Regional Growth In China Research Articles

LOCAL GOVERNMENT DEBT AND ECONOMIC GROWTH IN CHINA

ABSTRACT China’s local government debt (LGD) has recently become the focus of economic policy debates. However, information about LGD and its impact on economic growth in the Chinese economy is scarce. This paper attempts to present an empirical investigation of the impact of China’s LGD on economic growth. It is probably the first of its kind to focus on China and thus contributes to the general literature on the relationship between government debt and economic growth. The paper first provides an assessment of LGD in China’s regional economies, using recently released auditing statistics and other available secondary information. It then applies conventional growth analysis methods to examine the impact of LGD on regional growth in China. Various scenario and sensitivity analyses are also conducted, to accommodate the inadequacy and potentially poor quality of debt statistics.

Impact of Economic Development Levels and Disaster Types on the Short-Term Macroeconomic Consequences of Natural Hazard-Induced Disasters in China

The relationship between natural hazard-induced disasters and macroeconomic growth has been examined widely on global and national scales, but little research has been focused on the subnational level, especially in China. We examined the impacts of natural hazard-induced disasters on the regional growth in China based on subnational panel data for the period from 1990 to 2016. First, we used the number of people affected and the direct economic losses as the measures of the scale of disasters. Then, we used the direct damages of meteorological disasters and earthquakes as disaster measures separately to examine the impacts of different disaster types. Finally, we performed intraregional effects regressions to observe the spatial heterogeneity within the regions. The results show that the adverse short-term effects of disasters is most pronounced in the central region, while the direct damage of disasters is a positive stimulus of growth in the whole of China. However, this stimulus is observed in a lagged way and is reflected differently—meteorological disasters in central and eastern China and earthquakes in western China are related to regional growth. The results demonstrate that the short-term macroeconomic impacts of these disasters in the three geographical regions of China largely depend on regional economic development levels and the disaster types.

Investment in Infrastructure and Regional Growth in China

ABSTRACT In this paper we empirically examine the possible effects of regional infrastructure investment on regional per capita income growth and regional total factor productivity (TFP) growth. We first present a theoretical framework for output decomposition and then design a panel data growth model to examine the possible impact of regional infrastructure investment on regional per capita income growth. We find a negative effect of the former on the latter. We also perform a variance decomposition exercise and examine the possible effect of regional infrastructure investment on regional TFP growth. Our results suggest that regional infrastructure investment does not affect regional economic growth through the former’s impact on regional TFP growth. We also examine the possible relationship between regional infrastructure investment and the estimated individual region effects and find a negative correlation between the two.

Housing Price and Population Growth across China: The Role of Housing Supply

In this article, we employ a spatial equilibrium growth model to empirically examine the role of housing supply growth in differences in housing price and population growth across the provinces, autonomous regions, municipalities, and major cities of mainland China for 2002–2015. Areas in the East, particularly Shanghai, Ningbo, Qingdao, and Xiamen, are found to have had the least growth in housing supply, while autonomous regions and areas in the Southwest and Northeast had the most. The differences in housing supply growth are shown not only to have greatly influenced relative housing price growth, but they also greatly influenced relative regional population growth, suggesting that land and housing supply policies are a critical component of regional growth in China.

Spatial Perspective on Regional Growth in China: Evidence from an Extended Neoclassic Growth Model

ABSTRACTFollowing Ertur and Kock (2007) and Elhorst, Piras, and Arbia (2010), a spatially-extended neoclassical Solow growth model is developed to explore the spatial characteristics of regional economic growth at the prefecture level over the period 1992–2010 in China. A Spatial Durbin Model with the spatial fixed effects is verified in empirical analysis. The results show that spatial spillovers exist not only among the economic growth of neighbors, but also among the initial economic levels of neighbors. Furthermore, the same analysis is conducted for a new specified sample by controlling spatial heterogeneity, and the results show that spatial spillover effects are enhanced and the velocity of convergence is greater. The empirical analysis verifies that the extended neoclassic growth model is a feasible foundation to explore the spatial characteristics of regional economic growth over the period 1992–2010 in China.

The Cointegrating Relationship of Regional Growth in China

Since the open door policy declared in the late 1970s, the economic growth of China has been rapidly developed and accumulated. However, the widening regional economic development disparity has been brought to the concern by the government. It is doubtful that the regional economic growth would tend to be equivalent by spillover effects from some more-developed regions to other less-developed ones. The goal of this paper is to examine the long-run relationship of Chinese provincial economic performance with the consideration of the characteristic of cross-sectional dependence in the panel data covering 30 provinces in China over the period 1990-2012. We find a strong spatial dependence over in China’s regional production function. After a cointegrating relation is confirmed using the methodology of Kao (1999) and Pedroni (1999), a spatial error correction model is further applied. We find the local cointegration term is significantly negative, suggesting a long-run convergence relation for the Chinese regional economic growth.

Local Government Debt and Economic Growth in China

​China’s local government debt (LGD) has recently become the focus of economic policy debates. However, information about LGD and its impact on economic growth in the Chinese economy is scarce. This paper attempts to present an empirical investigation of the impact of China’s LGD on economic growth. It is probably the first of its kind to focus on China and thus contributes to the general literature on the relationship between government debt and economic growth. The paper first provides an assessment of LGD in China’s regional economies, using recently released auditing statistics and other available secondary information. It then applies conventional growth analysis methods to examine the impact of LGD on regional growth in China. Various scenario and sensitivity analyses are also conducted, to accommodate the inadequacy and potentially poor quality of debt statistics.

Weighted convergence and regional growth in China: an alternative approach (1952–2008)

This paper analyses the convergence behaviour of labour productivity, capital intensity and TFP across 28 Chinese regions from 1952 to 2008 by using the dynamics of the distribution approach. Unlike other works, we take into account the population and economic size of each region in the analysis as well as the spatial dimension in the convergence process. Our results indicate that un-weighted analysis provide a limited information of the convergence behaviour, since the weighted analysis matter in that process. Besides, although the multimodality prevails in all the analysis made, we find that convergence in labour productivity is mainly driven by capital intensity. In addition, it is also observed two distinctive clubs in the distribution of TFP that may account for the different speed of regional development in China. These results suggest the need to promote further economic policies in the Chinese economy.

Regional growth in China: An empirical investigation using multiple imputation and province-level panel data

This paper examines the contributions of various factors to China’s economic growth. The methodology is discussed in papers by Levine and Renelt (1992) and Sala-i-Martin (1997). Using multiple imputation techniques on a panel data from 1978 to 1999 for 30 provinces, autonomous regions, and independently administered cities, we find that provinces with more innovation capital and more bank-deposit-to-GDP ratios tend to experience higher economic growth. Migration of people into a province, the number of higher education teachers, railroad density & local government revenue as a percent of total government spending are all negatively related to subsequent growth rates.

An empirical study of structural factors and regional growth in China

Based on data of 31 Chinese provinces over the period 1980–2004, the study in this paper presents new evidence on the effects of structural shocks and structural transformation on growth and convergence among the Chinese regions. The division of overall regional growth in labour productivity into three components – growth due to structural shocks, growth due to structural transformation and a ‘residual’ indicating growth due to region-specific changes – provides us with a better framework than the traditional one-sector Solow growth model for attributing growth and convergence to various different sources. Among other findings, the study has shown that during 1990–1999, structural shocks worked to widen the gap between rich regions and poor regions in China, while structural transformation worked to narrow the gap.

The Revival of Private Enterprise in China

Contents: Introduction, Shuanglin Lin and Shunfeng Song Part I Private Enterprises and Economic Development: Higher efficiencies or resource reallocation?, Li Gan, Shunfeng Song and Chiu Tan Size of the state-owned sector and regional growth in China, Kerk L. Phillips and Shen Kunrong Resource allocation and economic growth in China, Shuanglin Lin. Part II Government and Private Enterprises: Government and private enterprises: Wenzhou experiences, Wenbo Wu Property rights developments and productivity gains in China: a law and economics perspective, Xiaowen Tian and Vai Io Lo Evolution of economic development: entrepreneurs, market, and the state, Jack W. Hou Private enterprise development and governmental functions, Jian He. Part III Financial Reforms, Openness, and Private Enterprise Development: Causes of the non-performing loan piling-up in the late 1990s: a research note, Ding Lu, Sandre M. Thangavelu and Qing Hu Public venture capital: understanding the US and Chinese experiences, Changwen Zhao, Shuming Bao and Chunfa Chen The challenges China's private enterprises face in the WTO, Shaomin Huang, Dongxia Wu and Grant D. Forsyth. Part IV Ownership Reforms and Privatization: The privatization of Russian state industry: some lessons for China, Marshall I. Goldman Politician control, agency problems and ownership reform: evidence from China, Lixin Colin Xu, Tian Zhu and Yi-min Lin Hospital ownership: what can China learn from the US experience?, Wei Yu. Part V Corporate Governance and Efficiency: Corporate governance and the development of private enterprise in China, Aimin Chen and Ping Li The productivity efficiency of the state-owned enterprises in China, Chun-Chien Kuo The prospect of private economy in China, Xiaowen Tian Index.

The place of FDI in China's regional economic development: Emergence of the globalized delta economies

China's remarkable economic development and sustainable high growth rates since the 1980s have stimulated much discussion in recent literatures. Among the augments of China's rapid growth, voluminous recent literatures have emphasized that foreign direct investment (FDI) may best explain its recent growth record at both national and regional level. To understand how such sustained rapid regional growth happened in a huge country such as China, this paper examines the possible explanations of FDI absorption from the perspective of regional agglomerations by investigating (1) the emergence of two major globalized delta economies (GDEs), namely, Pearl River Delta (PRD) and Yangtze River Delta (YRD), due to FDI inflows; (2) the critical effects and functions of a core city in promoting FDI into GDEs; and (3) industry structure specialization in the periphery cities/counties in GDEs. Estimations were performed with a set of panel data at the city/county level for 1993–2003. Research results show that both core cities in GDEs have played significant role in attracting FDI. Compared with PRD, YRD had relatively higher estimated elasticities in FDI absorption and more diversified industry structure similarities among its cities and hence, possible higher intra-regional competition in terms of industry production. The possible formation of any effective city link in GDEs was also investigated. Reflections and policy implications regarding FDI promotion and regional growth in China were discussed.

Spatial agglomeration, FDI, and regional growth in China: Locality of local and foreign manufacturing investments

While China remains as the largest foreign direct investment (FDI) host country among all developing nations, the nearby Hong Kong and Taiwan are the two dominating sources of manufacturing FDI among all FDI origins. FDI absorption in the case of China could be well explained by Krugman [Krugman, P. (1991a). Increasing returns and economic geography. Journal of Political Economy, 99, 483–499] core (Hong Kong)–periphery (Guangdong, China) system and the critical role of spatial agglomeration in directing foreign investments. This paper aims at understanding the “spatial dimension” of firm concentration and its economic interactions with growth in China as well as how firm locality is related to institutional factors, such as regional policy on FDI, investment source, gravity of the core city, and natural geographic aspects. The effects of spatial agglomeration and FDI on regional output growth and their structural relations with endogenous FDI are addressed. Using a micro-(firm) level data consisting of 55,348 local Chinese and foreign manufacturing firms investing in Guangdong, China, research results show that other than institutional forces, spatial agglomeration and their synergies as well as gravity have directed the patterns of inward FDI and further, induced regional GDP growth.

What effect does the size of the state-owned sector have on regional growth in China?

This paper examines the effects state-owned enterprises (SOEs) have on China's economic growth. We present a simple and intuitive model of the political process, which predicts a larger state-owned sector will lead to lower growth rates. We then estimate regressions with various measures of and proxies for real output growth using a variety of other factors, including measures of the size of the state-owned sector, as regressors. We find a robust negative relation between the size of state-owned enterprises and the provincial growth rate. The estimates indicate that a decrease in the SOE share of industrial production by 10 percentage points increases real GDP growth the following year by between 0.7% and 1.2%. The average impact of a reduction in the SOE share in employment by 10 percentage points is between 1.6% and 2.3%.

FDI and Industrial Restructuring in Post‐WTO Greater PRD: Implications on Regional Growth in China

This paper aims at studying the investment flows in the Greater Pearl River Delta region (Hong Kong‐PRD) in China and its impacts on industrial restructuring at the firm‐level using a business survey with the Hong Kong‐PRD entity acted as a core‐periphery economy. The critical effects of gravity distance on transaction costs in the determination of investment flows are examined statistically by a gravity model by incorporating a hypothetical infrastructural construction project. Survey findings show that the evolution of the cross‐border operations at the main core has directed the outward FDI flows and the subsequent industrial structural adjustments of the core‐periphery economy. This paper has presented a typical illustrative case for further studies of investment flows and its impacts upon industrial adjustments and performance in other regions in China especially after the WTO accession. Its implication on regional economic growth is also discussed.

What Effect does the Size of the State-Owned Sector Have on Regional Growth in China?

This paper tests the contributions of the size of state-owned enterprises as a determinant of China's economic growth. The methodology is discussed in papers by Levine and Renelt (1992) and Sala-i-Martin (1997). We estimate regressions with growth of output and total factor productivity as the dependent variable and a variety of other factors, including measures of the size of the state-run sector, as regressors. We find that controlling for a variety of other factors, the greater the importance of state owned enterprises, as measured by the proportion of total industrial production they produce, the lower the provincial growth rate. The average estimate is that a decrease in the SOE share of industrial production by ten percentage points increases real GDP growth the following year by 1.14%. The average impacts of a reduction in the SOE share in employment are smaller in absolute magnitude and different for large provinces than they are for small ones. Large provinces actually have higher growth rates if this share rises, while smaller provinces have higher growth rates when it falls.

Growth Disparity in China: Provincial causes

The strategic shift of central government policy from equitable economic growth to the open door policy with an emphasis on coastal development in 1978 has resulted in uneven regional growth in China. The most noticeable growth disparity is between the coastal and inland provinces. This article seeks to identify the uneven growth of regional economies and to investigate provincial causes of such interprovincial variations in growth in the post-Mao era. This study develops a local reform-driven perspective to account for an unequal growth pattern in Jiangxi and Fujian. It finds that discrepancies in leadership role and ability to establish growth policy and strategies are the key variables in explaining the dissimilar pace of development. Such growth policy and strategies account for differences in restructuring in the local economy from centrally-planned to market-conforming, variations in creating new comparative advantages of the acquired kind, and different levels of marketization and non-state sector growth.

Regional Growth in China Under Economic Reforms

This article uses both cross-section and panel data approaches to study regional growth in China. Inter-regional income inequality increased ((divergence), the rich regions became richer but poor regions poorer (b divergence), over the data period 1978-95. This contradicts results from other cross-region country studies shown by Sala-i-Martin [1996] and some earlier studies on China. Only after controlling for regional effects, population growth, and investment in both physical and human capital do the data show significant b-convergence. More interestingly, the degree of openness and transportation are two other important factors responsible for differences in regional growth. This finding has important implications for regional development policy.

Growth, Efficiency, and Convergence in China's State and Collective Industry

In China, as in the Soviet Union and Eastern Europe, economic reform initiatives seek to increase productivity by introducing elements of market-oriented policies and institutions into an economy formerly dominated by state planning. Efforts to evaluate the impact of reform of Chinese industry have focused on the measurement of productivity change in state enterprises. This study expands the prior framework of analysis in several directions. Our investigation of productivity trends is not limited to state enterprises but includes quantitative comparisons with China's fast-growing collective industries, which contributed 36% of overall industrial output in 1988.1 Unlike previous studies, our analysis works with gross rather than net output. This permits us to investigate changes in the productivity of intermediate inputs, which occupy a large portion of total costs in Chinese industry, as well as labor and capital. To do this, we develop a "quasi-frontier" estimation procedure which seems appropriate for comparisons of total factor productivity based on Chinese industrial data. Finally, we offer a quantitative perspective on the extent to which reform efforts have moved industrial resource allocation toward patterns expected of a market system. The analysis confirms our previous finding, based on a restricted framework employing only labor, fixed capital, and net output, that multifactor productivity in state industry has risen substantially during