Private Investment In China Research Articles

Influence of capital allocation on interregional inequality of public services: differentiated evidence of investment by the government and market in China

ABSTRACT Interregional inequality of public services is accompanied by their combined supply by government and market. This study investigates whether the spatial allocation of regional investment influences inequality and explores the differentiated source of such influence, distinguishing between government investment and private investment in China. Results suggest that the interregional inequality of public services is spatialised by the distorted spatial allocation of investment, which manifests itself as capital market segmentation, and it is aggravated by government investment but relieved by private investment. Such effects derive from differences in local protectionism, interregional competition and capital flow between government investment and private investment.

INFORMAL POLITICAL COALITIONS AND PRIVATE INVESTMENT IN CHINA

AbstractThis article attempts to estimate the effects of informal political coalitions on China's private investment. Theoretically, the party-state clients of China's supreme leaders are expected to have stronger incentives to foster economic growth. One way of doing so is to encourage private investment by reducing its political risks. Analysis of provincial-level panel data from 1993 to 2017 shows that personal connections—based on shared experience in the same work unit—between provincial leaders and the Chinese Communist Party's incumbent supreme leader significantly increase the growth rate of private investment. This suggests that informal institutional relations may assist the development of China's private economy by partially compensating for the weaknesses of formal rule-of-law institutions.

Research on the Influence of Real Estate Development on Private Investment: A Case Study of China

Private investment in China, as a developing country, is an important source of financing for Chinese SMEs (Small and Medium-Size Enterprises) and has played a major role in the development of the real economy. However, in 2016, the growth rate of private investment in China dropped from 10.18% to 3.17%, which had a significant impact on the real economy. At the same time, China’s real estate market has developed rapidly, attracting a large number of capital inflows. The relationship between real estate development and private investment in China is worth considering. This study first, theoretically analyzes the influence mechanism of real estate industry on private investment, pointing out that within a modest development range, the development of real estate industry can promote private investment through the industrial linkage, urbanization, and balance sheet effects, but when real estate is overdeveloped, it has an inhibitory effect on private investment through vampire effect, raising costs and reducing demand effect. In other words, real estate has different effects on private investment in different developmental periods. Therefore, there is a non-linear relationship between the two variables. Second, the relevant provincial panel data of 31 provinces in mainland China from 2003 to 2015 were selected. Using the dynamic panel system Generalized Method of Moments (GMM), this study estimated the correlation between real estate development and private investment. The empirical results showed that the development of the real estate industry has a significant impact on the level of private investment; the two showing an “inverted U-shaped” relationship. At present, in some provinces in China, the real estate industry has exceeded the inverted U-shaped threshold. To boost the vitality of private investment in promoting real economic growth, the development of the real estate industry should be restricted, and house prices should be properly regulated.

The Spatial Transformation of Traditional Rural Villages Driven by Private Investment in China’s Developed Areas: The Case of Daxi Village, Anji County

Abstract. Restricted by political ideology and institutional barriers, the development of rural China has in the past relied heavily on government spending. However, with institutional reform and the development of a market economy, private investment is playing an increasingly important role in rural development, especially in traditional rural villages. Daxi village in Anji County of Zhejiang Province is a typical case. Investment in the Tianhuangping Hydropower Station and the Beautiful Villlages policy supported by the public sector (government and state-owned enterprises) have been important driving forces in attracting private investments in rural tourism and have had a profound impact on the physical, economic and social space of Daxi village. This research used interviews with key subjects, including government officials, non-local investors and returned migrants, and a questionnaire survey among local residents. It was found that with the growth of private investment, location, transportation, natural resources, development policies and superior human resources are the most important factors that drive spatial transformation. Finally, it also offers a discussion on how the Daxi model may shed light on rural development in developing countries with an urban-rural dichotomy. Keywords. spatial transformation, private investment, rural development, Daxi village. Abstrak. Dibatasi oleh ideologi politik dan hambatan institusional, perkembangan pedesaan Cina di masa lalu sangat bergantung pada belanja pemerintah. Namun, dengan reformasi kelembagaan dan pengembangan ekonomi pasar, investasi swasta memainkan peran yang semakin penting dalam pembangunan pedesaan, terutama di desa-desa pedesaan tradisional. Desa Daxi di Kabupaten Anji, Provinsi Zhejiang adalah kasus yang tipikal. Investasi di Stasiun Pembangkit Listrik Tenaga Air Tianhuangping dan kebijakan Desa Indah yang didukung oleh sektor publik (pemerintah dan badan usaha milik negara) telah menjadi dorongan yang penting dalam menarik investasi swasta pada pariwisata pedesaan dan memiliki dampak besar pada ruang fisik, ekonomi dan sosial Desa Daxi. Penelitian ini menggunakan wawancara dengan subyek-subyek utama, termasuk pejabat pemerintah, investor non-lokal dan migran yang telah kembali, dan survei kuesioner di antara penduduk setempat. Ditemukan bahwa dengan pertumbuhan investasi swasta, lokasi, transportasi, sumber daya alam, kebijakan pembangunan dan sumber daya manusia yang unggul adalah faktor paling penting yang mendorong transformasi spasial. Akhirnya, penelitian ini juga menawarkan diskusi tentang bagaimana model Daxi dapat menjelaskan perkembangan pedesaan di negara-negara berkembang dengan dikotomi kota-desa. Kata kunci. transformasi spasial, investasi swasta, pembangunan pedesaan, Desa Daxi.

The value of a novel biotechnology

PurposeThe purpose of this paper is to examine the impacts of changing biotechnology and intellectual property rights (IPRs), institutions, and policies for Canadian crop development related to oilseed rape or “canola” as a case study. Implications for China as it considers regulatory and institutional change related to private sector incentives to invest in biotechnology are also discussed.Design/methodology/approachThe authors assess the effects of introducing biotechnology and IPRs in the Canadian oilseed sector over time. Data on the rate of return on agricultural research in general are presented and then the focus moves to the impacts for farmers in Canada. New data are gathered to estimate recent gains in the benefit of biotechnology advancements for farmers. Furthermore, the evolution of agricultural research in China is briefly presented, and a discussion follows that considers Canadian evidence and the possible applicability of the impacts to China.FindingsThe results support earlier studies identifying gains from agricultural research and show that private sector investments in Canada are now much higher than public sector investments and thus institutional innovations have been a powerful trigger to improve productivity. The gains from biotechnology for farmers are now over CND 1 billion per year in Canada.Research limitations/implicationsThe research gains measured are for Canada so should be applied to China’s situation only as a potential for gains.Practical implicationsWhile more work is needed to identify reasonable institutional incentives to generate private investment in China’s biotechnology industry, the potential impact in the Canadian canola sector highlights the importance of continuing the investment in biotechnology, and the need for appropriate policies and regulations to spur private investment.Social implicationsBiotechnology greatly improved the welfare of farmers in Canada. Much of the gain the authors find was in improved yields and lower herbicide costs that improved farmer profits. Privatization of breeding was a key step in this transformation.Originality/valueThe paper contributes an updated review of Canadian intellectual property institutions related to biotechnology, and an updated measure of gains at the farm level. It also begins the analysis of the applicability of these institutional changes for China.

Comments by Ding Lu, on Zombie Firms and the Crowding-Out of Private Investment in China

October 01 2016 Comments by Ding Lu, on Zombie Firms and the Crowding-Out of Private Investment in China Author and Article Information Online Issn: 1536-0083 Print Issn: 1535-3516 © 2016 by the Earth Institute at Columbia University and the Massachusetts Institute of Technology2016Massachusetts Institute of Technology Asian Economic Papers (2016) 15 (3): 56–57. https://doi.org/10.1162/ASEP_a_00475 Cite Icon Cite Permissions Share Icon Share Facebook Twitter LinkedIn MailTo Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Comments by Ding Lu, on Zombie Firms and the Crowding-Out of Private Investment in China. Asian Economic Papers 2016; 15 (3): 56–57. doi: https://doi.org/10.1162/ASEP_a_00475 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll JournalsAsian Economic Papers Search Advanced Search Ding Lu: This paper scrutinizes the effects of state-led investment on economic efficiency in China at the microeconomic level. Since the early 1980s, China has achieved extraordinary success in economic development. A crucial feature of this developmental path is a proactive role played by the government. As observed by Lin (2012, 2013), while pursuing reforms to build a well-functioning market economy, the Chinese government has facilitated the development and upgrading of industries according to the economy's dynamic comparative advantages over years. The key elements of the government's proactive role include: (a) compensating for externalities created by pioneer firms in the process of industrial upgrading; (b) coordinating the desirable investments and improvements in soft and hard infrastructure; and (c) liberalizing entry into sectors in which the country has comparative advantages but at the same time providing some transitory supports and protections to unviable firms to maintain (social) stability.... You do not currently have access to this content.

Comments by Vu Quoc Huy, on Zombie Firms and the Crowding-Out of Private Investment in China

Comments by Vu Quoc Huy, on Zombie Firms and the Crowding-Out of Private Investment in China

Comments by Phouphet Kyophilavong, on Zombie Firms and the Crowding-Out of Private Investment in China

Comments by Phouphet Kyophilavong, on Zombie Firms and the Crowding-Out of Private Investment in China

Summary of the General Discussion on “Zombie Firms and the Crowding-Out of Private Investment in China”

Summary of the General Discussion on “Zombie Firms and the Crowding-Out of Private Investment in China”

Zombie Firms and the Crowding-Out of Private Investment in China

From a data set of Chinese firms in the 2005–07 period, we find that government investment boosted the performance of zombie firms and crowded out the growth of private firms; we also found that the higher the concentration of state banks (and of state-owned enterprises), the more conducive is the environment for nurturing zombie firms. With the exit of zombie firms, (a) the industrial output growth rate would be higher by 2.12 percentage points, (b) the capital accumulation rate would be higher by 1.4 percentage points, (c) the employment growth rate would be higher by 0.84 percentage points, and (d) the rate total factor productivity growth would be higher by 1.06 percentage points. Our results support a radical change in the way that government investment has been carried out, and support comprehensive reform of the state sector, but they do not necessarily argue against government investment in large infrastructure projects and strategically-critical areas.

Zombie Firms and the Crowding-Out of Private Investment in China

From a dataset of Chinese firms in the 2005-07 period, we find that government investment boosted the performance of zombie firms and crowded out the growth of private firms; and that the higher the concentration of state banks, and of SOEs, the more conducive is the environment for nurturing zombie firms. With the exit of zombie firms, (a) the industrial output growth rate would be higher by 2.12 percentage points, (b) the capital accumulation rate by 1.4 percentage points, (c) the employment growth rate by 0.84 percentage points, and (d) the rate total factor productivity growth by 1.06 percentage point. Our results support a radical change in the way that government investment has been carried out, and support comprehensive reform of the state sector, but they do not necessarily argue against government investment in large infrastructure projects and strategically-critical areas.

Does government investment crowd out private investment in China?

This paper asks whether government investment “crowds out” or “crowds in” private investment in China. We divide government capital expenditures into two types: (1) investment that serves to provide public goods and infrastructure, and (2) investment in private industry and commerce. The results of structured vector auto-regressive analysis suggest that government investment in public goods in China “crowds in” private investment significantly, while government investment in private goods, industry and commerce, mainly through state-owned enterprises, “crowds out” private investment significantly.

Market entry barriers for foreign direct investment and private investors: Lessons from China's electricity market

Energy market Integration (EMI) is one of the priorities of regional cooperation identified by leaders from the East Asian Summit (EAS) region. The countries in the region have made great efforts to push for the electricity sector reform so as to boost the participation of private investment. However, a review of these reform experiences suggests that there is significant disparity between the expected and actual outcomes of reform. China has implemented its reform program since the 1990s, and a major reform was introduced in 2002, with the corporatization and unbundling of electricity being achieved. But, a competitive market has not yet been established due to both political and technical difficulties. Motivated by the Power Purchase Agreement (PPA), the participation of private investment in China was expanded in the 1990s. Paradoxically, after the introduction of a major reform in 2002 which created more favorable conditions for the private sector, foreign investors retreated from China. Among other things, the authors identified the fragmented regulatory system, unpredictable pricing mechanism, limited access to transmissions, fuel and financing, and unchecked expansion of the state-owned sector as major barriers that impeded the participation of the private sector. The policy responses and implications of China's experience for the region are also discussed.

Property rights, trade credit and entrepreneurial activity in China

This work empirically reconsiders the significance of legal protection of property rights and financial development for entrepreneurial activity measured by private investment in China, taking into account trade credit as an intermediate position between the two institutional developments. For financial development, we find that development of trade credit has a direct positive influence on private entrepreneurial investment, while development of bank finance has less impact on promotion of private investment. Legal property rights protection likely encourages private entrepreneurial investment indirectly, via development of trade credit.

The Practice Analysis of Perfecting Private Investment in China

The Practice Analysis of Perfecting Private Investment in China

Unbundling the Rule of Law in China: Local Legislative Power and Private Investment

This article argues that the importance of legal systems on private investment in China depends not on how credibly the rule of law is established, but how effective the government is at maintaining law and order. The legal development in China has contributed to the country’s success in attracting foreign direct investment (FDI), but has had little positive impact on domestic private investment. Using a data set of local legislative activities, this article demonstrates that profound differences in the exercise of local legislative powers influence regional investment patterns. Provinces tend to attract more FDI when local governments are more responsive but less arbitrary in using their legislative authority. Domestic private investment, in contrast, tends to respond favorably in provinces in which governments are less responsive but more discretionary in using legislative authority.