China Economics Blog
A place to find news, observations, statistics, information on undergraduate (BSc and BA economics) postgraduate (MSc economics) and academic analysis of important issues for China's economy including economic growth, inequality, stockmarket, shares, exchange rates, the environment, foreign direct investment, WTO and much more



Remaking the World of Chinese Labour (Aug 11)
Labour relations in China over time make for fascinating reading. To the outsider it appears strange that a communist country run by and for the workers appears in many respects to be exploiting workers more than in any capitalist country demonstrated not least by widening income inequality.

This paper in the BJIR looks interesting.

I agree with the conclusions - the new labour laws are good ones but there is a delicate balance of power that the state will have to very carefully.


"Remaking the World of Chinese Labour: A 30-Year Retrospective"

British Journal of Industrial Relations, Vol. 48, Issue 3, pp. 507-533, September 2010

ELI FRIEDMAN, affiliation not provided to SSRN
CHING KWAN LEE, affiliation not provided to SSRN

Over the past 30 years, labour relations, and, indeed, the entirety of working-class politics in China, have been dramatically altered by economic reforms. In this review, we focus on the two key processes of commodification and casualization and their imp...


The Chinese Housing Bubble - 40% falls possible (Jul 31)
I have long been a raging bear on the Chinese housing market. This is a result of a number of China specific factors. (1) lack of assets to invest in (2) the actions of state owned companies including the army that are dangerously addicted to speculation and not doing what they are supposed to do.

This recent CEPR paper looks at this issue in detail. I tend to agree with their headline figures and the results match my own concerns.

40% falls are a real possibility. The fact that the authors pick up on the state owned company problem show that these authors are on the ball.

"Evaluating Conditions in Major Chinese Housing Markets"

NBER Working Paper No. w16189

JING WU, Institute of Real Estate Studies, NUS, Institute of Real Estate Studies, Tsinghua University

JOSEPH GYOURKO, University of Pennsylvania - Real Estate Department, National Bureau of Economic Research (NBER)

YONGHENG DENG, National University of Singapore

High and rising prices in Chinese housing markets have...


China's Growth to 2030: The Roles of Demographic Change and Financial Reform (Jul 30)
This paper is worth a quick glance. What is interesting is the acknowledgement that China's population is not growing so quickly or will even start to contract. I am not convinced that this is true.

China's Growth to 2030: The Roles of Demographic Change and Financial Reform

Rod Tyers
Australian National University (ANU) - School of Economics

Jane Golley
Australian National University (ANU) - Faculty of Economics & Commerce

Review of Development Economics, Vol. 14, Issue 3, pp. 592-610, August 2010

Abstract:
China's economic growth has, hitherto, depended on its relative abundance of production labor and its increasingly secure investment environment. Within the next decade, however, China's labor force will begin to contract. This will set its economy apart from other developing Asian countries where relative labor abundance will increase, as will relative capital returns. Unless there is a substantial change in population policy, the retention of China's large share of...


Facing the Challenge of the Rising Chinese Economy: ASEAN's Responses (Jul 29)
I do a lot of work on Chinese trade and it's relationship with ASEAN. Is China a help or hindrance?

This recent RDE paper makes some progress on this issue.

Facing the Challenge of the Rising Chinese Economy: ASEAN's Responses

Yunhua Liu
Nanyang Technological University (NTU) - School of Humanities & Social Sciences

Beoy Kui Ng
Nanyang Technological University (NTU)

Review of Development Economics, Vol. 14, No. 3, pp. 666-682, August 2010

Abstract:
The emergence of China as one of the largest trading nations in the world provides challenges and opportunities to its neighboring ASEAN countries. In the face of the rise of the Chinese economy, there were concerns that ASEAN economies may be adversely affected with the loss of competitiveness in the international market. One of the concerns is that the world export markets of labor-intensive goods will be threatened if China turns into the world low-cost manufacturing factory. Meanwhile, trade between China and ASEAN countri...


Water pollution in China - 1/4 gone, 3/4 left (for now) (Jul 29)
In China's thirst for growth it is in danger of having the breaks applied very sharply from environmental contraints none more important that a lack of clean water.

China might, just might, be getting on top of air pollution but water pollution remains a serious problem. The sheer scale effect of China's growth will mean the battle against PM10 and air pollution is far from over.

Pollution Makes Quarter Of China Water Unusable: Ministry [PlanetArk]

Almost a quarter of China's surface water remains so polluted that it is unfit even for industrial use, while less than half of total supplies are drinkable, data from the environment watchdog showed on Monday.

Inspectors from China's Ministry of Environmental Protection tested water samples from the country's major rivers and lakes in the first half of the year and declared just 49.3 percent to be safe for drinking, up from 48 percent last year, the ministry said in a notice posted on its website (www.mep.gov.cn).

China classifies...


Climate and war in China (Jul 15)
As an academic with an interest in the fascinating history of China the following article on the impact of climate change on war and civil unrest is very interesting.

There is no doubt that droughts will cause future unrest. The government will need to be prepared.

Cooling Caused Wars And Drought In China [PlanetArk]

As Chinese policymakers grapple with an expected increase in extreme weather due to global warming, a study has found that periods of cooling between AD 10 to 1900 also caused a wave of disasters, war and upheaval.

Droughts and locust plagues caused by cooler spells probably triggered internal wars, the authors said.

In a modern day parallel, China, the world's top emitter of greenhouse gases blamed for heating up the planet, has taken steps to curb emissions growth fearing growing social unrest from environmental degradation.

Zhibin Zhang of the Chinese Academy of Sciences and his team used historical records and paleoclimatic reconstructions covering nearly 2,0...


Chinese firms are getting larger - a threat to the West? (May 12)
The recession in the West has thrown up a number of opportunities for rapidly growing Chinese and emerging country firms. Whether it is organic expansion or by taking over ailing assets in developed countries.

The FT do a good piece on this.

Business: A change in gear [FT]

As chief executives emerge from recession they are seeing some unfamiliar names  scurrying around the global corporate landscape.

In Europe Geely, the Chinese carmaker, is finalising a $1.8bn (€1.4bn, £1.2bn) acquisition of Volvo, the Swedish manufacturer. In Africa, India’s Bharti Airtel is set to become the world’s fifth-largest mobile phone operator through the $10.7bn purchase of the regional assets of Zain, the Kuwaiti telecommunications group. In the US, Reliance Industries, India’s biggest private sector company, is completing a $1.7bn joint venture with Atlas Energy after narrowly failing in Europe with a $14.5bn bid for LyondellBasell, a Dutch chemicals group.

Meanwhile, after last year’s slump, exp...


Ubanisation in China (Apr 29)
China's rapid growth is putting pressure on the ever growing cities. Shanghai's Expo is providing some of the answers. Today's FT gives a nice little summary of the problems that China faces.

THE BURDEN OF URBANISATION [FT]

China has the world’s biggest urbanisation problem and Expo is promising the world’s best solutions.

By 2030, China will have an urban population of 1bn, having added 350m by then – more than the entire current population of the US, according to a recent McKinsey study, Preparing for China’s urban billion. Even five years before that, China is forecast to have 219 cities of more than 1m each, compared with 35 in Europe today, and 24 cities of more than 5m.

Shanghai, with nearly 20m already, is a living experiment in urbanisation – and one that is mostly failing. The polluted Huangpu river runs between banks crowded with concrete apartment complexes with little or no greenery (but lots of hanging laundry). Parks are few and playgrounds almost unheard of; pede...


US chicken farmers spitting feathers (Apr 29)
China has picked on the humble chicken for the next salvo in the escalating trade war between China and the US.

Given the number of chickens in China it is perhaps surprising that China imports chicken at all given the transport costs and perishability of the said white meat.

Still, a 31.4% tariff is not to be sniffed at. Even without a tariff it is hard to believe that US chicken is competitively priced to actually have a market in China. However big that market is it is about to get smaller.

US chicken farmers will be spitting feathers (cheap gag) and US subsidies might have to get larger.

China to impose new tariffs on US {FT]
China announced yesterday it would impose a second round of tariffs on imports of US chicken products of as much as 31.4 per cent.

The commerce ministry said the tariffs were a response to what it called unfair subsidies given to US poultry farmers. The duties come on top of charges of up to 105.4 per cent placed on poultry two months ago because of ...


Human capital, economic growth, and regional inequality in China (Apr 27)
Regional inequality in China is an important issue and has been subject to numerous studies including those of many of my MSc dissertation students.

Belton Fleisher and co-authors look at growth and inequality in a recent Journal of Development Economics paper.

The results are fairly standard. The role of FDI and government policy can play their part.

Human capital, economic growth, and regional inequality in China

Belton Fleisher
Haizheng Li
Min Qiang Zhao

Abstract

We show how regional growth patterns in China depend on regional differences in physical, human, and infrastructure capital as well as on differences in foreign direct investment (FDI) flows. We also evaluate the impact of market reforms, especially the reforms that followed Deng Xiaoping's “South Trip” in 1992 those that resulted from serious hardening of budget constraints of state enterprises around 1997. We find that FDI had a much larger effect on TFP growth before 1994 than after, and we attribute this to th...