China: a New Model for Growth and Development
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China: A New Model for Growth and Development Other titles in the China Update Book Series include: 1999 China: Twenty Years of Economic Reform 2002 China: WTO Entry and World Recession 2003 China: New Engine of World Growth 2004 China: Is Rapid Growth Sustainable? 2005 The China Boom and its Discontents 2006 China: The Turning Point in China’s Economic Development 2007 China: Linking Markets for Growth 2008 China’s Dilemma: Economic Growth, the Environment and Climate Change 2009 China’s New Place in a World of Crisis 2010 China: The Next Twenty Years of Reform and Development 2011 Rising China: Global Challenges and Opportunities 2012 Rebalancing and Sustaining Growth in China China: A New Model for Growth and Development Ross Garnaut, Cai Fang and Ligang Song (eds) มࣷბ࿔၅Ӳม SOCIAL SCIENCES ACADEMIC PRESS(CHINA) Published by ANU E Press The Australian National University Canberra ACT 0200, Australia Email: [email protected] This title is also available online at: http://epress.anu.edu.au National Library of Australia Cataloguing-in-Publication entry Title: China : a new model for growth and development / edited by Ross Garnaut, Cai Fang and Ligang Song. ISBN: 9781921666483 (paperback) 9781921666490 (ebook) Notes: Includes index. Subjects: Economic development--China. China--Economic conditions. China--Economic policy. China--Commerce. Other Authors/Contributors: Garnaut, Ross, editor. Fang, Cai, editor. Song, Ligang, editor. Dewey Number: 338.951 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior permission of the publisher. Book design and layout by Teresa Prowse, http://www.madebyfruitcup.com This edition © 2013 ANU E Press Contents Tables vii Figures xi Contributors xv Acknowledgments xvii 1 China’s New Strategy for Long-term Growth and Development 1 Ross Garnaut, Cai Fang and Ligang Song 2 New Institutions for a New Development Model 17 Dwight H. Perkins 3 The New Normal of Chinese Development 35 Yiping Huang, Cai Fang, Peng Xu and Gou Qin 4 The End of China’s Demographic Dividend 55 Cai Fang and Lu Yang 5 Chinese Industrialisation 75 Huw McKay and Ligang Song 6 China’s Saving and Global Economic Performance 97 Rod Tyers, Ying Zhang and Tsun Se Cheong 7 Growing into an Innovative Economy 125 Yixiao Zhou 8 China’s Agricultural Development 147 Li Zhou 9 Rural–Urban Migration 179 Xin Meng 10 Reforming China’s Public Finances for Long-term Growth 199 Christine Wong v China: A New Model for Growth and Development 11 Changing Business Environment in China 221 Xiaolu Wang, Jingwen Yu and Fan Gang 12 Will Chinese Industry Ever Be ‘Green’? 251 Shiyi Chen and Jane Golley 13 Can China Achieve Green Growth? 267 Yongsheng Zhang 14 China’s Climate Change Mitigation in International Context 281 Ross Garnaut 15 China’s Energy Demand Growth and the Energy Policy Trilemma 301 Simon Wensley, Stephen Wilson and Jane Kuang 16 Financial Constraints on Chinese Outward Direct Investment by the Private Sector 321 Bijun Wang, Miaojie Yu and Yiping Huang 17 Determinants of Chinese Exports in Information and Communication Technology (ICT) Products 341 Kunwang Li and Bingzhan Shi Index 363 vi Tables Table 4.1 Increases in demand for and supply of labour force (million, %) 62 Table 4.2 Estimated results for potential inputs and outputs in China, 1978–2020 64 Table 4.3 Labour force participation rates in China by age group and gender (%) 65 Table 5.1 Quadrupling living standards from a base of $2,000 PPP GDP per capita 78 Table 5.2 Producer subsidy equivalents of factor market distortions in China, 2000–2009 (% of GDP) 85 Table 6.1 China’s outward FDI and its regional distribution 110 Table 7.1 Number of all firms and number of firms that engaged in R&D expenditure 136 Table 7.2 Descriptive statistics of the sample for regression 136 Table 7.3 Regression results 139 Table 7.4 Regression results 140 Table 8.1 Outputs and growth rates of major agricultural products since 1978 (1,000 ton) 149 Table 8.2 Key agricultural output per capita since 1978 (kg) 150 Table 8.3 Changes in the level of integrated mechanisation (%) 151 Table 8.4 Effective irrigation areas since 1978 (1,000 ha) 152 Table 8.5 Amount and composition of chemical fertilisers used in China, 1980–2011 (1,000 tons and %) 153 Table 8.6 Share of grains produced in the 13 major provinces in the total amount of the country (%) 155 Table 8.7 China’s agricultural TFP growth rate and its composition (1985–2010) 156 Table 8.8 Efficiency in China’s grain production by regions 157 Table 8.9 Farmers employed in urban areas (1,000 person) 159 vii China: A New Model for Growth and Development Table 8.10 Farmers employed outside agriculture during 2008–2011 (1,000 person, %) 159 Table 8.11 Changes in the shares of GDP created by the farmers employed outside agriculture in the country’s total GDP 159 Table 8.12 Comparison of the incomes of farmers and urban residents since 1978 161 Table 8.13 The central government’s subsidies to agriculture (billion yuan) 163 Table 8.14 The central government’s special funds for rewarding the governments of counties where a certain amount of grains are produced 164 Table 8.15 Area and carbon sequestration of the six major forest projects during 2000–2010 166 Table 8.16 Improvement in the minimum living security: 2001–2011 (1,000 persons, billions yuan) 170 Table 8.17 Labour and labour costs in the production of rice, wheat and corn per ha 172 Table 9.1 Summary statistics of different samples 185 Table 9.2 Proportion of each age group among the new arrivals by year 187 Table 9.3 Results from earnings regressions 191 Table 10.1 Composition of fiscal revenues in the comprehensive budget, 2012 204 Table 10.2 Sources of finance for fixed investment: 1982–2010 (%) 211 Table 11.1 Provincial ranking by business environment (2006–2012) 225 Table 11.2 Overall scores and changes in ranking by provinces (2006–2012) 228 Table 11.3 Major obstacles to businesses by the sample firms: 2008 and 2012 230 Table 11.4 Eight areas of business environment: changes in scores 232 Table 11.5 Differences in business environment between SOEs and NSEs 234 Table 11.6 Difference in business environment between enterprise scales 235 viii Tables Table 11.7 Changing business environment in different sectors: area indexes and overall index 239 Table 11.8 Statistical significance of differences among three groups 241 Table 11.9 Scales and ownership types of the sample enterprises by sector groups 242 Table 11.10 Changes in business environment in four regions 245 Table 11.A1 The structure of the BEIFCP 248 Table 12.1 Levels and growth of key variables by sector 256 Table 12.2 Growth of productivity, efficiency and technical change in Chinese Industry, 1980–2010 257 Table 12.3 Average annual growth rates of outputs, inputs and productivity (%) 259 Table 12.4 TFP, GTFP, Efficiency and technical change across sectors and time 261 Table 14.1 China: power generation 2011 and 2012 294 Table 15.1 Two gas development scenarios for China 315 Table 16.1 Country, institution and industry distribution (2006–2008) 329 Table 16.2 Variable definition and summary statistics 330 Table 16.3 Results for multinomial logit model: full sample 332 Table 16.4 Results for multinomial logit model: consider the mitigating effects of productivity 333 Table 16.5 Results for multinomial logit model: one-period lag 334 Table 16.6 Results for multinomial logit model: first-time ODI 335 Table 17.1 Breakdown of China’s ICT exports by custom regime (%) 346 Table 17.2 The ratio of different policy zones in China’s ICT export (%) 346 Table 17.3 The extensive margin, quantity and quality in China’s ICT export ratio 347 Table 17.4 Variable descriptions and summary statistics 350 ix China: A New Model for Growth and Development Table 17.5 Basic estimation results for dependent variable lnv 352 Table 17.6 Robustness check for dependent variable lnv 353 Table 17.7 Basic estimation results for dependent variable lnq 354 Table 17.8 Robustness check for dependent variable lnq 355 Table 17.9 Basic estimation results for dependent variable lnp 356 Table 17.10 Robustness check for dependent variable lnp 357 x Figures Figure 3.1 Estimates of growth potentials (%) 38 Figure 3.2 Current account surplus as a share of GDP, 2006–2012 (%) 39 Figure 3.3 Urban–rural income ratio narrowed, 1987–2012 (%) 40 Figure 3.4 Growth in eastern, central and western China, 2012 (%) 40 Figure 3.5 Gini coefficients estimated by the National Bureau of Statistics, 2003–2012 41 Figure 3.6 Contribution to GDP growth, 1995–2012 (%) 42 Figure 3.7 Total consumption share of GDP (%) 42 Figure 3.8 Household consumption share of GDP (%) 43 Figure 3.9 Rapid rise of migrant workers’ wages 45 Figure 3.10 Labour income and consumption share of GDP (%) 46 Figure 3.11 Private consumption share of GDP in Korea and Taiwan (%) 47 Figure 4.1 The Chinese Lewis turning period 56 Figure 4.2 Trends of potential growth rate and of its factors in China: 1996–2020 60 Figure 4.3 Labour force participation rate in China, 2010 66 Figure 4.4 Effect of one percentage point increase in labour force participation rate on potential GDP growth rate 67 Figure 4.5 Effects of one extra percentage point of TFP growth on potential GDP growth rate 69 Figure 5.1 Quadrupling living standards from a base of $2,000 PPP GDP per capita 77 Figure 5.2a Selected characteristics of successful future industrialisers at the $2,000 PPP GDP per capita level 80 Figure