Institutional Change In China Research Articles

The spatial correlation of economic institutional change in China and its impact on economic growth: A social network analysis approach.

Economic institutional change is a vital driving force behind the rapid rise of China's economy. However, the incremental approach to economic institutional change has caused unbalanced transformation and economic growth. To this end, we adopted the entropy method to measure the economic institutional change index, and employed social network analysis to reveal its spatial correlation characteristics. We then applied QAP analysis to empirically demonstrate the impact of China's economic institutional change on regional disparities in economic growth. The findings indicated a gradual increase in the level of economic institutions over time and a spatial gradient between the eastern, central, and western regions. Moreover, the spatial correlation network of China's economic institutional change is stable and gradually improving. Nevertheless, the role of provinces in the process of economic institutional change varies: the eastern coastal provinces play a dominant role, the central and western provinces benefit to a lesser extent, and some provinces in northeastern China play a "bridging" and "intermediary" role. Regional differences in China's economic institutional change have widened the regional disparities in China's economic growth, and the impact of each dimension of economic institutions on regional disparities in economic growth is characterized by phases.

Институциональная трансформация политики занятости Китая в условиях рыночных преобразований: ретроспективный анализ

During the period of market reform and economic opening up, China's employment policy has undergone profound institutional changes. Since 1978, in the process of building a socialist market economy with Chinese specifics, there has been a large-scale institutional transformation of the state policy of distributing the total labor force of society across territories, industries and enterprises into a policy of supporting employment through state regulation of the labor market, improving the education system and creating the institution of social protection of workers. Four stages of institutional transformation of China's economic employment policy have been identified. For more than 40 years of reform and gradual improvement over the centralized distribution of labor force, the employment policy by now organically combines the market mechanism with an effective system of state regulation of employment. It is substantiated that institutional changes in China were implemented purposefully, providing a gradualist replacement of the centrally planned distribution of labor force in the prereform economy by a labor market with sufficiently effective state regulation with gradual supplementation and expansion of successful rules. The impact of institutional changes on the structure of employment in rural areas is analyzed, as well as the emergence of new challenges that are associated with adaptation to the new economic system.

When Socialist Legacy Meets International Norms: Gender Quota Adoption and Institutional Change in China

ABSTRACT Gender quotas have a long history in China, with the earliest gender quota introduced in 1933 in the Chinese Communist Party’s (CCP) border regions. Yet, research on China’s gender quotas has been scarce. This study addresses the gap by examining the process of gender quota adoption in China’s subnational Party-States and the People’s Congresses. Using an institutional approach, we argue that quota adoption in China was a process of ‘institutional layering’ that lasted from the late 1980s to the 2010s. During this process, domestic actors contested the CCP’s existing personnel rules and strategically exploited the CCP’s ideological commitment to gender equity and its need for an improved international image during the second wave of global gender quota adoption. Two changes have happened during the ‘layering’ process: the slow diversification of domestic actors, including both state and non-state ones, and the shifting of the actors’ working strategy from an informal and network-based approach to an institutionalized one that operated through formal channels. In so doing, this article expands the comparative literature on gender quotas, which has been preoccupied with quotas in elected parliaments, and enriches our understanding of Chinese politics.

An Attempt to Demonstrate the Significant Role Played by Institutional Change in China's Sustained Economic Growth

During China's reform and opening, the Renminbi exchange rate mechanism has undergone several modifications. It has steadily moved from an early fixed exchange rate regime to a market-determined, managed floating exchange rate system. At various periods, each stage of reform has contributed to China's economic growth. The purpose of this study is to examine, from the perspective of the reform of the Renminbi exchange rate regime, whether the change in the Renminbi exchange rate regime has impacted China's sustained economic progress. Using the theoretical system of national income accounting and the multiple linear regression model, the information includes data on gross domestic product (GDP), the real effective exchange rate of the Renminbi, social fixed asset investment, population consumption level, and import/export balance from the China Statistical Yearbook 2006-2021. Then, it is concluded that this institutional change contributes significantly to China's sustained economic growth, and reform ideas for China's institutions are presented.

He Peasants' Cognition and The Level of Informal Constraints and The Rural Land Institutional Change in China —Analysis and simulation based on dynamic evolutionary game model

The peasants' cognition and informal constraints are important factors that affect the rural land institutional change in China. By constructing a dynamic evolutionary game model and conducting simulation analysis, this paper finds that the individual cognition of peasants affects the strategic choice of them, and then affects the direction of the rural land institutional change in China, which is the endogenous power of institutional change; Informal constraints are hierarchical and affect the speed of institutional change. The higher the level of informal constraints, the faster the speed of institutional change. Based on the above conclusions, this paper proposes to adhere to the road of gradual reform, carry out multi-party research activities, and improve peasants' cognition; Clarify the main status of f peasants in the reform and create an organizational form with them as the main core; Give rights to the rural grass-roots democratic autonomy, and form broad binding informal constraints.

IPO Pricing Regulation and Audit Fees: From the Perspective of Institutional Changes in China

IPO Pricing Regulation and Audit Fees: From the Perspective of Institutional Changes in China

Panacea or Pandora's Box? An institutional analysis of the contested long-term rental apartments development in China

The dramatic growth of long-term rental apartments (LRAs) in China's megacities since 2015, spurred by a series of state policies encouraging the development of the private rental sector (PRS), has culminated in many LRA firms encountering capital chain rupture and even going bankrupt within a short period. As a result, thousands of tenants were rendered homeless and many property owners were left unpaid. The present study analyses the boom and bust of LRA development in China under housing financialisation and explores the relationship between the transformative institutions – characterised by policy deregulation/re-regulation – and market performance stimulated by capital speculation. The findings of this study reveal the institutional changes in China's PRS to have been closely linked to the socio-economic changes emanated from endogenous opportunism and exogenous shocks. Specifically, the policy drift in the PRS was closely associated with deregulation and capital speculation, while policy layering was employed to institutionalise, regulate and legalise the PRS, thus mitigating the housing shortage crisis and ensuring the retention of social stability. Adapting to the volatile politico-economic circumstances as a form of punctuated equilibrium, policies governing the PRS require constant assessment and reflection to safeguard people's basic housing rights.

New Developments in China’s Maritime Traffic Safety Legislation: Theoretical Background, Institutional Changes, and Potential Implications

Recent legal theories and state practice have tended to expand the conceptualization of maritime security beyond the traditional security field to encompass nontraditional security issues such as economic growth, environmental protection, and the optimal use of ocean resources. In this context, the conceptualization of maritime security in China has also undergone profound changes that have significantly influenced China’s revision of maritime traffic safety legislation. The objectives of this article are to examine the specific institutional changes in China’s new regulatory framework for maritime traffic safety, and to explore their potential implications. This article uses normative analysis to conduct a comprehensive analysis of the institutional developments in China’s new maritime traffic safety legislation, discusses how the evolution of the concept of maritime security has theoretically affected these institutional developments, and explores the potential implications of the new legislation for China’s navigational safety governance, maritime law enforcement, and cross-border maritime security cooperation.

Regulatory institutional reform of the power sector in China

In 2002, China established the State Electricity Regulatory Commission as part of the nation's electricity reform plan. However, this agency existed for only a decade, after which it was incorporated into the National Energy Administration (NEA), a governmental department. Why did the independent regulatory model not survive in China? This paper introduces the historical background of regulatory institutional change in China and evaluates current regulatory governance against the standard of agency independence. The findings indicate that the NEA can hardly be regarded as independent from the government and stakeholders. Subsequently, the paper explains the reason that independent regulatory institutions are not applicable in China from the perspective of institutional supply and demand. From the demand side, as the macroeconomic controller, the National Development and Reform Commission can deliver superior policy output compared to an independent regulator. In addition, public ownership makes it unnecessary for the government to create an independent regulator as a credible commitment mechanism. From the supply side, the traditional administrative arrangement and lack of regulatory economics knowledge contribute to an undersupply of independent regulation.

Socialization of Investment and Institutional Changes in China: A Heterodoxy Approach

In this paper, we show that economic development in China can be analyzed by the cyclical emergence of institutions that delimit a continuous reorganization of activities between the State and private sectors in the economy. For this purpose, we develop a ‘developmentalist approach’—based on the contributions of John M. Keynes, Alexander Gerschenkron, Ignacio Rangel and Albert Hirschman—that aims at understanding the formation of a policy space suitable for the socialization of investment in China under an international environment characterized by the financial globalization.

Earnings inequality and China's preferential lending policy

Wages have been distributed increasingly unequally over the past decades for most countries. While policymakers have tried different methods to stop the earnings inequality from widening, the effects have been minimal. In this paper, we propose a novel mechanism through which a preferential lending policy reduces the earnings inequality, inspired by the case of China. As most countries have, China has experienced increasing earnings inequality over the past decades; however, the inequality started to decline substantially after 2009. We argue that this change reflects the following important institutional change in China: since 2009, the local governments have been granted the ability to offer their preferred firms cheap credit. Since many of these preferred firms are unskilled-labor intensive, with a lower financing cost, they increase their investment and hire more unskilled workers, thereby reducing the earnings inequality. We incorporate this mechanism into a two-sector model and show quantitatively that our model can account for most of the decline of the earnings inequality observed in the data. Moreover, the model also predicts a surge in the aggregate investment rate, which is also in line with the data.

Inter-temporal and inter-spatial institutional change influencing the duration decision of the Sino-foreign university alliances

Abstract The inter-temporal and inter-spatial institutional change in China have precipitated the internationalisation trends in Chinese higher education, leading to Sino-foreign inter-university alliances. Does the institutional development reflect on the contractual duration differences before and after these institutional changes? This article addressed to answer the duration decision. The inter-temporal institutional development measures the (i) WTO membership and (ii) educational policy in 2003. The inter-spatial institutional change represents the national cultural differences based on indices. The analysis of 717 alliances between 327 foreign partners and 262 Chinese universities shows support for both types of institutional developments. The results on inter-temporal institutional change show that the post-institutional change contractual duration has decreased compared to pre-institutional change. The result of the inter-spatial institutional differences shows mixed results. Power distance predicts longer duration. Likewise, masculine cultures, compared to the feminine culture, show a longer duration of the alliance contract. Instead, the long-term orientation (marginally significant) shows decreased duration. Individualist and uncertainty avoidance cultures show no significant difference, which may be due to the policy changes that have accounted for the individualist and uncertainty avoidance cultures.

Evaluating Family Planning Organizations Under China's Two-Child Policy in Shandong Province.

Background: The 2015 two-child policy was the most important institutional change in China’s family planning since the 1978 one-child policy. To implement the two-child policy, China merged the former health departments and family planning departments into the new Health and Family Planning Commission organization. We collected and analyzed funding and expenditure data, providing a novel approach to assessing the family planning outcomes under China’s two-child policy. The paper shows how the management structure and funding levels and streams shifted with the new two-child policy and assesses the new management structure in terms of the ability to carry out tasks under the new family planning policy. Methods: We collected data on the funding, structure of expenditure and social compensation fee in Shandong province from 2011 to 2016, to evaluate how resources were allocated to family planning before and after the organizational change. We also collected interview data from family planning administrators. Results: While total family planning government financing was reduced after the organizational change, expenditures were shifted away from management to family planning work. Funding (80%) was allocated to the grass-root county and township levels, where family planning services were provided. The overlapping work practices, bureaucracy, and inefficiencies were curbed and information flows were improved. Conclusions: The new Health and Family Planning Commissions shifted resources to carry out the new family planning policy. The aims of the two-child policy to reduce inefficiencies, overlapping authorities and excessive management were achieved and expenditures on family planning work was enhanced and made more efficient.

Entrepreneurship in China and India

Research to date has not explored that the role of entrepreneurship has a key driver of China’s economic growth and how the nature of entrepreneurship may differ between India and China in this context. This difference will have implications on the extent of entrepreneurship as a driver of Indian economic growth. The aim of this paper is to fill this research gap. Furthermore, one of the central premises of this paper is that the economic reforms in China have provided an incentive for the Chinese to embrace their uniquely cultural entrepreneurial skills. However, this has not happened in isolation because the reforms have targeted all sectors of the economy; the most important of these reforms for entrepreneurial facilitation has been associated with infrastructure, education, property rights, ownership restructuring and foreign direct investment. In this case, changes in infrastructure, knowledge creation and knowledge spillovers have led indirectly to China’s economic growth. This is because knowledge spillovers have been facilitated by entrepreneurship. Moreover, this process has been characterised by the dynamic nature of institutional change in China. Nevertheless, in India at state level, there is variation in the level of economic, institutional and infrastructural development. Furthermore, there is also a tendency for firms in India to remain small. This may be due to the country’s rigid labour laws. The findings of this paper indicate that entrepreneurship is stronger in China than in India from an economic, cultural and a historical perspective. Private entrepreneurship has been stimulated in China by the incrementally evolving economic reforms which resulted in the dynamic nature of institution formation. However, private entrepreneurship in India remains constrained by institutional factors and institutional rigidity. Nevertheless, social entrepreneurship is more prevalent in India than in China.

China’s Financial Crisis in the Making --Soft Budget Constraint, Overdraft and the Missing Credible Commitment

Multiple risks have been building up in the Chinese economy during the past decade, exposing it to a possible financial crisis of increasing likelihood. Based upon the inductive reasoning from the conventional key indicators discussed by economists, this paper also adds a deductive reasoning by examining the incentive structure for key players in the Chinese political economy to gauge the risk of a financial crisis in China. It highlights the political and structural factors that are responsible for soft budget constraint, moral hazard from major players, and the lack of institutional foundation for sovereign credibility. It argues that recent policies have not only failed to address these issues but instead have further damaged the credible commitment of the state to the market economy and ratcheted up the course of a great meltdown. This paper calls for a fundamental institutional change in China’s political economy in order to prevent perversion in the state-market interaction from spawning both political and economic crises.

Law, Trust and Institutional Change in China: Evidence from Qualitative Fieldwork

China’s rapid growth in the absence of autonomous legal institutions of the kind found in the west appears to pose a problem for theories which stress the importance of law for economic development. In this article we draw on interviews with lawyers, entrepreneurs and financial market actors to illustrate the complexity of attitudes to contract, corporate and financial law and economic growth in contemporary China. In the case of product markets, we find that business relations are increasingly characterised by a mix of trust-based transacting and legal formality which is not fundamentally different from practice in the west. Financial markets are less like their western counterparts, thanks to the preponderant role of government in asset allocation, and a lack of transparency in market pricing. However, in both sets of markets we find evidence of a transition from inter-personal trust (guanxi) to impersonal transacting, and of growing demands from business and legal groups for the impartial application of legal rules and market regulations. China’s experience does not suggest that law is irrelevant or unrelated to growth, but that legal and economic institutions coevolve in the transition from central planning to a market economy.

An Institutional Analysis of Xi Jinping’s Centralization of Power

Xi Jinping swiftly centralized political power shortly after the 18th Chinese Communist Party (CCP) National Congress in 2012, opposing what was predicted when he was elected general secretary. This action also compromises China’s long-term efforts to avert an over-concentration of power among a few elites. This study deals with Xi’s strong ascent to power, defined as the result of institutional change in China’s political power game from the perspective of new institutionalism. The author identifies triggers of institutional change, ideas and norms introduced for changing informal institutions, and the actual transformation of formal institutions, arguing that Xi took advantage of social demand for reform coordination as well as some top elites’ serious political misbehavior to commence institutional change for the centralization of political power. To do so, Xi introduced new reform ideas – systemic thinking and top-down design, originating from complex systems theory – in the name of coordinating and comprehensively deepening reform. Xi eventually succeeded in justifying the centralization of power and the establishment of central organizations to deepen reforms comprehensively and coordinate internal and external security. As a result, Xi seized power while practically nullifying the principle of division of work.

Law, trust and institutional change in China: evidence from qualitative fieldwork

ABSTRACTChina’s rapid growth in the absence of autonomous legal institutions of the kind found in the west appears to pose a problem for theories which stress the importance of law for economic development. In this article we draw on interviews with lawyers, entrepreneurs and financial market actors to illustrate the complexity of attitudes to contract, corporate and financial law and economic growth in contemporary China. In the case of product markets, we find that business relations are increasingly characterised by a mix of trust-based transacting and legal formality. Financial markets are less like their western counterparts, thanks to the preponderant role of government in asset allocation, and a lack of transparency in market pricing. Overall, China’s experience does not suggest that law is irrelevant or unrelated to growth, but that legal and economic institutions coevolve in the transition from central planning to a market economy.

Institutional change in Chinese cross-border finance: foreign investors, the party-state and power resources

ABSTRACTThis paper is the first to investigate the changes in criteria for market access under China's Qualified Foreign Institutional Investor (QFII) Programmes. By combining insights on institutional change and Chinese elite politics, it demonstrates that the evolution of access criteria can be explained by interdependent bargaining between Chinese party leaders, administrative authorities and corporate interests. The 2008 global financial crisis triggered fundamental shifts in resource interdependencies that altered the bargaining dynamics between these agents. The changes in internal and external conditions are decisive for understanding how the QFII programmes evolved. The analysis draws on an original data-set coupling 91 multi-stakeholder interviews, database analysis and internal government records. The findings show that institutional change in China's cross-border investment programmes is a negotiated economic outcome bridging interdependent state and market agents. These results have important implications for the study of globalisation and institutional change in non-Western contexts. They challenge existing narratives of an all-pervasive Chinese party-state that is resistant to change.

A win–win path for institutional change

Institutional change is a response to socioeconomic pressures caused by resource scarcity, population growth, cultural change, and economic inefficiency. Historical evidence shows that the unequitable resource redistribution among groups caused by institutional change can indirectly reduce income, particularly when it leads to civil conflicts. A more equitable and effective approach to institutional change would seek win–win solutions. To examine this possibility, I review historical examples of institutional change in China to show how gradual institutional change that lets all stakeholders share the economic benefits is the most successful path. Therefore, innovation to replace or modify old institutions and equitably increase economic growth will be a key approach. This win–win approach requires persuasion, compromise, demonstration projects, competition, and embracing institutional diversity. Increased economic benefits come from economic innovation and encouragement of stakeholders to participate in institutional change, but require nurturing of new social groups that will drive the change process.