Asian Region Special Issue: Introduction by the Guest Editors

Abstract

THIS issue focuses mainly on international trade and trade-related issues in Asia with special attention to China. The issue, which consists of 10 articles, draws heavily from the papers presented at two reputable international conferences. Four papers are selected from the Third All China Economics (ACE) International Conference organised by the APEC Study Center of the City University of Hong Kong on 14–16 December, 2009. Another four papers are chosen from the Second International Economics and Finance Society China (IEFS China) Conference, organised by the University of International Business and Economics in Beijing, China, during 22–23 May, 2010. The remaining two papers are selected from an open submission. All selected papers went through a rigorous refereeing process. The first paper by Xianhai Huang, Sheng Xu and Jing Lu, titled ‘Trade Liberalisation and Labour Income Share Variation: An Interpretation of China’s Deviation from the Stolper-Samuelson Theorem’, explains a notable empirical puzzle of the Chinese economy. That is, the labour-income share has suffered a decline over time, despite China’s increasingly liberalised trade policy and more integration with the rest of the world since the late 1970s. This observation appears to contradict the prediction of the Stolper-Samuelson theorem that the share of the labour income of a labour rich country should increase as the country moves from autarky to freer trade. To help resolve this puzzle, the paper provides both a theoretical framework incorporating labour saving technical progress, as well as an empirical testing using a provincial panel dataset to show the two opposing effects of the technical progress on the share of labour income, and hence the possible decline in the share in China in recent years. The second and rather timely paper, ‘Financial Markets in East Asia and Europe during the Global Financial Crisis’, by Anders C. Johansson examines the movement of equity market in East Asia and Europe during the 2008 global financial crisis. This empirical paper shows that there is an increase in the co-movement between the equity markets in the two regions; China, usually The World Economy (2011) doi: 10.1111/j.1467-9701.2011.01364.x