Globalization and Sustainable Growth in China

Inhaltsverzeichnis

1. Frontmatter

2. Chapter 1. Introduction

   Yanqing Jiang, Yuwen Dai

   Abstract

   Thanks to the market-oriented policy reforms that were initiated in the late 1970s, China has achieved spectacular growth over the past several decades, and its economic structure has experienced great transformation. In the meantime, in the general context of globalization, the whole country has also gradually opened up to foreign trade and foreign direct investment, transforming itself from a virtually completely closed economy into a major trading nation and the largest developing-country destination for foreign direct investment in the world.

3. Chapter 2. Technology and China’s Growth Trend

   Yanqing Jiang, Yuwen Dai

   Abstract

   This chapter contains a statistical analysis exploring the interrelationships between technology, production and various socio-economic variables in the context of China’s regional macroeconomy. We focus on empirically examining how technology at the macro level is interrelated to production, output, and various macro-level socio-economic indicators. Our statistical analysis shows that a higher level of technology is always associated with socio-economically desirable outcomes on the various chosen macro-level indicators. However, the causality may run bi-directionally. Our empirical results also show that even after the partial effects of all the other macro-level variables are netted out, that is, even when the indirect effects of technology are not considered, the remaining direct effect of technology is still shown to play a very crucial role in determining labor productivity in the production process at the macro level.

4. Chapter 3. Spatial Effects of FDI and Growth in China

   Yanqing Jiang, Yuwen Dai

   Abstract

   This chapter examines how the spatial distribution of foreign direct investment (FDI) affects productivity growth in less developed regions of China. A systematic theoretical framework is set up concerning the potential effects of FDI capital via different channels. Following the theoretical framework, this study presents empirical evidence showing that FDI spillovers from the developed regions play a crucial role in enhancing productivity growth in the less developed regions. Empirical results also show that local FDI spillovers in less developed regions promote local productivity growth. In addition, FDI spillovers from less developed regions are not shown to have a significant effect on productivity growth in other less developed regions.

5. Chapter 4. Interregional Disparity in Productivity Growth

   Yanqing Jiang, Yuwen Dai

   Abstract

   This chapter presents an empirical analysis to improve our understanding of the catch-up and convergence tendencies of total factor productivity (TFP) growth across the Chinese provinces. After controlling for the province heterogeneity, our regression results show that the Chinese provinces exhibit significant conditional convergence in TFP growth over the sample period. This indicates that province-specific factors play an important role in determining provincial TFP growth. Economic policies conducive to faster TFP growth should thus be directed to the relevant factors underlying the province heterogeneity. This chapter suggests that openness to international economic activities and human capital accumulation are two important factors that promote TFP growth, both of which rely on a salutary social infrastructure.

6. Chapter 5. Trade Imbalance and Protectionist Policy on Imported Intermediate Inputs

   Yanqing Jiang, Yuwen Dai

   Abstract

   In this chapter, we analyze changes in trade balance in response to protectionist policy on imported intermediate inputs. Our analysis is conducted in a non-scale growth model, which features endogenous labor supply, leisure choice, and an imported intermediate input in the domestic production. From our model results, we find that an increase in the price of the imported intermediate input will lead to lower productivity and lower output, which in turn will have an adverse effect on the trade balance. But the reduced consumption following the import tariff will have a positive effect on the trade balance. The net impact on the trade balance depends on the relative forces of these offsetting factors. Hence, trade protectionism on imported intermediate inputs will not necessarily reduce the trade deficit in the domestic economy. The policy implication is that President Trump’s trade protectionist policy on imported intermediate inputs from China will probably not work.

7. Chapter 6. When the US Sneezes, Will China Catch a Cold?

   Yanqing Jiang, Yuwen Dai

   Abstract

   In this chapter, we examine the synchronization of business cycles between China and the United States for the past few decades. To that end, we measure their business cycles and find the turning points in their cycles. Under a GMM analytical framework, we conduct both single synchronization tests and joint synchronization tests in the growth cycles and acceleration cycles between China and the US. From our synchronization tests, we find strong evidence of positive correlation in the growth cycles between China and the US, with spillover effects on each other. In addition, we find evidence of negative correlation in the acceleration cycles between China and the US across time, which implies that when the rate of US economic growth begins to slow down, the Chinese economy will be resilient. So when the US sneezes, China will not catch a cold.

8. Chapter 7. Growth Cycles in the BRICS

   Yanqing Jiang, Yuwen Dai

   Abstract

   It has been over a decade since the cooperation within the BRICS was formalized. In this chapter, we attempt to examine the behavior and the correlation of growth cycles among the BRICS. To that end, we measure their growth cycles, locate the turning points in their cycles, and conduct contemporaneous and cross-time correlation tests in their growth cycles. From our empirical results, we find that the growth cycles of Brazil, Russia, and South Africa depend highly on the growth in the Chinese economy and the demand from the Chinese market. This common dependence on China drives growth cycle correlation among Brazil, Russia, and South Africa over time. As the BRICS are major economic forces in their respective regions, the findings from our study have important policy implication for future cooperation among the BRICS.

9. Chapter 8. China’s Growth Targeting and Policy Implication for LDCs

   Yanqing Jiang, Yuwen Dai

   Abstract

   The current wave of globalization has encouraged growth in the world economy and affected all sides of international economic involvement over the last few decades. Developing and emerging market economies have introduced major policy reforms and experienced significant economic growth. As a developing country, China has set an annual growth target, which has driven the nation’s economic policies for decades. Motivated by the Chinese experience, we develop an analytical framework to examine the case of economic growth targeting. In our model economy, key features for developing countries include the degree of commitment by the central bank, semi-dependence between the monetary authority and the fiscal authority, and the risk of sovereign default. From our analytical results, we find that under a GDP growth targeting regime, when the central bank is more committed to its growth target, the actual growth rate becomes close to the target level, the inflation rate increases moderately for those countries with flatter supply curves, and the social welfare improves. Moreover, higher growth rate is associated with lower tax levied by the fiscal authority, and it is inversely related to the government’s default probability. Policy implication could be drawn from our model results for developing countries when they evaluate the policy option of growth targeting, in order to achieve positive and sustainable economic growth.