The contracts between leading agribusiness enterprises and rural households: its effects on firm-level export of agricultural products

In this paper, transaction cost is introduced into the general firm-level export behavior model. By so doing, we build a theoretical model explaining how connection modes between leading agribusiness enterprises and rural households affect the firm-level agricultural products export. Analyzing the dataset of 561 national leading agribusinesses of the year 2003, we use Tobit model to estimate the firm-level export effect of the connection modes. The empirical result demonstrates that connections in the mode of stock-cooperation or cooperation contracts have a significant positive effect on the enterprises export and export ratio. In addition, the connection with more characteristics of factor contract has stronger effect on export than that with commodity contract characteristics.Contracts; Agribusiness; Rural Households; Firm-level; Export

Renminbi Internationalisation: Precedents and Implications

While it is commonly assumed that there are no known precedents against which to benchmark the internationalisation of the Renminbi (RMB), this paper argues that the PRCs own development experience provides a useful perspective on the internationalisation debate. In particular it indicates that lessons can be learnt from both the successes and the shortcomings of efforts to internationalise the RMB in the 1970s. During this period state-owned banks in Hong Kong played a central role in mobilising finance for foreign trade. Access to Hong Kong’s developed financial institutions allowed the PRC to maximise receipts from foreign trade as well as minimise the risks of undue swings in capital flows. The paper shows that although China no longer faces foreign exchange scarcity, economic reforms have not yet resolved vulnerabilities in China’s financial institutions and as such Hong Kong’s role in mitigating the risk of undue capital swings remains

Industrial Agglomeration, Production Networks and FDI Promotion The Case Study of China

Chinas Industrial clustering is a distinguished economic phenomenon over the last 20 years. It began to enter into its fast track in the mid-1990s and developed rapidly in recent years. Both market-driven force and government-driven force contribute to Chinese industrial clusters. The opening and stable macroeconomic policies create a favorable climate for the industrial clustering. Local government has made its contribution to construction on both hardware and software environments for industrial clusters. The major contribution of FDI to the local industrial clustering lies in helping integrating Chinese domestic industries into international division of labor and at the same time forging a relatively integrated production chain for Chinese domestic industries. At present, China has stepped into the new phase of industrial clusters upgrading. Chinese government is gradually improving the local software infrastructure for industry clustering.Industrial Agglomeration, China, Production Networks, FDI, foreign direct investment

"Growth and Structural Change in China-U.S. Trade"

Since the resumption of China-U.S. trade in 1972, and in particular since the establishment of diplomatic relations in early 1979, trade between the two countries has increased dramatically. By 1990, the United States was China's third-largest trading partner, accounting for 10.2% of China's total trade, 12.4% of Chinese imports, and 10.1% of total foreign investment. China's foreign exchange holdings had grown to $40 billion (sixth largest in the world), and its foreign borrowing to$53 billion. This represents an integration into the world economy believed impossible by most observers a decade earlier. A key to this success has been the decentralization reform of foreign trade structures undertaken by the Chinese leadership, and the adoption of the devaluation policy aimed at emulating the trade and economic growth strategies of Taiwan and South Korea. During the period examined, Hong Kong has played a crucial role in stimulating and facilitating trade between the two countries, and has provided experience in foreign trade operations to novice Chinese exporters. Furthermore, the British colony has aaed as a middleman-lowering transaction and transportation costs-for U.S. businesses wishing to trade with the rapidly growing number of Chinese foreign trade corporations. It is noted that the discrepancy in U.S. and Chinese government trade estimates results largely from the export of substantial Chinese goods to the U.S. through Hong Kong: Washington, unlike Beijing, counts these as Chinese goods. During this period, the slow growth in world trade has proved no constraint on the rapid growth in China-U.S. trade, and shows no signs of doing so. This is, in large part, due to the complementary nature of the two economies: Beijing sees the U.S. as a critical source of advanced technology and equipment to meet its modernization goals, while Washington regards China as a vast untapped marker for exports. The governments of the two countries have played a positive role in encouraging trade growth to date, and Wang points to the potentially disastrous consequences of revoking most-favored-nation trading status. The reduction in Chinese exports would, in turn, cause a loss of the foreign exchange needed to afford U.S. imports, and thus would have a negative effect on an already ailing U.S. domestic economy. The larger effects, particularly the "body blow" to Hong Kong, would reach far beyond the economic relations between the two countries.

The Baosteel Group – A national champion amongst national champions

In comparison to many of the Chinese and Indian state-owned enterprises examined in this volume, the institutional and competitive position of the Baosteel Group is somewhat unique. First, Baosteel stands out as one of the major success stories of recent Chinese state-owned enterprise (SOE) reform. Created as a national steel champion by the Chinese government in the early years of the reform period, and benefiting from the industrial policy support this status has brought during the intervening three decades, Baosteel has earned the status of one of China’s most internationally competitive SOEs. However, Baosteel is also unique in that it does not dominate the Chinese steel sector. Accounting for only a small share of Chinese steel production, Baosteel’s position is one of a technological leader within a competitive market structure populated by a large ‘national champions group’ of SOEs. Moreover, Baosteel has also faced special obligations to implement national industrial policies, by acting as a technological leader tasked with the role of acquiring and upgrading ailing steelmakers. Understanding Baosteel’s position within the Chinese steel sector as a ‘national champion amongst national champions’ is critical to explaining its operational characteristics, its special relationship with the Chinese government, and the benefits and costs this has carried for the firm

On The Pollution Content of China’s Trade: Clearing the Air?

This study compares alternative measures of the potential and actual pollution content of China’s trade using an environmental I-O methodology. Using the conventional, potential measure adopted by other researchers, we find that China ‘saves’ on local environmental resources by exporting goods that on average embody less pollution content than imports would if they were produced locally in China. A less positive, assessment of the environmental impact of China’s trade emerges, however, if the assumption of a common technology for producing exports and imports is dropped. Using an actual pollution content methodology for measuring the pollutants embodied in the production of both exports and imports, we find that China is actually a net exporter of embodied pollutants.Trade, pollution content, China

The Renminbi Equilibrium Exchange Rate: an agnostic view

The supposed undervaluation of the renminbi has been the subject of intensive academic research over the past few years. Using equilibrium exchange rate models (Purchasing Power Parity, BEER and FEER), many authors have concluded that the renminbi is undervalued by 15 to 30% against the dollar. This article shows that the common view is not that obvious. The models used in the estimation (BEER or FEER) assume that the economy is at full-employment, a strong hypothesis for developing economies such as China, whose unemployed amount to 150 million people. On the contrary, we show that China is facing massive unemployment and if investment depends on expected potential demand (from domestic consumption and foreign demand), then an undervalued exchange rate (by traditional standards) is suited for its policy objectives. Therefore the exchange rate can be analyzed as a policy tool used by the Chinese authorities to pursue their objectives. The exchange rate can be undervalued by traditional standards and in equilibrium compared to the government’s policy objectives. This article shows that equilibrium exchange rate theories are not suited for developing countries and therefore the concept of equilibrium exchange rate is highly questionable. The final section analyzes the adoption of a managed float regime by the Popular Bank of China and discusses the delicate issue of the best exchange rate regime for China

China’s Energy Situation and Its Implications in the New Millennium

Many are interested in China’s energy situation, however, numerous energy related issues in China still remain unanswered. For example, what are the potential forces driving energy demand and supply? Previous reviews focused only on fossil fuel based energy and ignored other important elements including renewable and ‘clean’ energy sources. The work presented here is intended to fill this gap by bringing the research on fossil-based and renewable energy economic studies together and identifying the potential drivers behind both energy demand and supply to provide a complete picture of China’s energy situation in the new millennium. This will be of interest to anyone concerned with the development of China’s economy in general, and in particular with its energy economy.China China; Energy; Fossil fuels; Renewable Energy