The Chinese Economy (March-April 2009/VOL.42,
NO.2)
Finance and Trade Development in Contemporary China
Guest Editor's Introduction
KUI-WAI LI
3
Government
Protection and Corporate Risk Management in China
JIANBING
HUANG
AND HUI WANG
7
> Abstract
Corporate finance theory indicates that risk management increases firm
value by reducing expected costs of financial distress, agency costs,
and expected taxes etc. This paper examines the hypothesis by conducting
an empirical research on Chinese listing firms. Previous studies mainly
focused on corporate governance system in China, while this study pays
more attention to protection within the context of local government and
tries to analyze its effects on decisions of firms risk management.
Contrastive to what the theory claims, results of this studies show that
firms with high distress cost pay little attention to risk management.
Furthermore, there seems no clear impact of risk management decision on
firm value. Hence, the author believes that phenomenon could be
attributed to protection from the local government, which lets very few
listing firms in China go bankrupt. But in the long run, this protection
will destroy a firms competitiveness and accordingly will reduce firm
value.
Nonperforming Loans and
Productivity in Chinese Banks, 1997-2006
KENT MATTHEWS, XU ZHANG, AND JIANGUANG GUO
30
> Abstract
Using a bootstrap method for the Malmquist index estimates of productivity growth are
constructed with appropriate confidence intervals. The paper adjusts for the
quality of the output by accounting for the non-performing loans on the balance
sheets and test for the robustness of the results by examining alternative sets
of outputs. The productivity growth of the state-owned banks is compared with
the Joint-stock banks and its determinants evaluated. The paper finds that
average productivity of the Chinese banks improved modestly over this period.
Adjusting for the quality of loans, by treating NPLs as an undesirable output,
the average productivity growth of the state-owned banks was zero or negative
while productivity of the Joint-Stock banks was markedly higher.
Financing Urban Development in
China
JOHN
E. ANDERSON
48
> Abstract
Chinese
urban areas are exploding with growth and expanding at a rapid pace across
several regions of the country. This article examines the various revenue
sources that local governments may use to finance the costs of rapidly
expanding infrastructure and local public service provision. It starts with
an examination of the current urban development policy context in China.
Then, the article examines recent reform proposals for urban land
development and housing construction tax and fee reforms. The primary focus
is on the current policy debate over conversion of the existing system of
multiple real estate taxes and fees, often applied once at the time of house
purchase, into a unified real estate tax requiring annual payments. Analysis
of the potential impacts of this policy change on housing prices and the
patterns of housing development are considered.
Foreign Currency Inflow
and Real Exchange Rate Movement
China Versus Other Net Foreign Currency Inflow
Economies
YUANYAN ZHANG
63
> Abstract
A
number of East Asian and oil exporting countries have generated a large
inflow of foreign currencies as a result of their continued trade surplus
and surging foreign investments in recent decades. In China, the booming
foreign inflow was accompanied by a modest appreciation of the real exchange
rate. This paper argues that the failure of the real exchange rate to
appreciate in China is more of a result of the higher demand for real
monetary balances than a result of exchange rate manipulation. Such
"sterilization by the people" is more evident in the earlier episodes than
the more recent ones. This can be due to the emergence of competitive
financial instruments, a deeper financial market, and a more developed
social security system.
Can China Trigger Economic Growth in Africa?
An Empirical Investigation Based on the Economic
Interdependence Hypothesis
JEAN-CLAUDE MASWANA
91
> Abstract
This
paper tests the exports to China-led growth and imports from China-led growth
hypotheses using Toda-Yamamoto's version of Granger no-causality combined with
Johanness cointegration and bootstrap diagnostic tests. The findings seemingly
downplay the importance of the export-led growth hypothesis while suggesting
that Africa might benefit from Chinas growth through technology-embodied
capital good imports. In this sense, the findings support recent views that
rather than the mere effects of trading, the gains from global
trade depend on the ability of countries to appropriately position themselves
along the global value chain.
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