purpose for a state to own firms? If merely as tools of servicing its social and political ends, fine, keep them albeit unwieldy and expensive. But otherwise loose them. That finding, in its own right, might well tip the balance of the debate over the validity of the state ownership.
The tendency of regional protectionism is closely related to the economic interests of local officials. There have always been controversies about the extent and impact of it, but there lacks systematic evidence. Regional Protectionism in China: Direct Micro-evidence by Gong Binglin, Xu Lixin and Chen Guangyan has filled this blank. By using a survey specifically designed for the theme, the paper found that the phenomenon was notably on the wane as time passed by. Also, it varied with provinces as well as industries, among which the tobacco industry and beverage industry (including alcohol) were the most badly hurt. Moreover, the development of impoverished inland regions took the full brunt of it. Therefore, the economic return from eliminating regional protectionism was quite obvious. What’s more, the lesser the extent of regional protectionism, the higher the relative prices of goods in other regions, and hence the more attraction gained in their regional trades. These findings remarkably expand our discussion and deepen our understanding of relevant issues.
Meanwhile, the issue of RMB exchange rate becomes a hot issue as well as an important economic research topic in recent years. Here we selected three representative papers. The Equilibrium Exchange Rate of RMB and Maladjustment of the Exchange Rate: 1991~2004 by Shi Jianzhun and Yu Haifeng is one of them, utilizing a model of equilibrium exchange rate commonly used in the field while conducting a systematic research on the issue of RMB exchange rate. Equilibrium rate is based on the notion that either overly high or low the rate will result in dislocation of an economy as it is one of fundamentals of an economy. We thus define the equilibrium exchange rate as that under which an economy is at equilibrium.
The paper not only utilized the notion foregone, but also adopted a new way of behavioural exchange rate method with a skilful treatment of data, including the consideration of possible roots of units of various macro-data. The findings of the paper are quite interesting. For example, during 1992 to 1994 RMB was undervalued and from the forth quarter of 1994 onward, the real rate was in the state of appreciation. Similarly, from 1995 to 1999 it was higher than its equilibrium rate, hence starting to decline. The paper is a rare masterpiece with regard to methodology among relevant domestic literature. There is one point that requires further discussion and exploration: under the circumstance that the Chinese economy has not been fully marketized, does the exchange rate have such a huge impact on the balance of the economy? The question is whether there is an intrinsic connection between the level of the rate and the balance or imbalance of the economy, though statistically the connection exists. The answer to this question is the theoretical basis of RMB equilibrium exchange rate which requires further investigation.
Zhang Shuguang’s paper, the Issue of RMB Exchange Rate: its Appreciation and Cost-benefit Analysis, first systematically reviewed the evolution of RMB exchange rate system since the Reform and Opening Up, and then suggested that the imbalance of the economy was manifested by the out-of-kilter balance of payment. Using econometric analysis this paper discussed the influence of RMB exchange rate on China’s import, export and the inflow of foreign capital. It found that RMB exchange rate did have an influence on China’s export, though with a lag, and this influence tended to fade after 7 lagging periods. This finding is worth noting because such a systematic inquiry is quite unique since the RMB exchange rate became a hot issue. However, the paper can be improved in one aspect: its econometric analysis is a little crude in that the roots of units of some macro-variables were not tested.
In the paper, Ease the Pressure of Hot Money: Self-Regulation Mechanism of the Market and Policy Measures, Sun Huayu and Ma Yue set up a monetary model of sticky prices in a continuous time-frame that took into consideration exchange rate expectations, and demonstrated the effect of a massive capital inflow on the expectation of RMB appreciation. One conclusion of the model is that the freeing up interest rate can to some extent ease the pressure generated by the expectation as it is basically self-enforcing in nature with multiple equilibriums. The significance of this paper does not lie in its detailed policy advice or vivid description of the reality, but its modus operandi whereby to study the topics of RMB appreciation and inflow of hot money, very commendable indeed.
Social issues amid a rapid growth of the economy received a significant amount of attention in all social circles. Here, we selected three papers with profound results, covering topics of property distribution, rural workers and medical needs. The paper the Uneven Property Distribution of Chinese People and Empirical Analysis of its Reasons by Li Shi, Wei Zhong and Ding Sai distinguishes itself because, though the misdistribution of incomes receives much attention, the uneven property distribution lacks systematic research due to lack of data. This paper can be said to be path-breaking in this field. In the survey of 1995 and 2000, they found wealth growth of households was faster than that of GDP and income, and the disparity of wealth distribution enlarged quickly between cities and rural areas, mainly caused by the privatization of the public housing in urban areas.
The issue of rural worker is a unique phenomenon in Chinese economic development. Rural workers work in cities for a long term, have the right of use of land in the countryside, but do not have registered residence in cities. This phenomenon is different from the dual economic structure in the conventional economics for development. In fact, rural workers move between cities and rural areas constantly. Lack of rural workers in some regions in recent years is partly because some rural workers start to move back to the countryside. Zhang Luwen’s Theory and Case Study of Rural Workers’ Moving Back systematically reviewed relevant literature in the international economic circle and proposed his own theory. The main point was that rural workers determined the direction of their own movement after a rational comparison of the relative returns between working in cities and staying in rural areas. The paper proved his theoretical discovery to a large extent by surveying rural workers. As an academic paper that specifically studies the movement of rural workers between cities and the countryside, this paper represents a relatively high level of economic research and it is worth further discussion by later literature.
The health and medical issue has become a social focus in China. The paper Health Needs of Our Citizens and the Grossman Model—Evidence from the Interface Data by Zhao Zhong and Hou Zhengang for the first time systematically studied the connections of people’s health level, education level and income level by using China’s 2000 Health and Nutrition Survey. Based on the survey of nutrition, the paper constructed a life quality index of an individual which is directly based on an individual’s health level index including action index, physical activity index and social activity index. According to the long-term research of health economics, an individual’s health level should be related to some of his or her characteristics, such as education level and income level etc. The paper came up with some interesting findings: the distribution of people’s health level was more even than that of income level; women’s education level had a positive effect on their health level—the higher their education level, the higher their health level—while for men this effect was not obvious; age level was a big influence on men’s health but not women’s; income level did not affect health level much. The forth finding is worthy of our careful discussion—maybe the high income group in China sacrifice their health to gain a high income level—as it has significant theoretical meanings to study China’s health policy and economic development policy..
Colleagues in China’s economic circle also worked hard in 2005 to study some topics that had regularity concerning economic development. These topics were not only closely related to the Chinese economy, they were also keenly felt pains in China’s economic development. We selected six pieces to get a rough idea.
The paper Financial Restraint, Financial Restriction and Financial Intervention? A New Theoretical Explanation for Evidence of Elementary Development Period by Zhang Chun and Wang Yijiang put forward a "Financial Intervention" theory. The paper is innovative in the idea of "financial restraint", and suggested that a low level of loan rate could increase efficiency because it could reduce adverse selection of input factors of social effective investment projects. The paper explained that if the input factor was entrepreneurship (managerial skills), there would be an adverse selection problem. The bank could not tell apart managers with high and low abilities. The bank would charge higher loan rate to avoid loss if low-ability managers managed projects with a relatively high bankruptcy risk. A high loan rate reduced returns of the projects so that for those high-ability managers managing high-value projects it was not worthwhile to carry out these projects. A low loan rate under the government regulation would attract high-ability managers to undertake new projects the society needed. In this case, in elementary development period financial intervention were needed in certain industries after weighing benefit against cost. This theory is consistent with the actual situation of loan rate and deposit rate in Korea and Taiwan during the 1960s. The idea this paper put forward promoted research of basic rules for this sort of problems and also provided a new viewpoint for later scholars’ theoretical research.
The reform of state-owned commercial banks was a hot issue in China’s economic circle in 2005. The reform of state-owned commercial banks cannot be separated from improving the bank regulation ability. But is there any international rule for bank regulation? In Bank Regulation: to Prevent Crisis or Promote Development? –An Empirical Study Based on Transnational Data and its Inspirations for China, Shen Kunrong and Li Li systematically studied this topic by comparing data in different countries. Using transnational time series data from the World Bank and modern econometric method they discussed the impact of various bank regulation measures on a country’s development in banking industry and came up with a series of general conclusions. They also discussed some problems concerning China’s current bank regulations based on these conclusions. They discovered that with a low capital adequacy rate of China’s commercial banks and insufficient non-governmental regulations, certain plans could be taken, so that they provided the foundation for the establishment of China Banking Regulatory Commission and policy advice for China’s bank reform. This research style that relates international experiences and China’s reform reality is worth advocating.
Ideology and Government Intervention by Zhang Qi and Liu Mingxing deals with why different developing countries adopt different economic development strategies, why some governments emphasize the effects of governmental intervention while others let the market function. This topic has a universal meaning. One feature of this paper is that it conducted an empirical research on this topic using historical and transnational data. The paper discovered that those ex-colonial countries that gained independence during the period from 1945 to 1965 and those countries with a poor previous economic system were the most likely to adopt a development strategy with strong government intervention after gaining their independence. This research is closely related to the topic discussed internationally—the relationship between colonial history and economic development, and to some extent it pushed forward the knowledge frontier of relevant research.
All fast developing economies including the Chinese economy have one feature in common—a high savings ratio. Economic research must give this phenomenon an explanation. Conventional theories used savings ratio to explain economic growth, asserting that a high savings ratio was an important reason for a fast economic growth. Chen Liping’s paper High Economic Growth Results in High Savings Ratio: An Explanation Based on Consumption Comparison pushed forward some research work in economics literature in the recent century. The article used a high growth rate to explain high savings ratio. One mechanism for this is that consumers expect a rise in future consumption. An individual’s utility gained from consumption is decided by the comparison between this individual’s consumption and the average consumption level in the society. So with a fast economic growth consumers have to save today so as to match others’ consumption in the future. This theory can explain China’s current high savings ratio. The model in the paper is quite standardized and follows modern economic norms. The paper used an endogenetic growth model to discourse the phenomenon that high economic growth results in high savings ratio. Certainly, this article cannot fully explain other reasons of China’s high savings ratio. For example, income distribution in recent years leans towards capital owners, and capital owners of companies are too eager about investment, causing a declining social consumption level.
Jiang Jianqiang’s Innovative Agreement Choice and Entrepreneurship studied a very interesting problem: why entrepreneurs launch their own enterprises instead of selling their innovative ideas to the market and letting others begin a business? It was assumed in previous literature that entrepreneurs were business creators. The author did not rest on this generally accepted assumption but asked further why entrepreneurs could not sell their product innovation through the market but had to start a business. This paper follows Coase’s theoretical frame of transaction cost. It has a clear viewpoint—the transaction cost of selling an innovative idea is very high, and the entrepreneur might as well start a business and sell products improved by the innovation in the product market. This thought is consistent with real-life observations and with most economic intuitions, and therefore pushes forward the research of entrepreneurial theories. The paper needs to further study the financing problems that entrepreneurs starting a business can meet. A huge transaction cost can incur in the financing market, so when entrepreneurs’ ideas need a large sum of capital, they may sell their innovations to investors and let them start a business.
The evolution of the system of property rights has long been a focus in China’s economists’ circle. Wang Sheng’s paper the Evolution of the System of Property Rights in the Competition with Other Nations brought Chinese economic discussions into the literature of international mainstream economics. The central idea of the paper is that although some groups inside a country have the tendency to violently violate property rights, due to the competition with other nations, the ruler to a large extent has the motivation to constrain this violent tendency to protect property rights and increase the production capacity and competitiveness. His paper systematically compared the histories of Western Europe and other civilized countries before industrialization. His basic conclusion is that competition between nations is an important force for the self-evolution of the system of property rights. Though this idea exists in relevant international papers, this paper incorporated the reality in China, conducted a systematic sorting of relevant literature and provided his own evidence for relevant history, which are all very precious.
Chen Liping, 2005. "High Growth Leads to High Savings: One Explanation Based on Consumption Rivalry", World Economy 11, 3-9.
Gong Binglin, Xu Lixing, and Chen Guangyan, 2005. "Local Protectionism in China: Direct Evidenc", Journal of Economics, 12, 1-18.
Hu Yifan, Song Min, and Chang Junxi, 2005. "Competition, Ownership, Corporate Governance: Their Importance and Interactions", Economic Research, 9, 44-57
Jiang Jianqiang, 2005. "Innovative Contract Select and Entrepreneurial Spirit", Economics Quarterly, vol.4, 18, 101-118.
Li Ji, Sun Jianmin, Liu Xiangyang, and Ba Shusong, 2005. "Ownership Structure Reform of SOEs", Administrative World, 1, 120-130.
Li Shi, Wei Zhong, and Ding Sai, 2005. "Unequal Distribution of Households’ Wealth: Some Empirical Explanation", Economic Research 6, 4-15.
Li Tao, 2005. "State ownership, Operational Risks, Soft-budget Constraint and Firms’ Performances", Economic Research 7, 77-89
Li Yang and Yin Jianfeng, 2005. "High Rate of Saving, Investment and Growth over the Period of Transition in Labour Force", Economic Research 2, 4-15
Lu Ting and Liu Xiaoxuan 2005. "A Model of Ownership Structure – Reform and its Impact", Economic Research 6, 94-103
Shen Kunrong and Li li, 2005. "Banking Supervision: Risk Prevention or Growth Promotion?", Administrative World 10, 6-23
Shi Jianzhun and Yu Haifeng, 2005. "RMB’s Long Run Exchange Rate and its Misalignment over the Period of 1991-2004", Economic Research 4, 34-45
Sun Huayu and Ma Yue, 2005. "Influx of Hot Money and Easing of Revaluation Pressure: Market Automatic Adjustment Mechanism and Policy Measures", World Economy 4, 13-22
Wang Sheng, 2005. "Transition of Ownership Regime under the State of Rivalry amongst Nation-States", New Political Economic Review, vol 1, 30-48
Zhang Chun and Wang Yijiang, 2005. "Financial Depression, Restriction and Intervention", Economic Daily 6, 68-82
Zhang Shuguang, 2005. "RMB Exchange Rate: Revaluation and its Costs", Economic Research 5, 17-30
Zhang Luwen, 2005. "Backflow of Rural Labour Movement: Theory and Case Analysis", China Social Sciences Review vol.3, 48-63
Zhang Qi and Liu Mingxing, 2005. "Ideology and State Interference", Economic Quarterly 2, 335-358
Zhao Zhong and Hou Zhengang, 2005. "Urban Health Demand and Grossman Model", Economic Research, 10, 79-90
