Barriers to energy efficiency improvement: Empirical evidence from small-and-medium sized enterprises in China

This paper analyzes barriers for energy efficiency investments for small-and medium-sized enterprises (SMEs) in China. Based on a survey of 480 SMEs in Zhejiang Province, this study assesses financial, informational, and organizational barriers for energy efficiency investments in the SME sector. The conventional view has been that the lack of appropriate financing mechanisms particularly hinders SMEs to adopt cost-effective energy efficiency measures. As such, closing the financing gap for SMEs is seen as a prerequisite in order to promote energy efficiency in the sector. The econometric estimates of this study, however, suggest that access to information is an important determinant of investment outcomes, while this is less clear with respect to financial and organizational factors. More than 40 percent of enterprises in the sample declared that that they are not aware of energy saving equipments or practices in their respective business area, indicating that there are high transaction costs for SMEs to gather, assess, and apply information about energy saving potentials and relevant technologies. One implication is that the Chinese government may assume an active role in fostering the dissemination of energy-efficiency related information in the SME sector. --energy efficiency,SMEs,China,energy policies,information access

Understanding the high profitability of Chinese banks

The big Chinese state-owned banks came as winners out of the global financial crisis. According to the Banker ranking, Chinese banks led the global banking profitability ranking through the years from 2008 to 2010 and contributed one fifth of global banking profits in 2010. The Chinese banking sector, which was deemed as wholly insolvent ten years ago, was reborn like a phoenix from the fire of the Asian financial crisis and the current financial crisis. The banking reform in the last decade with large-scale capital injection, assets carve-outs, restructuring and public listing celebrated great success. However, the low efficiency in Chinese banks is still persistent, as evident in many empirical studies (e.g. Feyzioglu, (2009)). The contradiction of high profitability and low efficiency causes great confusion in understanding banking in China. Our paper aims to reveal the real sources of the high profitability of the big Chinese banks. We compare their profitability pattern with peer banks from Asia, Europe and North America. We first test the hypothesis that the average asset return of the big five Chinese banks will fall below the international comparative level if the current high net interest margin given by the managed interest system in China falls to the international peer average level. Surprisingly, the hypothesis has to be rejected. Instead, our results show that the profitability of Chinese banks stays at international comparative level, despite the high inefficiency in Chinese banks. We therefore test a second hypothesis stating that the profitability of Chinese banks will fallbelow their international peers if staff costs increase by 30 percent in average to reach the international level, with the joint condition of margin decrease. This hypothesis can be proved, which means that the big five Chinese banks compensate its inefficiency by a combination of a non-competitive high interest margin and unsustainable lower labor cost. The above results of course raise the question how the big Chinese banks can stay competitive if China continues to liberalize its interest rate system and labor cost increases. In our concluding remarks, we discuss the possibility that Chinese banks change their business model towards universal banking with additional non-interest income to compensate the drop in interest margin. --China,banks,finance,banking business model,universal banking

Enrichment with growth

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Mobile banking and financial inclusion: The regulatory lessons

Mobile banking is growing at a remarkable speed around the world. In the process it is creating considerable uncertainty about the appropriate regulatory response to this newly emerging service. This paper sets out a framework for considering the design of regulation of mobile banking. Since it lies at the interface between financial services and telecoms, mobile banking also raises competition policy and interoperability issues that are discussed in the paper. Finally, by unbundling payments services into its component parts, mobile banking provides important lessons for the design of financial regulation more generally in developed as well as developing economies. --Banking,Regulation,Microfinance,Payments System,Mobile Money

Are Chinese consumers at risk due to exposure to metals in crayfish? A bioaccessibility-adjusted probabilistic risk assessment

Freshwater crayfish, the world's third largest crustacean species, has been reported to accumulate high levels of metals, while the current knowledge of potential risk associated with crayfish consumption lags behind that of finfish. We provide the first estimate of human health risk associated with crayfish (Procambarus clarkii) consumption in China, the world's largest producer and consumer of crayfish. We performed Monte Carlo Simulation on a standard risk model parameterized with local data on metal concentrations, bioaccessibility (phi), crayfish consumption rate, and consumer body mass. Bioaccessibility of metals in crayfish was found to be variable (68-95%) and metal-specific, suggesting a potential influence of metal bioaccessibility on effective metal intake. However, sensitivity analysis suggested risk of metals via crayfish consumption was predominantly explained by consumption rate (explaining >92% of total risk estimate variability), rather than metals concentration, bioaccessibility, or body mass. Mean metal concentrations (As, Cd, Cu, Ni, Pb, Se and Zn) in surveyed crayfish samples from 12 provinces in China conformed to national safety standards. However, risk calculation of phi-modified hazard quotient (HQ) and hazard index (HI) suggested that crayfish metals may pose a health risk for very high rate consumers, with a HI of over 24 for the highest rate consumers. Additionally, the phi-modified increased lifetime risk (ILTR) for carcinogenic effects due to the presence of As was above the acceptable level (10(-5)) for both the median (ILTR = 2.5 x 10(-5)) and 90th percentile (ILTR = 1.8 x 10(-4)), highlighting the relatively high risk of As in crayfish. Our results suggest a need to consider crayfish when assessing human dietary exposure to metals and associated health risks, especially for high crayfish-consuming populations, such as in China, USA and Sweden.HZ by the National Natural Science Foundation of China (41273087). LN was supported by European Union Marie Curie Actions, Grant FP People 2010 “IRSES Electroacross” and BG by the SAGE-IGERT Fellowship (US National Science Foundation)

Reconciling climate change and trade policy

There is growing clamor in industrial countries for additional border taxes on imports from countries with lower carbon prices. The authors confirm the findings of other research that unilateral emissions cuts by industrial countries will have minimal carbon leakage effects. However, output and exports of energy-intensive manufactures are projected to decline potentially creating pressure for trade action. A key factor affecting the impact of any border taxes is whether they are based on the carbon content of imports or the carbon content in domestic production. Their quantitative estimates suggest that the former action when applied to all merchandise imports would address competitiveness and environmental concerns in high income countries but with serious consequences for trading partners. For example, China’s manufacturing exports would decline by one-fifth and those of all low and middle income countries by 8 per cent; the corresponding declines in real income would be 3.7 per cent and 2.4 per cent. Border tax adjustment based on the carbon content in domestic production, especially if applied to both imports and exports, would broadly address the competitiveness concerns of producers in high income countries and less seriously damage developing country trade.Climate Change Mitigation and Green House Gases,Climate Change Economics,Environment and Energy Efficiency,Energy and Environment,Transport Economics Policy&Planning

Chinese firms entering China's low-income market: Gaining competitive advantage by partnering governments

This paper investigates poverty alleviation efforts in China and the nature of governmententerprise partnerships there. We argue that firms partnering central and local governments can be an effective strategy to overcome resource-based obstacles in low-income markets. In China, local and central governments are owners of rare and valuable resources, thus offering better access to finance, infrastructure, technical and planning expertise, advocacy through government marketing and distribution channels, and links to other stakeholders. The findings are based on 16 case studies of firms entering the low-income market in China, of which two cases in the agricultural and telecommunication sector are studied in depth. --Partnerships,government,poverty alleviation,China,base of the pyramid

Making sense of institutional change in China: The cultural dimension of economic growth and modernization

Building on a new model of institutions proposed by Aoki and the systemic approach to economic civilizations outlined by Kuran, this paper attempts an analysis of the cultural foundations of recent Chinese economic development. I argue that the cultural impact needs to be conceived as a creative process that involves linguistic entities and other public social items in order to provide integrative meaning to economic interactions and identities to different agents involved. I focus on three phenomena that stand at the center of economic culture in China, networks, localism and modernism. I eschew the standard dualism of individualism vs. collectivism in favour of a more detailed view on the self in social relationships. The Chinese pattern of social relations, guanxi, is also a constituent of localism, i.e. a peculiar arrangement and resulting dynamics of central-local interactions in governing the economy. Localism is balanced by culturalist controls of the center, which in contemporary China builds on the worldview of modernism. Thus, economic modernization is a cultural phenomenon on its own sake. I summarize these interactions in a process analysis based on Aoki's framework. --Aoki,culture and the economy,emics/etics,guanxi,relational collectivism,central/local government relations,culturalism,population quality,consumerism

Environmental Protection Bureau leadership at the provincial level in China: Examining diverging career backgrounds and appointment patterns

This paper analyzes the career backgrounds of local government officials in provincial Environmental Protection Bureaus (EPBs) in China and explains appointment processes of Chinese EPB bureaucrats. Using biographical information of provincial EPB heads and drawing on extensive fieldwork conducted in 2010 in Shanxi Province and Inner Mongolia, this paper finds that only one-fourth of current EPB heads were promoted through the bureau ranks within the EPB, while the remaining three-fourths were appointed from positions outside the environment field. Further, nearly all EPB heads' professional backgrounds and associated networks can be clearly categorized as environmental, business, provincial government, or local government oriented. The paper delineates these four types of Chinese EPB leaders and explains why an awareness of the different professional orientations is critical to understanding environmental protection in China. These findings have implications for inferring the unique characteristics of a province's EPB leadership, the implementation capacities of provincial EPBs, and the appointment preferences of provincial leaders. --agency,environmental protection,policy implementation,networks,China

Energy service companies in China: The role of social networks and trust

China's energy-service companies (ESCOs) have developed only modestly despite favorable political and market conditions. We argue that with sophisticated market institutions still evolving in China, trust-based relations between ESCOs and energy customers are essential for successful implementation of energy efficiency projects. Chinese ESCOs, who are predominantly small and private enterprises, perform poorly in terms of trust-building because they are disembedded from local business, social, and political networks. We conclude that in the current institutional setting, the ESCO model based on market relations has serious limitations and is unlikely to lead to large-scale implementation of energy efficiency projects in China. --energy policies,energy service companies (ESCO),social networks,trust,China