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2020 | OriginalPaper | Buchkapitel

13. System Cost and China’s Economy

verfasst von : Qiren Zhou

Erschienen in: Property Rights and Changes in China

Verlag: Springer Singapore

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Abstract

This paper aims to analyze China’s economic growth through the concept of system cost which is the cost associated with the establishment, running and the changes of institutions.

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Vorheriges Kapitel Monetary System and Economic Growth

For economic growth rate in 2008 and the previous 30 years, see NBS of the People’s Republic of China (2013: 45); for IMF figures, see America Usurped: China Becomes World’s Largest Economy, (http://www.dailymail.co.uk/news/article-2785905/China-overtakes-U-S-world-s-largest-economy-IMF-says-economy-worth-17-6trillion-America-falls-second-place-time-1872.html).

For example, Cheung announced in his unique style that “I never saw such a good institution in China.” (See reports from http://news.ifeng.com/opinion/200809/0912.23_780811.Shtml). He also announced that he had decrypted the code of China’s economic system (see The Economic System of China). For other publications on the China Model, see “Eyes on the Chinese model”, on the Theory Channel of people.cn (http://theory.people.com.cn/GB/40557/149513/).

In 1773 when Smith traveled a mere 410 miles from Edinburgh to London to publish his masterpiece, he had to take a public carriage, which operated only once a month, on a bumpy road for 10 to 15 days. Even worse, he had to sign his will before he went off because the journey was never safe (Ross 2010: 401).

Coase (1937).

Pei-kang Chang (1940).

Zhou Qiren (2006).

Arrow (1969: 48).

North (1990); Steven N.S. Cheung (1987).

Steven N.S. Cheung (1987: 58).

Take China for example. In the era of the planned economy, many behaviors and activities were enormously costly, although they may not be related to direct production or be regarded as transactions in the narrowest sense. These include: provinces and cities swapping allocated goods, local governments lobbying the central planning department for investment and construction projects, farmers trading products produced from their private land plot on the black market at the risk of “the capitalist tails being cut”, and the movements one after another.

Alchian (1987) pointed out that “socially enforced” is essential to property rights. After him, North (1990) introduced state behavior into the analysis of institutional changes.

For the Sixth Five-Year Plan (1981‒1985) for Economic and Social Development of the People’s Republic of China, http://www.npc.gov.cn/wxzl/gongbao/1982-11/30/content_1478459.htm.

For an overview of the changes in population policies, see Zheng Zhenzhen (2012).

In 1978, Deng Xiaoping summarized at the National Science Conference: “What is the status of our current production technology? Several hundred million people work in farming, yet the food problem is not truly solved.”

For the internal logic of China’s rural development driven by reform, see Zhou Qiren (1994).

NBS (2013: 224).

The theory of comparative advantage was developed by David Ricardo to explain why there can be large trade volumes between developed countries and backward countries, which would be unlikely based on the theory of absolute advantage of Adam Smith. The key is “comparative advantage”: although the developed economy has the absolute advantage over the developing economy across the board, the latter could concentrate on producing products with comparative advantage and then promote economic growth through international trade.

In 1978, China’s agricultural population was 810 million yuan. The annual per capita net income was only 133.57 yuan. Previously, farmers’ incomes were even lower. For example, in 1957, the figure was less than 73 yuan (Department of Planning, Ministry of Agriculture, Animal Husbandry and Fisheries 1983: 35, 523).

See NBS (2013: nominal GDP. 44; total amount of wages. 132; taxation 331: fiscal revenue, 328; social security contributions, 850); the land transfer fees amounted to 42 billion yuan in 1995 (including 2.4 billion yuan of make-up payment for previous land allocations, see China Land Yearbook 1996:60. The land transfer fees amounted to 2.69 trillion yuan in 2012 (See Land and Resources Statistical Yearbook 2013) and 4.28 trillion yuan in 2014 (See Ye Kai, From 40 Billion to 4 Trillion—The History of Land Sales by Local Governments, published by China Business News, August 29, 2016, http://finance.qq.com/a/20160829/036965.htm).

This should serve as a caveat for transitional economies like China: special attention should be paid to the relationship between the resource allocation system and the income distribution system. Before power has been properly caged, the “charge” by the authority on a fast-growing economy may far exceed the sustainable level that the economy can afford.

According to this, the Fuzhou Intermediate People’s Court ruled that: “IP telephone is a new type communication business that is based on network technology and provided over Internet, and it falls into the scope of “computer information service business” described in the No. 55-1993 Circular of the State Council and in Chinese Public Multimedia Communication Regulations. The No. 55-1993 Circular of the State Council explicitly stipulates that “the computer information service business” is open to the private sector. Therefore, it is not a long-distance communication and international communication business under the exclusive operation of the post and telecommunications department as per No. 54-1990 Circular of the State Council, as claimed by the appellee Fuzhou Municipal Public Security Bureau Mawei District Branch.” For the full text of the ruling, see http://bbs.cl14.net/thread-829885-1-1,html).

Lao Rong, who provided expert testimony in the case of CHEN brothers in the Fuzhou Intermediate People’s Court, recorded the case in detail. See http://laorong.blog.techweb.com.cn/archives/11.10.

Xu Yongdong, a judge for eight years, later resigned and founded Tuowei Law Firm as Lead Partner (http://www.yearbooklawyer.com/sites/lawyer/detaiL201207271801341547_c_10.html).

For more analysis, see Zhou Qiren (2002).

“Premier Li Keqiang urged to increase the speed and reduce costs of broadband for three consecutive times,” Beijing Times, May 14, 2015. Two years later, Premier LI Keqiang said in his government work report on March 5, 2017, that all domestic long-distance fees and roaming fees for mobile phones had to be abolished within the year, and the Internet access fees for SME dedicated lines and international long-distance telephone charges should be drastically reduced. (See the special telegram by Xinhua News Agency Beijing New Media).

The controversy over online car-hailing since 2015 is just one of the many new telling cases.

Zhou Qiren (2010: 25).

For example, since 2013,Caixin.com has been publishing the “Anti-Corruption Weekly” column to cover major anti-corruption cases. It has produced a total of 130 editions so far.

Zhou Qiren (2008).

Barzel defines the power as the ability to impose costs, see Barzel (2002: 10).

Alchain, A. 1987. Property Rights. In The New Palgrave A Dictionary of Economics, ed. John Eatwell, Murray Milgate, and Peter Newman, 1031–1034. London: The Macmillan Press Limited and The Stockton Press.

Arrow, K. J. 1969. The Organization of Economic Activity: Issues Pertinent to the Choice of Market versus Non-Market Allocation. In The Analysis and Evaluation of Public Expenditures: The PBB-System, Joint Economic Committee, 91st Cong., 1st Sess., 1. Washington, DC: Government Printing Office.

Barzel, Yoram. 2002. Theory of the State: Economic Rights, Legal Rights, and the Scope of the State. Cambridge: Cambridge University Press.

Chang, Pei-kang. 1940. Grains Distribution and Sales in Zhejiang. The Commercial Press.

Cheung, Steven N. S. 1987. Economic Organization and Transaction Costs. In The New Palgrave: A Dictionary of Economics, Vol. 2, 55–58. Palgrave Macmillan. For Chinese text, see Economic Organizations and Transaction Costs” by Cheung, published in The New Palgrave Dictionary of Economics, Vol. 2, Economic Science Press, 1996: 58–60.

Cheung, Steven N.S. 2009. The Economic System of China. Beijing: Citic Press.

Coase, R.H. 1937. The Nature of the Firm. Economica 4 (2): 386–405.

National Statistics Bureau of PRC. 2013. China Statistical Yearbook 2013. China Statistics Press.

North, Douglass C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.CrossRef

Qiren, Zhou. 1994. China’s Rural Reform: The Evolution of the Relation Between Government and Property Rights. China Social Sciences Quarterly (Hong Kong), Summer Issue, August 15.

Qiren, Zhou. 2002. The Right to Play with Wording”, “The Irrelevant Anthrax”, “The Situation of Express Mail Market and its Upper Layer”. Income Is a Series of Event, Peking University Press.

Qiren, Zhou. 2005. Market Competition Is a Right, “From IP Telephone to 3G”. Take the Lamp to Examine the Sword–Observing the Big Era of Economy, Peking University Press.

Qiren, Zhou. 2006. Attending Pei-kang Chang’s Lectures. Income Is a Series of Events, Peking University Press, 11–14

Qiren, Zhou. 2008. What Deng Xiaoping Did Right. What China Did Right, Peking University Press 2010, 10–27.

Ross, Ian Simpson. 2010. The Life of Adam Smith. 2nd ed. Oxford: Oxford University Press.

The Planning Department of the Ministry of Agriculture, Animal-Husbandry and Fisheries. 1983. Agriculture Economic Information.

Xiaoping, Deng. 1983. Selected Works of DENG Xiaoping, Vol. 2. Copenhagen: The People’s Press.

Zhenzhen, Zheng. 2012. A Review of China’s Population Policy and Its Future Directions, china.com.cn on July 12. http://www.china.com.cn/guoqing/2012-07/12/content_25890510.htm.

Titel: System Cost and China’s Economy
verfasst von: Qiren Zhou
Verlag: Springer Singapore
Buch: Property Rights and Changes in China
Print ISBN: 978-981-15-9884-5

Electronic ISBN: 978-981-15-9885-2

Copyright-Jahr: 2020
DOI: https://doi.org/10.1007/978-981-15-9885-2_13

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