The Impact of Reform on Economic Growth in China: A Principal Component Analysis

The study decomposes the sources of Chinese growth by first making a distinction between technological progress and technical efficiency in the growth accounting framework, and then identifying a series of reform programmes, such as urbanization, structural change, privatization, liberalization, banking and fiscal system reforms as the key components in institutional innovation which facilitate the improvement of technical efficiency and through which economic growth. These components are then incorporated into the model specification, which is estimated based on a panel dataset by applying the principal component analysis (PCA) to eliminate the multicollinearity problem. The results show that urbanization, liberalization and structural change in the form of industrialization are the most important components in contributing to the improvement of technical efficiency and hence growth, highlighting the importance of government policies aimed at enhancing further urbanization, openness to trade and industrial structural adjustments to sustain the growth momentum in China. The study also found that the potential for further enhancing growth through technical efficiency in China is considerable, which can be realized by deepening state-owned enterprises (SOEs) restructuring, and banking and fiscal system reform.institutional reform, growth, technical efficiency, principal component analysis, stochastic frontier analysis

China - Linking Markets for Growth

China’s prosperity is at the core of the emerging Platinum Age of global economic growth. Rapid economic growth has been underpinned by expansion in its domestic markets, and the integration of domestic and international markets in goods, services, capital, labour and foreign exchange. Global commodity prices have reached historic highs, while China’s capital outflows have helped to hold down interest rates worldwide. Linking markets, both domestic and international, has been key to China’s success. In sustaining its strong economic growth, China has become one of the world’s most voracious consumers of energy. The challenge now facing the government and people of China is in achieving cooperation with the international community to avert the costs–both economic and environmental–of accelerating energy consumption. China–Linking Markets for Growth gathers together leading scholars on China’s economic success and its effect on the world economy into the next few decades

China: New Engine of World Growth

Twenty-five years of reform have transformed China from a centrally planned and closed system to a predominantly market-driven and open economy. As a consequence, China is emerging as the new powerhouse for the world economy. China: new engine for world growth discusses the impact and significance of this transformation. It points out risks to the growth process and unfinished tasks of reform. It presents conclusions from recent research on growth, trade and investment, the financial sector, income and regional disparities, industrial location and private sector development. Ross Garnaut is a Professor of Economics in the Research School of Pacific and Asian Studies, and Chairman of the China Economy and Business Program at The Australian National University. He was Australia’s Ambassador to China in the 1980s. Ligang Song is a Fellow in the Asia Pacific School of Economics and Government, and Director of the China Economy and Business Program at The Australian National University

The Turning Point in China's Economic Development

Economic policy; Economic conditions; Industrialization; Chin

China 2002: WTO entry and world recession

In 2002 China enters the WTO. Long awaited by the world’s trading economies, it now comes in a year of global recession. What effect will China’s entry into the WTO have at a difficult time? The rapid expansion of China’s trade has required large adjustment in its trading partners, and the expansion and adjustment will accelerate with WTO entry. The internal adjustment pressures in China from WTO entry are also immense. Recently dubbed Australia’s Ambassador to the region by Rowan Callick of the Financial Review, Ross Garnaut was Australia’s ambassador to China through an earlier exciting period when China took its first major steps towards opening to international trade and investment. He was instrumental in the development of China’s thinking about the WTO. Ross Garnaut is Chairman of the China Economy and Business Program at The Australian National University. Australian members of the Program and their associates gather each year for the China Update. Ligang Song is leading authority on the internationalisation of the Chinese economy and on the development of the private sector in China. He has worked at Peking University and People’s University in Beijing and at the International University in Tokyo

Promoting private entrepreneurship for deepening market reform in China: a resource allocation perspective

After more than three decades of rapid growth, China's economy is going through an important turning point, where structural imbalances in both supply and demand sides must be addressed for a more moderate and sustainable growth path. By focusing on the structural changes to its ownership, a central element in China's economic transformation under market reform, the present paper highlights the importance of private entrepreneurship in deepening market reform and, thereby, in driving economic growth in a more efficient and sustainable way. Based on a perspective of resource allocation and a conceptual framework of entrepreneurship, the paper elaborates on the evolution of the private sector and its performance in the context of ownership reform, making comparisons with the performance of the state sector. The analysis suggests that there is further room for more productive use of economic resources, especially capital, land and natural resources, by increasing the participation of private entrepreneurs in industries with high entry barriers in favor of state-owned enterprises. Moreover, more competitive and equal access to productive resources through reform is needed to promote more productive entrepreneurship and to reduce rent-seeking activities

China's Dilemma: Economic Growth, the Environment and Climate Change

China’s Dilemma—Economic Growth, the Environment and Climate Change examines the challenges China will have to confront in order to maintain rapid growth while coping with the global financial turbulence, some rising socially destabilising tensions such as income inequality, an over-exploited environment and the long-term pressures of global warming. China’s Dilemma discusses key questions that will have an impact on China’s growth path and offers some in-depth analyses as to how China could confront these challenges. The authors address the effect of the global credit crunch and financial shocks on China’s economic growth; China’s contribution to greenhouse gas emissions and emissions reduction schemes; the environmental consequences of foreign direct investment in China; the relationship between air pollution and mortality; the effect of climate change on agricultural output; the coal industry’s compliance with tougher regulations; and the constraints water shortages may impose on China’s economy. It also emphasises the importance of managing the rising demand for energy to moderate oil price increases and placating domestic and international concerns about global warming. In the thirty years since China started on the path of reform, it has emerged as one of the largest and most dynamic economies in the world. This carries with it the responsibility to balance the requirements of key industries that are driving its development with the need to ensure that its growth is both equitable and sustainable. China’s Dilemma highlights key lessons learned from the past thirty years of reform in order to pave the way for balanced and sustained growth in the future

Rebalancing and Sustaining Growth in China

The idea that China’s economy needs to rebalance is no longer controversial inside or outside the country. Whether it be the increasing recognition of incom