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31. Chinaʹs Startup Ecosystem Policy and Implications

Author:
Sangbaek Hyun, Hyojin Lee, Yunmi Oh, and Koun Cho
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The Chinese government is moving toward a qualitative growth model in the era of “New Normal,” transitioning from the existing quantitative growth model. In line with the transition, since 2015 the Chinese government has been implementing a strategy of “mass entrepreneurship and innovation,” which involves building a startup ecosystem in order to solve youth unemployment and create new growth engines. Thanks to the success story of China’s BAT (Baidu, Alibaba, Tencent) and these new policies by the Chinese government, the startup entrepreneurship boom in China has grown rapidly, together with an explosive expansion of infrastructure and platforms for startups. To determine whether China’s economy can be transformed into an innovative economy, we need to carefully examine and evaluate China’s strategy and status of developing the startup ecosystem.
Topic:
Entrepreneurship, Economic Growth, Unemployment, and Startup
Political Geography:
China and Asia

32. Turning away from globalization? Trade wars and the rules of competition in global trade: Implications for the EU

Author:
Jan J. Michałek and Przemyslaw Wozniak
Publication Date:
03-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The trade war between the U.S. and China began in March 2018. The American side raised import duties on aluminum and steel from China, which were later extended to other countries, including Canada, Mexico and the EU member states. This drew a negative reaction from those countries and bilateral negotiations with the U.S. In June 2018 America, referring to Section 301 of its 1974 Trade Act, raised tariffs to 25% on 818 groups of products imported from China, arguing that the tariff increase was a response to years of theft of American intellectual property and dishonest trade practices, which has caused the U.S. trade deficit. Will this trade war mean the collapse of the multilateral trading system and a transition to bilateral relationships? What are the possibilities for increasing tariffs in light of World Trade Organization rules? Can the conflict be resolved using the WTO dispute-resolution mechanism? What are the consequences of the trade war for American consumers and producers, and for suppliers from other countries? How high will tariffs climb as a result of a global trade war? How far can trade volumes and GDP fall if the worst-case scenario comes to pass? Professor Jan J. Michałek and Dr. Przemysław Woźniak give answers to these questions in the mBank-CASE Seminar Proceeding No. 161.
Topic:
Globalization, European Union, Economic Growth, and Trade
Political Geography:
China, Europe, and United States of America

33. Tariffs and Monetary Policy: A Toxic Mix

Author:
Michael D Bordo and Mickey D. Levy
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The ratcheting up of tariffs and the Fed’s discretionary conduct of monetary policy are a toxic mix for economic performance. Escalating tariffs and President Trump’s erratic and unpredictable trade policy and threats are harming global economic performance, distorting monetary policy, and undermining the Fed’s credibility and independence. President Trump’s objectives to force China to open access to its markets for international trade, reduce capital controls, modify unfair treatment of intellectual property, and address cybersecurity issues and other U.S. national security issues are laudable goals with sizable benefits. However, the costs of escalating tariffs are mounting, and the tactic of relying exclusively on barriers to trade and protectionism is misguided and potentially dangerous. The economic costs to the United States so far have been relatively modest, dampening exports, industrial production, and business investment. However, the tariffs and policy uncertainties have had a significantly larger impact on China, accentuating its structural economic slowdown, and are disrupting and distorting global supply chains. This is harming other nations that have significant exposure to international trade and investment overseas, particularly Japan, South Korea, and Germany. As a result, global trade volumes and industrial production are falling. Weaker global growth is reflected in a combination of a reduction in aggregate demand and constraints on aggregate supply.
Topic:
International Trade and Finance, Monetary Policy, Economic Growth, Tariffs, and Industry
Political Geography:
Japan, China, Europe, Asia, South Korea, Germany, North America, and United States of America

34. Using purchasing power parities to compare countries: Strengths and shortcomings

Author:
Patrick Honohan
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Good international economic policy requires good comparative data on national economic performance. In May 2020, the World Bank published the latest comprehensive update of purchasing power parities (PPPs), as part of the International Comparison Program. Produced for 176 countries, these PPPs are used to convert data (especially GDP and other quantities based on national income accounts) from national currencies to a common basis in a way that is meaningful for economic analysis. PPP-adjusted data are essential because the distortions caused by sharp exchange rate movements are significant, especially for times of macroeconomic turbulence. The newly released PPP data contain fewer surprises than those published in previous updates and are an invaluable tool, but Honohan explains why PPPs should be used with caution and an understanding of their limitations. Apart from removing distortions caused by market exchange rate movements, PPPs remove the impact of other factors affecting relative prices, especially productivity differences, which Honohan argues should not be removed if one wishes to compare the overall economic size or strength of a country or region. Adjusting for productivity, he finds that the United States retains its position as the world’s largest economy for the time being, and the European Union (even without the United Kingdom) is just ahead of China.
Topic:
World Bank, Economic Growth, Currency, Data, and Productivity
Political Geography:
China, Europe, and United States of America

35. US-China Trade Tensions: Impact on Mexico | Estados Unidos-China Tensiones Comerciales: Impacto en Mexico

Author:
COMEXI
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
Mexican Council on Foreign Relations (COMEXI)
Abstract:
For the mid- or long-term, no country in the world—and much less Mexico—benefits from a strained environment in which there is no adherence to international trade rules. However, for the short-term, a strained trade environment produces adjustments to the supply chains, which could benefit competitors of those economies that are currently in conflict. Mexico, the second supplier of the United States only behind China, could reassert its position as a credible competitor of the Asian economy in the US. Likewise, in the context of trade friction, or even just the threat of a conflict, Mexico could strengthen its trade positioning in China by replacing part of the US offering. /// En el mediano o largo plazo, a ningún país del mundo, y menos a México, le conviene que exista un clima de tensiones donde no se respeten las reglas del comercio internacional. Ahora bien, en el corto plazo, el clima de tensiones comerciales genera ajustes en las cadenas de suministro, lo cual puede beneficiar a los competidores de las economías en conflicto. México, el segundo proveedor de Estados Unidos sólo después de China, puede reafirmar su posición como competidor creíble de la economía asiática en Estados Unidos, así como fortalecer su posición comercial en China, al sustituir parte de la oferta estadounidense, en un contexto de fricciones comerciales o su amenaza.
Topic:
Foreign Policy, Economy, Economic Growth, Trade Wars, Exports, and Trade
Political Geography:
China, Mexico, and United States of America

36. The Sea as Catalyst of Geopolitics: from Mahan to the Chinese Boom / El mar como catalizador de la geopolítica: de Mahan al auge chino

Author:
Josep Baqués Quesada
Publication Date:
06-2019
Content Type:
Journal Article
Journal:
Journal on International Security Studies (RESI)
Institution:
International Security Studies Group (GESI) at the University of Granada
Abstract:
China is the State that has grown the most economically and militarily in the past decades. Although its armed forces are still far from the US, the enormous Chinese commercial projection and its policy of providing facilities in ports on all continents, together with the creation of a powerful fleet of the high seas, recall the path traveled years ago by other great powers. But China, unlike the United Kingdom of the nineteenth century or the USA in the twentieth century, is rather a Rimland´s power with one foot in the Heartland. Precisely for this reason, this analysis tests the Chinese capacity from the theoretical framework least favorable for her, that is, the maritime power of Mahan. The conclusion is that, despite certain deficits in purely geographical issues, many of the parameters once defined by Mahan endorse the Chinese candidacy.
Topic:
Armed Forces, Geopolitics, Navy, Economic Growth, and Maritime
Political Geography:
China and Asia

37. Processing Trade, Trade Liberalisation, and Opening Up China's Miracle of International Trade

Author:
Miaojie Yu and Huihuang Zhu
Publication Date:
11-2019
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Understanding the role of international trade is the key to understanding China’s miraculous economic growth. This paper reviews the literature on international trade in the context of China, with a focus on processing trade, trade liberalisation, and firmperformance to provide a better understanding of China’s experience of opening up over the past four decades.
Topic:
International Trade and Finance, Economic Growth, and Trade Liberalization
Political Geography:
China and Asia

38. China, Like the US, Faces Challenges in Achieving Inclusive Growth Through Manufacturing

Author:
Robert Z. Lawrence
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
For more than three decades the goal of becoming “the factory of the world” has been at the core of China’s development strategy. This strategy, in combination with high rates of domestic investment and low rates of consumption, made Chinese production the most manufacturing intensive in the world. But as its wages have risen, China’s competitiveness in the most labor-intensive manufacturing industries has eroded. Its ability to assemble products remains a major source of its exports, but it has also tried to shift toward more sophisticated value-added production domestically. Chinese domestic spending has shifted away from investment toward more consumption as citizens’ incomes have grown. Like Americans, Chinese people are also spending more on services than on manufactured goods. All these changes are fundamentally altering the structure of China’s production, reducing the role of manufacturing, and increasing the skill levels of workers in manufacturing. This Policy Brief reviews the challenges posed by these developments for China’s long-term goal of achieving more inclusive growth. It presents evidence that commonly held perceptions that Chinese manufacturing employment growth is robust are wrong. In fact, such growth has peaked and China is now following the pattern of structural change that is typical of a more mature emerging economy, in which the share of employment in manufacturing declines as workers are increasingly employed in services.
Topic:
Economic Growth, Manufacturing, and Trade
Political Geography:
China, Asia, North America, and United States of America

39. Supply-side reform leads to economic resilience

Author:
Qiyuan Xu
Publication Date:
02-2019
Content Type:
Policy Brief
Abstract:
China's GDP grew 6.6 percent in 2018, according to National Bureau o ftatistics data. Despite the slight slowdown in the GDP growth rate, however, exports grew at a relatively high 9.9 percent year-on-year calculated in US dollars. And, not surprisingly, China's trade surplus with the United States expanded further. ...... Besides, the relative prosperity index of small and medium-sized enterprises has dropped to the second-lowest point in a decade, and the financial cost differentiation among various industries is growing. This may have a negative impact on not only short-term macroeconomic stability, but also the development space of relevant emerging industries and long-term growth momentum.
Topic:
Reform, GDP, Economy, Economic Growth, and Resilience
Political Geography:
China and Asia

40. Perceiving Truth and Ceasing Doubts: What Can We Learn from 40 Years of China’s Reform and Opening up?

Author:
Fang Cai
Publication Date:
05-2019
Content Type:
Working Paper
Abstract:
China’s reform, opening up and resultant economic growth in the past 40 years haveled to the accumulation of an immense array of experiences, which economists areobligated to look into, analyze and theorize upon. In fact, the rich literature in thisarea has positively assessed and documented China’s successful experiences. However,theories that were established in Western countries have been applied as doctrine tojudge China’s experiences. By adopting an analytical framework unifying historicallogic and theoretical logic, the purpose of this paper is to reveal the unique Chineseexperience and its relevance to the general laws of economic development. Based on theexperiences of and in reference to research findings about China, this paper chroniclesthe process of reform, opening up and economic growth, and analyzes the nexus betweenthem. The study demystifies how the incentive mechanism, the factor accumulation andallocation system, market development, and macro policy environment reforms havespurred China’s economic growth, structural changes and the increase in productivity.The changes in development stage are examined and policy implications for furtherreform are discussed.
Topic:
Reform, Economy, Economic Growth, and Trade Policy
Political Geography:
China and Asia