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



The serious consequences of "supply and demand" in China (May 4)
The natural reaction of a farmer to an increase in the price of a crop is to plant more of it for the following year. Supply and demand.

The difficulty comes in realising that you are not the only one thinking the same thing - the result is price bubbles leading to price crashes.

The role of the "middle man" or "supply chain" is particularly interesting in this story. Is this merely a lack of information on behlaf of the farmer? The introduction of widespread mobile phone technologies should help.

But what about the road tolls? There are some interesting economics to dig into here.

The Diplomat covers the story:

China’s Unhappy, Uneven Growth [The Diplomat]

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But one incident stands out for me as representing an issue the government should be particularly ashamed over – the suicide of a farmer in Shandong Province.

When the prices of vegetables surged last year, the farmer in question cultivated large numbers of cabbages, believing that this particular vegetable could ...


The economics of dams in China - water wars on the horizon? (May 3)
China is a thirsty country that needs a lot of water. To this end it is using a lot of dams in some very sensitive areas. There are a whole lot of "externalities" involved with dam production for those upstream, downstream and round about.

When those people live in different countries things can get messy quickly especially if two of those countries and China and India.

I like the concluding statement:

"Scarcity in a zero sum situation can lead to conflict but it can also goad countries into more cooperative behavior. It's a bleak picture, but I'm not without hope."

The author of the quote has more hope than I do - I can only guess that he is not an economist.

Water wars? Thirsty, energy-short China stirs fear [Yahoo]

BAHIR JONAI, India – The wall of water raced through narrow Himalayan gorges in northeast India, gathering speed as it raked the banks of towering trees and boulders. When the torrent struck their island in the Brahmaputra river, the villagers remember, it took...


Is China’s economy a cause for concern? (Apr 28)
The University of Birmingham's Director of the Business School, Professor David Dickinson reports on how he views recent developments in China's economy.

A sensible comment that touches on a number of issues that this blog has talked about in recent posts.

The Birmingham Brief

Is China’s economy a cause for concern?

Questioning China’s remarkable economic performance over the last 30 years seems to fly in the face of wisdom honed by decades of double digit growth. However, it is perfectly possible to explain China in the context of standard models of economic growth. Immigration of low-wage labour into the Eastern seaboard along with transfers of capital from Chinese Diaspora in Hong Kong, Taiwan and further afield, created the conditions for the ‘miracle’.

This does not imply that China has not been an economic success story but puts the emphasis on standard factors rather than some special Chinese characteristics. China’s policy-makers have been generally clever (or perhaps a...


Martket integration in China (Apr 28)
Hot on the heels of my last post signalling the end of market capitalism in China as we know it as part of "socialism 3.0" comes a paper looking at China's market integration from a more academic perspective.

Market Integration in China

Qingqing Chen
Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Chor-ching Goh
World Bank

Bo Sun
Board of Governors of the Federal Reserve System - Division of International Finance - International Banking and Finance Section

Lixin Colin Xu
affiliation not provided to SSRN


April 1, 2011

World Bank Policy Research Working Paper No. 5630

Abstract:
Over the last three decades, China's product, labor, and capital markets have become gradually more integrated within its borders, although integration has been significantly slower for capital markets. There remains a significant urban-rural divide, and Chinese cities tend to be under-sized by international standards. China has also integrated globally...


Socialism 3.0 - the beginning of a new China? (Apr 27)
China is a country of many contradictions. On the one hand it is a single party communist state and on the other hand it has the most ruthless capitalist ethos I have witnessed.

My reading is that the period of all out capitalism is drawing to an end. China has done what it needed to do to catch up, import technologies and learn learn learn.

The result has been rising inequality and rising discontent.

Enter stage left "Socialism 3.0".

The Diplomat gives a good summary of the rise of the "new left" in China. This development is exactly what I would have expected. Is this development good or bad for world trade and development? Time will tell.

Socialism 3.0 in China [The Diplomat]
But while Bo’s Chongqing has become a capital for China’s New Left, it’s not the only model competing for the attention of China’s top leaders. Liberals and globally oriented modernizers have also drawn inspiration from local governments, especially reformist policies pursued by the governments of ...


The Value of Education - $6.1million (Apr 21)
Always one to jump on a bandwagon is one is passing I must report the "Beijing Normal University Professor" quote again.

The Diplomat gives a good summary. This is an interesting blog actually.

I have been talking about the real estate bubble for a while. Who are the bubble-deniers?

We must begin to work out what the fallout from a bubble bursting will be. It could get very ugly very quickly. The key is to understand who the large property speculators are over and above the man in the street (trying to find a wife - see previous story).

The question with this story is what is he really trying to say. I can not quite put my finger on it.

The Value of Education [The Diplomat]
I’d like to share a memorable comment from earlier this month by a professor at Beijing Normal University. The remark is about more than just education – it has quickly become a source of entertainment among Chinese netizens, and even something of a social issue.

On 4 April, a professor at one of the u...


Pictures of China in the 1800s (Apr 20)
Given China's rapid development it is always useful to look back in time to assess where China has come from to know where it is going.

Rare Photographs of China in the 1800s [Environmental Graffiti]

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