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211. Consumption boosts China's resilience but risks of a property bust still loom

Publication Date:
01-2012
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
With the outlook for exports subdued and investment weak, we expect industrial output growth to slow further in 2012H1. But consumption is taking up the slack and fiscal policy is set to be supportive. As a result, we only expect a relatively modest slowing in growth in 2012 to 8.4% from 9.2% in 2011. But with house prices still falling in December, we remain concerned about the risk of a sharp slowing in the property market leading to strains on local government finances and a hard landing for growth, particularly with the external environment weak. However, central government finances are strong and fiscal transfers could provide a significant cushion in the event of a property bust.
Topic:
Communism, Economics, Government, International Trade and Finance, and Global Recession
Political Geography:
China and Israel

212. Pharmaceutical Price Regulation: Macro-Level Evidence from China between 1997 and 2008

Author:
Qiong Zhang, Binzhen Wu, and Xue Qiao
Publication Date:
01-2012
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
This paper uses macro-level data between 1997 and 2008 to evaluate the effects of China's pharmaceutical price regulations. We find that these regulations had short-run effects on medicine price indexes, reducing them by less than 0.5 percentage points. The effects could have been slightly reinforced when these regulations were imposed on more medicines. However, these regulations failed to reduce household health expenditures and the average profitability of the pharmaceutical industry, and firms on the break-even edge were worse off. Finally, although these regulations have no significant effects on the price of substitutes or complements for medicines, they increased expensive medicine imports.
Topic:
Economics, Health, Human Welfare, Industrial Policy, International Trade and Finance, and Markets
Political Geography:
China

213. Global Governance Audit

Author:
Hakan Altinay
Publication Date:
02-2012
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
We frequently treat the changing constellation that has come to be referred to as global governance as a lackluster fait accompli. Nobody has masterminded it. Nobody is really in charge. Almost everybody has reasons to be unhappy about what they view as its current suboptimal state. As such, global governance is not an easy phenomenon to assess or audit. The benchmarks and scales to be used are not obvious. Yet an audit attempt is nevertheless necessary, if for no other reason than to start to form a deliberated assessment, to develop some benchmarks, and to refine our questions for the future.
Topic:
Economics, Globalization, and Governance
Political Geography:
China and Europe

214. Cooperating with China in Africa

Publication Date:
02-2012
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies
Abstract:
OECD donors, international organisations and non-governmental organisations are increasingly cooperating with China in Africa. This policy brief offers recommendations for policy-makers on how to lay the groundwork for such cooperation. It also stresses that the involvement of African partners is critical in fully realizing the benefits such cooperation can provide for sustainable development.
Topic:
Foreign Policy, Development, Diplomacy, Economics, Foreign Aid, and Foreign Direct Investment
Political Geography:
Africa and China

215. Is Chinese FDI pushing Latin America into natural resources?

Author:
Miguel Pérez Ludeña
Publication Date:
03-2012
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
Chinese foreign direct investment (FDI) in Latin America is a recent phenomenon. Although the China National Petroleum Corporation and other companies have been present in Peru, Ecuador and Venezuela since the early 1990s, large projects have been pursued only since 2006, following an extended period of high commodity prices. The Economic Commission for Latin America and the Caribbean (ECLAC) estimated that there were US$ 15 billion of Chinese FDI inflows into Latin America in 2010, 90% of which were in extractive industries. This further contributed to the already high percentage of Chinese FDI flows to the region that are in natural resources. At a time of high economic growth fueled by commodity exports and strong currency appreciation (particularly in Brazil), FDI into extractive industries strengthens the region's specialization in primary products at the expense of manufacturing and other activities.
Topic:
Economics, International Trade and Finance, Markets, Natural Resources, and Foreign Direct Investment
Political Geography:
China, Brazil, Latin America, and Peru

216. The unbalanced dragon: China's uneven provincial and regional FDI performance

Author:
Karl P. Sauvant, Chen Zhao, and Xiaoying Huo
Publication Date:
03-2012
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
Among developing countries, China attracts most foreign direct investment (FDI). Where is this investment located within China, what explains its distribution and what are policy implications? We used UNCTAD's FDI Performance Index to answer the first question. Although developed for countries , it can be applied to sub-national units. It uses provincial GDP to ascertain whether a given territorial unit has received FDI inflows as expected from its economic size. Standardizing the data accordingly reveals three clusters of provinces for 2007-2010 (table 1, figure 1 below): The first cluster encompasses virtually all coastal provinces: they have an index value above 1, i.e. perform better than their economic size would lead one to expect. They account for 9 of the top 11 performers of Mainland China's 31 provinces, municipalities and autonomous regions (“provinces”). The provinces in the middle cluster underperform (index value of 1-0.5). They include 5 central provinces, but also 3 western and 2 coastal provinces. The provinces in the bottom cluster underperform significantly (index value below 0.5), comprising primarily the country's western provinces (8 out of the 10 provinces in this cluster).
Topic:
Development, Economics, International Trade and Finance, Markets, and Foreign Direct Investment
Political Geography:
China

217. China's Shale Gas Strategy

Author:
Ralph Winnie
Publication Date:
03-2012
Content Type:
Journal Article
Journal:
The Diplomatic Courier
Institution:
The Diplomatic Courier
Abstract:
Over the past twenty years, China has experienced dramatic economic growth, transforming itself from a basically agrarian society into the world's second largest economy behind only the United States. Since the initiation of economic and political reforms in 1978, China has produced an average annual growth rate of 10 percent. From 1978 to 2008, China increased its GDP 83 times (NBS, 2009) and lifted over two hundred million of its people out of poverty. This has continued to generate increased energy supply. Within China's energy sector, production was stimulated by the clarification of mineral exploration rights, the development of transportation and roadway infrastructure projects, diversification of management structures and the liberalization of environmental and safety regulation.
Topic:
Economics
Political Geography:
United States and China

218. China's New Courtship in South Sudan

Publication Date:
04-2012
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
In the wake of Sudan's partition, Beijing has accelerated a re-orientation of its engagement in the resulting two states, most significantly through a new courtship in Juba. China's historical support for Khartoum left a sour legacy in the South, but the potential for mutual economic benefit means a new chapter in bilateral relations is now being written. Balancing new friends in Juba with old friends in Khartoum, however, has proven a delicate dance. China has been drawn into a high-stakes oil crisis between the two, the consequences of which may temper an otherwise rapidly expanding relationship with Juba. A sustainable solution to the crisis cannot be achieved in isolation; North-South stability, mutual economic viability and the security of Chinese interests will also depend on answers to other unresolved political and security issues, including in Sudan's marginalised peripheries. The future of Beijing's dual engagement, and the kind of relationship that emerges in the South, will depend in part on how the oil standoff – and this broader reform agenda – are confronted.
Topic:
Security, Foreign Policy, Economics, Oil, and Bilateral Relations
Political Geography:
Africa, China, and South Sudan

219. Spillover Effects of Exchange Rates: A Study of the Renminbi

Author:
Arvind Subramanian, Aaditya Mattoo, and Prachi Mishra
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper estimates the impact of China's exchange rate changes on exports of competitor countries in third markets, known as the "spillover effect." Recent theory is used to develop an identification strategy in which competition between China and its developing country competitors in specific products and destinations plays a key role. The variation is used—afforded by disaggregated trade data—across exporters, importers, product, and time to estimate this spillover effect. The results show robust evidence of a statistically and quantitatively significant spillover effect. Estimates suggest that, on average, a 10 percent appreciation of China's real exchange rate boosts a developing country's exports of a typical 4-digit Harmonized System (HS) product category to third markets by about 1.5 to 2 percent. The magnitude of the spillover effect varies systematically with product characteristics as implied by theory.
Topic:
Development, Economics, and Markets
Political Geography:
China

220. Chinese Investment in Latin American Resources: The Good, the Bad, and the Ugly

Author:
Theodore H. Moran, Julia Muir, and Barbara Kotschwar
Publication Date:
02-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
China's need for vast amounts of minerals to sustain its high economic growth rate has led Chinese investors to acquire stakes in natural resource companies, extend loans to mining and petroleum investors, and write long-term procurement contracts for oil and minerals in Africa, Latin America, Australia, Canada, and other resource-rich regions. These efforts to procure raw materials might be exacerbating the problems of strong demand; "locking up" natural resource supplies, gaining preferential access to available output, and extending control over the world's extractive industries. But Chinese investment need not have a zero-sum effect if Chinese procurement arrangements expand, diversify, and make more competitive the global supplier system. Previous Peterson Institute research (see Moran 2010) and new research undertaken in this paper, show that the majority of Chinese investments and procurement arrangements serve to help diversify and make more competitive the portion of the world natural resource base located in Latin America. For a more comprehensive analysis, the authors conduct a structured comparison of four Peruvian mines with foreign ownership: two Organization for Economic Cooperation and Development-based, and two Chinese. They examine what conditions or policy measures are most effective in inducing Chinese investors to adopt international industry standards and best-practices, and which are not. They distill from this case study some lessons for other countries in Latin America, Africa, and elsewhere that intend to use Chinese investment to develop their extractive sectors: first, that financial markets bring accountability; second, that the host country regulatory environment makes a significant difference; and third, that foreign investment is a catalyst for change.
Topic:
Economics, International Trade and Finance, and Natural Resources
Political Geography:
China, Canada, Latin America, and Australia