Economy

In the spirit of what is known as business cycle accounting, this paper finds that the investment wedge—the gap between household rates of intertemporal substitution and the marginal product of capital—is large and quantitatively significant in...

The authors present a stylized real model of the Chinese economy with the objective of explaining two features: (1) domestic production is highly competitive in the sense that an accumulation of capital that raises the marginal product of labor...

We document Hong Kong SAR's evolving role as an international financial center in the Asia region, the importance of the growing special link with China as well as supply-side advantages, and outline the scope for future financial services...

China’s rapid economic growth since 1979 has transformed it into a major economic power. Over the past few years, many analysts have contended that China could soon overtake the United States to become the world’s largest economy, based on estimates...

Over the course of the last thirteen months, delegates from Africa, China, and the United States have met three times in an effort to identify strategies of cooperation among their respective nations with the goal of accelerating economic...

This paper analyzes certain policies that are typical of a number of rapidly growing East Asian countries in which a fixed exchange rate, combined with a surplus labor market, has made domestic assets relatively inexpensive, generating high rates of...

In recent years, much has been written about the China's rising current account surplus and the importance of its exchange rate policy. At the same time, the increasing integration of China into the global economy has raised questions about how...

Despite China's significant economic growth, most of the 700 million farmers that make up about 56% of the total population still lack secure and marketable land rights that would allow them to make long-term investment in land in order to...

What role does China play in Africa’s development? What drives China’s increasing economic involvement in the continent? This paper attempts to provide a quantified assessment of China’s multifaceted influence as market, donor, financer and investor...

This paper uses disaggregated trade data to assess how the expansion of China's production capacity and its changing production structure may be affecting its trade linkages with other countries. It finds that China is moving away from...

The Hong Kong SAR's government faces the dual challenges of volatile revenue and medium term spending pressures arising from a rapidly aging population. Age-related spending pressures raise long-run sustainability concerns, while revenue...

The Chinese government has recently focused on the need to increase consumption to rebalance the economy. A widely held view is that despite China's remarkably high growth, the share of consumption in total expenditure has been low and...

The rapid aging of China's population over the next few decades makes it important for a new pension system with broad and adequate coverage to be put in place quickly. Pension reforms, first initiated in 1997, have become bogged down in...

The Joint Declaration signed on July 18, 2005, by President George W. Bush and Indian Prime Minister Manmohan Singh has been heralded in some quarters as the equivalent of President Richard Nixon’s opening to China. The opening to China under...

The rise of China from a poor, stagnant country to a major economic power within a time span of only twenty-eight years is often described by analysts as one of the greatest economic success stories in modern times. From 1979 (when economic reforms...

This edition aims to highlight wildlife trade trends in threatened and at-risk wildlife from the past year, with an emphasis on the impact of China’s consumption on globally important biodiversity ‘hotspots.’ Surveys in 2007 found that while illegal...

As imports from the People’s Republic of China (PRC) have surged in recent years, posing a threat to some U.S. industries and manufacturing employment, Congress has begun to focus on not only access to the Chinese market and intellectual property...

Based on a survey that covers a stratified random sample of 12,400 firms in 120 cities in China with firm-level accounting information for 2002-2004, the authors examine the presence of systematic distortions in capital allocation that result in...

The People's Bank of China (PBC) has made great strides in modernizing its monetary policy frameworks, but their effectiveness will diminish as the sophistication of the economy increases. Empirical evidence supports maintaining a reference to...

This paper uses the standard one-sector neoclassical growth model to investigate why China's consumption has been low and investment high. It finds that the low cost of capital has been quantitatively an important factor. Theory predicts that...

The recent wave of foreign investment in China's banks and the prospects of further opening of the banking sector under the WTO agreement suggest that foreign banks are likely to play an increasingly important role in China. This paper takes...

A study of the impact of labor market restructuring and foreign direct investment on the banking sector, using a dynamic general equilibrium model with a financial sector. Numerical simulations are performed using stylized Chinese data, and bank...

Investment has grown rapidly in China in recent years, reaching more than 40 percent of GDP. Despite good progress on bank and enterprise reforms, weaknesses remain that could contribute to inefficient investment decisions. Manufacturing,...

The U.S. policy framework for Taiwan was laid down in 1979 when Washington severed official relations with the Republic of China (ROC) on Taiwan and instead recognized the People’s Republic of China (PRC) as the legitimate Chinese government. The...

Increased attention is being paid to assessments of the actual values of countries' real exchange rates relative to their "equilibrium" values as suggested by "fundamental" determining factors. This paper assesses the...

Congress and the Bush administration continue to pressure China to allow its currency to appreciate against the U.S. dollar under threat of trade sanctions. Critics contend “currency manipulation” gives Chinese producers an unfair advantage against...

It is widely acknowledged that China’s financial system is deeply troubled. Its banks have very high nonperforming loan ratios and its stock market has lost 50 percent of its value since 2001 amidst a GDP growth rate averaging some 9 percent a year...

China’s much-praised tendency to save and invest over 40 percent of its GDP has become dangerous and destabilizing, both for China and the global economy. China’s avid savers expect to increase their wealth by forgoing current consumption. There are...

As China's economy becomes more market-based and continues its rapid integration into the global economy, having an independent and effective monetary policy regime oriented to domestic objectives will become increasingly important...

The evidence of “hot money” clearly shows that China’s cumbersome system of capital controls is not as effective as officials claim. There is no doubt that the greater openness of China’s economy will certainly generate growing tensions with the...

Substantial effort has been devoted to reforming China's banking system in recent years. The authorities recapitalized three large state-owned banks, introduced new governance structures, and brought in foreign strategic investors. However, it...

With China's share in global trade increasing rapidly, some argued in 2002-03 that China was exporting deflation to other countries as it was dumping cheap goods in mature markets. Later, others argued that China was sucking in commodities and...

China's growth record since the start of its economic reforms in 1978 has been extraordinary. Yet, this impressive performance has been associated with an increasing regional income disparity. The authors use a recently developed nonparametric...

The consequences of China’s financial repression are easy to see. By suppressing two key macroeconomic prices—the interest rate and the exchange rate—and by failing to privatize financial markets and allow capital freedom, China’s leaders have...

Chinese economic liberalization largely stopped at the gates of the financial sector. Investment funds are channeled through state-owned banks to state-owned enterprises (SOEs), there are few investment alternatives, stock markets are dominated by...

The economic rise of China and the growing network of trade and investment relations in northeast Asia are causing major changes in human, economic, political, and military interaction among countries in the region. This is affecting U.S. relations...

In this paper, we examine returns in the Chinese A and B stock markets for evidence of calendar anomalies. We find that both cultural and structural (segmentation) factors play an important role in influencing the pricing of both A- and B-shares in...

Fundamental shifts underway in Asia could constrain the U.S. role in the multilateral affairs of Asia. The centrality of the United States is now being challenged by renewed regionalism in Asia and by China’s rising influence. While the United...

Many are concerned that China’s currency is undervalued and that this injures the U.S. economy. The Chinese authorities say they are not manipulating their currency and they want to move as soon as possible to a market-based yuan. A new exchange...

China’s labor-intensive economic growth over the last two decades allowed the transfer of a vast amount of low-wage labor from both the rural sector and the declining state-owned enterprise (SOE) sector. That allowed China to grow by “walking on two...

The Hong Kong Special Administrative Region (HKSAR) has recently recovered from an economic downturn and the SARS virus outbreak of 2002-2003 which crippled trade and tourism. There has also been a major change in top government personnel, with the...

Over the past year, increasing attention has focused on China’s growing interest in Latin America. Most analysts appear to agree that China’s primary interest in the region is to gain greater access to needed resources—such as oil, copper, and iron—...

In stark contrast to its broader restraint in the face of anti-China protectionist pressure, the Bush administration has adopted an unabashedly bellicose approach to antidumping matters. The administration should take a hard look at its antidumping...

Exchange rate protectionism is a subject much in the news these days, especially in regard to the actions of Japan and China in foreign exchange markets and in the financing of the U.S. current account deficit.

China's account surplus has increased sharply as a product of economic growth and manipulation of its undervalued currency. This paper argues that China's account surplus is actually higher than reports indicate. China’s monetary...

During the George W. Bush Administration, U.S. and People’s Republic of China (PRC) foreign policy calculations have undergone several changes. The Bush Administration assumed office in January 2001 viewing China as a U.S. ”strategic competitor.”...

China’s rapidly aging population, strong economic growth, and high return on capital mean that a funded pension system would be more efficient than a state-directed system. Yet, there are many problems in implementing a new privatized pension system...

After many years of difficult negotiations, China, on December 11, 2001, become a member of the World Trade Organization (WTO), the international agency that administers multilateral trade rules. Under the terms of its WTO membership, China agreed...

On October 20-21, 2003, the Eleventh APEC Leader’s Meeting is to be held in Bangkok, Thailand. The theme for APEC 2003 is “A World of Differences: Partnership for the Future,” which is intended to bring together the best potential of all APEC...

After several years of negotiations, Taiwan joined the World Trade Organization (WTO), the international organization that sets rules for most international trade, on January 1, 2002. Taiwan’s WTO membership is expected to accelerate trade and...

On October 26-27, 2002, the Tenth APEC Leaders’ Meeting (summit) is to be hosted by Mexico in Las Cabos, Mexico. APEC 2002 is intended to send a clear message to the world that APEC has the ability to implement its initiatives while responding and...

On October 20-21, 2001, the Ninth APEC Leaders’ Meeting (summit) was hosted by China in Shanghai. The theme for APEC 2001 was “Meeting New Challenges in the New Century: Achieving Common Prosperity through Participation and Cooperation” with the sub...

The main finding of this report is that both the United States and China will run risks as Beijing moves ahead with membership in the World Trade Organization (WTO), but the potential payoffs for both countries are well worth it. It also points out...

The U.S. Congress is in the historic position of being able to help pro-reform leaders in China move their country in a market-oriented direction. A vote to grant China permanent normal trade relations (PNTR) status will bolster the position of...

Between 1979 and 1983, China made the dramatic transition from a socialist agriculture dominated by large collective farms to a more market-oriented agriculture dominated by small family farms. This report describes the experiment’s background in...

Congress will soon consider whether to revoke normal trade relations (NTR) with China and then, possibly in the fall, whether to make NTR permanent as part of China’s anticipated entry into the World Trade Organization. The consequences of...

Relations between the United States and China are becoming frayed, with serious risks for both countries. Although the Clinton administration has wisely resisted the most reckless proposals, its policies have been inconsistent and sometimes inept...