Peking University, Nov.7, 2011: On the afternoon of November 6, 2011, the third session of Economic-sub Panel around the theme “Economic Growth in the Context of Globalization: Opportunities, Challenges and Perspectives” was held at the Press Hall of Peking University (PKU) Yingjie Exchange Center. Professor Xia Qingjie served as the session chairman.

Challenges to China’s Continued Rapid Growth

Professor John Knight from the University of Oxford first reviewed the underlying reasons why China has been able to grow at a rapid speed during the Opening-up and Reform period. Then he summarized the economic factors that econometric analysis identifies as the proximate causal determinants of growth, including more rapid capital accumulation, “conditional convergence” from a low base, slower population growth, and more drastic sectoral change from low-productivity agriculture to high-productivity industry. In his eyes, there could be shocks to the Chinese economy which might dislodge it from its current virtuous circle of rapid growth such as the macroeconomic imbalances, a banking crisis, rising inequality, and other sources of socio-political instability.

Economic Growth and Longevity Gains in China

Professor Chee-Ruey Hsieh from Academia Sinica in Taiwan shared his ideas about economic growth and longevity gains in China. He pointed out that a gap in the performance of the economic and health sector empirical importance of mechanisms and through which economic growth contributed to population health are identified, and it goes true with cross-sectional differences in life expectancy across countries and geographic regions.

Role of Family Background for Earnings in Rural China

Professor Tor Eriksson from Aarhus University showed his research concerning the role of family background for earnings in rural china. His research indicated that compared with 1990s, income correlations have decreased in more recent years, but remain high. Furthermore, there are no differences between the coastal and interior provinces and by the father’s education. The high brother correlations imply that the high level of income inequality in China is likely to persist. Besides, the main factor contributing to the low intergenerational mobility is that these individuals were unfortunate to be borne in the rural parts of China.

Target Mode of Low-income House in China

Professor Ping Xinqiao from PKU School of Economics illustrated this topic of common concern. He illustrated that the relationship between the low-income house and the commodity house is the problem of the mechanism design. Once given the resource, the optimal ratio problem of low-income house within the state is the ratio between public goods and personal effects. At a certain level of the economic development and degree of urbanization, the optimal ratio of low-income house does not exist on the basis of certain land fiscal level.

Hong Kong as RMB offshore center

Professor Frank Song from PKU School of Economics, focused on the perspectives and challenges of Hong Kong as RMB offshore center. He came up with several factors that have restricted the flow of RMB to foreign economics, including the capital account restriction of RMS, sustainable growth in China’s economy as well as China’s continuous current account and capital account surplus. In his opinion, Hong Kong plays a very important role in facilitating the trading and investment of overseas RMB, and also the special role in RMB internationalization while China is still under capital control. However, there are challenges and risks to the monetary policy in Mainland and currency substitution in Hong Kong due to the RMB internationalization.

Exchange Rate Shocks in China and Japan

Professor So-young Kim from Seoul National University talked about “Empirical Analysis on the Effects of Exchange Rate Shocks in China and Japan”. By employing structural vector auto-regression model that shows some important differences between the experiences of Japan and China, he got moderate support to the claim that currency appreciation will give recessionary pressure in the Chinese economy. On the other hand, RMB appreciation significantly reduces output in China although it has insignificant effect on the current account. Empirical results suggest that, for China, dollar pricing with vertical trade integration seems responsible for the insignificant effect on the current account.

Sustainability and Responsibility in Economic Growth

Professor Phil Harris from Britain discussed some problems concerning sustainability and responsibility in economic growth. As he argued, “Major differences in the quality of life and resource scarcity are challenges that underline the inevitability of change. In this environment the narrative of ‘sustainable development’ is increasingly becoming adopted as a helpful set of principles to make sense of these connected global facts and trends and to guide our political and business responses.” He believed that increasingly critical for strategic public affairs management is to play a leadership role in driving sustainability and to strengthen international corporate social responsibility.  

Population Aging & China’s Social Security Reform

Another PKU Economic Professor Lin Shuanglin focused on the population aging and China’s social security reforms. In his eyes, at present China still faces severe population aging problem despite its rapid population increasing since the Qing Dynasty. Therefore, it is necessary to carry out a social security system reform for the old. He also pointed out that China’s social security system faces serious problems because the social account does not have enough revenues to cover the social security payments, and the current social security system is unsustainable due to population aging.

Constraints on Private Enterprises

Using a panel of Chinese firms over the period 2000-2007, Professor Lina Song from Britain presented her findings that the financial constraints upon private firms including all China’s large and medium size firms, has indicated a bottleneck for a healthy development of the sector. She pointed out that without the consistent fiscal policies allowing finance to go to private firms, the private sector will not be able to smooth the economy during economic crisis. In other words, if China is to go down the road of its market development, protectionism over its core industries through state monopoly or oligopoly would not work. China needs a further open-door policy to welcome a market system which promotes the private sector and allows it to compete with their state counterparts at the level ground.

After the lectures, scholars answered the questions raised by attendants and carried out heated discussions.

The panel session of “Economic Growth in the Context of Globalization: Opportunities, Challenges and Perspectives” will continue on Sunday morning with the theme “Economic Growth and the Sustainable Development of Environment and Resource”.

Reported by: Zhang Hao

Edited by: Arthars