Gang Fan is a Professor of Economics at the Peking University HSBC Business School. He holds a M.A. and PhD in Economics from the Graduate School of the Chinese Academy of Social Sciences. His research interests include macroeconomics and Chinese macroeconomic policy, economics of transition and development economics. Professor Gang Fan holds numerous academic positions. He is the director of the National Economic Research Institute at the China Reform Foundation and its chairman. He is also the president of the China Development Institute (Shenzhen).
1. In the early stage of development, wage is low, profit is high, and therefore consumption is low and saving is high, and current account surplus maybe high if investment is not high enough. A good side of high saving is it makes the investment in infrastructure possible, the bad side is it may make growth not only “imbalanced”, but also over-heated.
2. Middle income trap is not because of imbalance, but because of the productivity growth is lower than income growth, or, vice versa, the income grows too much compared to the normal productivity.
3. So, in short run, the imbalance causes up-side-downs, and in long run, any type of middle income traps causes stagnation. Those are the main challenges for every developing economy!
4. A special problem in China is the lagged urbanization which caused income grew faster than productivity.
Hans Timmer is Director of the Development Prospects Group at The World Bank. He is a quantitative international macroeconomist and econometrician with 15 years of management experience leading teams of modelers, forecasters, and policy analysts. His experience ranges from long-term structural analyses of the economic impact of environmental policies, trade policies and tax reforms, to short-term monitoring of the business cycle and analysis of monetary and fiscal policies. Before joining the Bank in 1996, he was Manager of International Economic Analysis, among other positions, at the Central Planning Bureau of The Netherlands. He holds a Master’s degree in econometrics from the Erasmus University in Rotterdam and has also studied at the University of Lodz in Poland.
Coutside China. There are many signs that limits of fast growth have been reached: labor is becoming scarcer; environmental an China continue its soaring growth of the last decades? That is a frequently asked question, both inside and consequences are increasingly affecting the quality of life; and, as China approaches technological frontiers, efficiency gains are becoming more difficult to achieve. There are also many concerns that slower growth will expose China financial vulnerabilities and will threaten the global recovery. All these issues warrant a strong focus on China growth rates.
However, even more important than the level of growth is the character of growth. China can only become richer and reach the aspired high-income level if the structure and governance of their economy dramatically changes. That is why China 2030, a joint report by the Chinese government and the World Bank focuses on, for example, the move from manufacturing to services; on moving up the value chain; on the shift from inward FDI to outward FDI; on greening the economy; on maturing the financial sector; on new ways of urbanization; and on fiscal reforms of the local government. That is why policy makers in China, despite major economic successes in the past, are willing to radically change their policies. They realize that past performance is no guarantee for future success.
Professor Christine Wong is Fellow of LMH and Director of China Studies in the School of Interdisciplinary Area Studies, University of Oxford. Over the past 15 years she has worked extensively in advisory capacities, both as staff and through consultancies, for the World Bank and the Asian Development Bank. She has also done consultancies for the OECD, UNDP, UNICEF, and DFID. Prior to coming to Oxford in 2007, Christine was Henry M. Jackson Professor of International Studies at the University of Washington’s Henry M. Jackson School of International Studies. She has also held faculty positions in the economics departments at the University of California, Santa Cruz; University of California, Berkeley; and Mount Holyoke College.
Since embarking on its transition in 1978, China has come a long way toward building a new fiscal system to support the growth and operation of an increasingly decentralized, complex market economy. The list of reforms is impressive, and covers virtually all aspects of the fiscal system. The new tax system is highly income-elastic, and has produced buoyant revenues that have funded vastly improved social services that are reaching even rural and poor regions. Improvements in financial management, however, have lagged behind. Most conspicuously, fiscal resources are fragmented under the control of numerous ministries and local governments. The inability of the Ministry of Finance (or any other agency) to exercise comprehensive oversight over public resources has meant weak aggregate fiscal discipline that has allowed excessive and often wasteful public spending and especially investment. The runaway investment in public infrastructure by local governments has highlighted the urgent need for a comprehensive public financial reform to realign incentives and restore macroeconomic control.
Ling Chen is a Professor of Business Administration at the Department of Family Business and Business History, School of Management, Zhejiang University. He holds a M.A. in Economics from Beijing University and a PhD in Economics from Humboldt University, Berlin, Germany. His research interests include family business research, human resource management and regional development.
The origin and development of the family business is one important key to the success of Chinese economy in recent 30 years. In the study, culture and efficiency have been used to explain both the strengths and weaknesses of the Chinese family business. We put culture and efficiency arguments to test in a case study of a family business in Zhejiang province, China. Through careful analysis of data on the case collected during field research, we argue that the evolution of family and kinship in contemporary China, which provides the micro-institutional context of the family business, has shaped the organization of the firm. At the same time, we examine the market environment in which the family business emerged and argue that in the particular market environment of Chinese economy, the family business is an efficient form of business organization as it can both tap into the positive energy of family members and reduce transaction costs.
Yongping Wu is a Professor and Associate Dean at the School of Public Policy and Management (SPPM) of Tsinghua University. He holds a PhD in Political Science from Leiden University, the Netherlands. His research interests include state-owned enterprises and China’s development, government and market in China; industrial policy in China; local government and regional economic development; Taiwan’s political and economic development, Cross-strait relations. Professor Yongping Wu is also the chief Eeditor and founder of “Public Administration Review”.
As part of the party-state, SOEs serve multiple missions. Politicizing them is equally, if not more than, important as economizing them. The consequences of SOEs’ political mission are profound Their efficiency and performance are largely influenced by the political mission. Further reform is also determined by this factor.
Dr. Jeroen Lamers is an economic and commercial counselor at the Embassy of the Kingdom of the Netherlands, Beijing. He holds a PhD from the Research Center for Japanese and Korean Languages and Cultures at Leiden University. Dr. Lamers has worked as the chief of staff at the Ministry of Economic Affairs, Agriculture and Innovation and as deputy director International Business at the Ministry of Economic Affairs in the Netherlands. Dr. Lamers has been the industrial counsellor at the Embassy of the Kingdom of the Netherlands in Tokyo and Seoul.
The paper looks at the performance of Dutch FDI, as a prism for the Chinese business climate for foreign investment. The paper compares the Dutch business experience, which was the topic of a survey carried out by the Netherlands embassy in Beijing, to the broader European perspective. The paper will conclude with some more general remarks about the direction and development of the Chinese investment climate.
The results of the business survey indicate that: One out of four companies has been active in China for more than 15 years; all relevant Dutch business sectors are represented in China and almost all multinationals; Dutch companies are doing well in China;A majority of the companies are profitable and foresee an increase in turnover (70%), profitability (60%), and investments (53%) for 2012 and 2013.
China is becoming a strategic market for Dutch companies. Almost all of the respondents serve the Chinese market, which is also the most mentioned strategic reason for establishing their business in China. Two thirds of the respondents report that their business in China contributes to the company’s overall profit. The findings of the survey show that local production and services for the local market are both increasingly difficult and strategically important.
The business climate proves to be rewarding and challenging. Access to the domestic market and stronger local competition is seen as one of the biggest obstacles or challenges to doing business in China. Many of the companies report difficulties in dealing with China’s regulatory framework. Managing government relations also proves to be a challenge. On the operational side many companies mention difficulties with regard to recruiting and retaining skilled, talented workers. Obstacles to business are both formal and informal.
Eric Thun is the Peter Moores University Lecturer in Chinese Business at Saїd Business School and a Fellow of Brasenose College. His primary areas of expertise are business in China and international business. His research focuses on the dynamics of competition in emerging markets. In his current research, Thun analyses how a profound shift in the geography of consumption creates both challenges and opportunities for firms. Emerging markets are the fastest growing markets in the world, but the price constraints of consumers and institutional differences within these markets demand new forms of innovation, design, purchasing, and organization. The future success of firms, and the economies in which they are based, depends on their ability to meet these new challenges.
Why do Chinese firms innovate and compete successfully with foreign firms in some sectors but not in others? Supply side explanations (e.g. with state support) abound in the economic development literature. In contrast, building on innovation theories, this paper argues that demand and supply factors interact to provide essential ingredients for building capabilities of local firms to upgrade in domestic markets. The paper develops a theoretical framework of demand and supply interactions to construct upgrading ‘ladders’ for local firms in domestic markets. The argument is illustrated with a comparison of upgrading dynamics of indigenous firms in Chinese sectors with highly mixed outcomes: autos, heavy construction equipment, and motorcycles.