Growth and Convergence: The case of China

Growth and Convergence: The Case of China Since the initiation of economic reforms in 1978, China has become one of the world’s fast-growing economies. The rapid growth, however, has not been shared equally across the different regions in China. The prominent feature of substantial differences in incomes and growth rates across the different Chinese regions has attracted the attention of many researchers. This book focuses on issues related to economic growth and convergence across the Chinese regions over the past three decades. The book has eight chapters. Apart from an introduction chapter and a concluding chapter, all the other chapters each deal with some certain aspects of the central issue of regional growth and convergence across China over the past three decades. The whole book is organized as follows. Chapter 1 provides an introduction to the basic issues involved in this book. Chapter 2 tests economic growth and convergence across 31 Chinese provinces during 1981-2005, based on the theoretical framework of the Solow growth model. Chapter 3 investigates the relationship between openness to foreign economic activities, such as foreign trade and foreign direct investment, and the regional economic growth in the case of China during 1981-2005. Chapter 4, based on data of 31 Chinese provinces over the period 1980-2004, presents new evidence on the effects of structural shocks and structural transformation on growth and convergence among the Chinese regions. Chapter 5, by building up an empirical model that takes account of different potential effects of foreign direct investment, focuses on the impacts of foreign direct investment on China’s regional economic performance and growth. Chapter 6 reconsiders the growth and convergence problem of the Chinese regions in an alternative theoretical framework with endogenous saving behavior and capital mobility across regions. Chapter 7, by building up a theoretical model concerning comparative advantage and transaction efficiency, focuses on one of the potential mechanisms through which China achieves its fast economic growth over the past few decades. Chapter 8 concludes the book by summarizing the results from the previous chapters and suggesting directions for further studies.

Corporate Governance in China (summary section only)

The negative relationship between economic growth and stock market return is not an anomaly according to evidence documented in many economies. It is argued that future economic growth is largely irrelevant for predicting future equity returns, since long-run equity returns depend mainly on dividend yields and the growth of per share dividends. The economic growth does result in a higher standard of living for consumers, but does not necessarily translate into higher returns for owners of the capital. The divergence in performance between the real sector and stock markets appears to support the above argument. However, this thesis strives to offer an alternative explanation to the apparent divergence within the framework of corporate governance. It argues that weak corporate governance standards in Chinese listed firms exacerbated by poor inventor protection results into a marginalized capital market. Each of the three essays in the thesis addresses one particular aspect of corporate governance on the Chinese stock market in a sequential way through gathering empirical evidence on three distinctive stock market activities. The first essay questions whether significant agency conflicts do exist by building a game on rights issues. It documents significant divergence in interests among shareholders holding different classes of shares. The second essay investigates the level of agency costs by examining value of control through constructing a sample of block transactions. It finds that block transactions that transfer ultimate control entail higher premiums. The third essay looks into possible avenues through which corporate governance standards could be improved by investigating the economic consequences of cross-listing on the Chinese stock market. It finds that, by adopting a higher disclosure standard through cross-listings, firms voluntarily commit themselves to reducing information asymmetry, and consequently command higher valuation than their counterparts.

Governance Matters : China's Developing Western Region with a Focus on Qinghai Province

This study is about governance in contemporary China. The focus is on Qinghai Province, one of the twelve provincial-level units included in the western region development strategy launched in 2000 by the government of China. Qinghai, the subject of the case study, is not a very well-known province. Hence, this study is significant, because it provides new knowledge about the province of Qinghai, its governance and diverse challenges, and deepens one s overall knowledge regarding China. Qinghai province is one of the slowest developing regions of China. My research problem is to analyze to what extent provincial development correlates with the quality of governance. The central concept of this research is good governance. This dissertation employs a grounded theory approach while the theoretical framework of this study is built on the Three World s approach of analyzing the three main themes, namely, the environment, economic development, and cultural diversity, and to support the empirical work. Philosophical issues in the humanities and contemporary theories of governance are brought in to provide deeper understanding of governance, and to understand to what extent and how characteristics of good governance (derived from the Western canon) are combined with Chinese tradition. A qualitative research method is chosen to provide a deeper understanding of the contemporary challenges of Qinghai (and China) and to provide some insight into the role and impact of governance on provincial development. It also focuses on the Tibetan ethnic group in order to develop as full an understanding as possible about the province. The challenges faced by Qinghai concern in particular its environment, economic development, and cultural diversity, all of which are closely interrelated. The findings demonstrate that Qinghai Province is not a powerful actor, because it has weak communications with the central government and weak collaboration with its stakeholders and civil society. How Qinghai s provincial government conducts provincial development remains a key question in terms of shaping the province s future. The question is how is Qinghai s government best able to govern in a way that is beneficial for the people. This study demonstrates that this is a significant question that challenges governance everywhere, and particularly in China given the absence of democracy. This study provides the ingredients for reflection as to how provincial government can be motivated to choose to govern in a sustainable way, instead of leaning on growth factors with too little consideration about the impact on the environment and the people.

Democracy, Participation, and Deliberation in China : The discussion about democratic centralism in the official Chinese press, 1978-1981

This study examines the Chinese press discussion about democratic centralism in 1978-1981 in newspapers, political journals and academic journals distributed nationwide. It is thus a study of intellectual trends during the Hua Guofeng period and of methods, strategies, and techniques of public political discussion of the time. In addition, this study presents democratic centralism as a comprehensive theory of democracy and evaluates this theory. It compares the Chinese theory of democratic centralism with Western traditions of democracy, not only with the standard liberal theory but also with traditions of participatory and deliberative democracy, in order to evaluate whether the Chinese theory of democratic centralism forms a legitimate theory of democracy. It shows that the Chinese theory comes close to participatory types of democracy and shares a conception of democracy as communication with the theory of deliberative democracy. Therefore, the Chinese experience provides some empirical evidence of the practicability of these traditions of democracy. Simultaneously, this study uses experiences of participatory democracies outside of China to explain some earlier findings about the Chinese practices. This dissertation also compares Chinese theory with some common Western theories and models of Chinese society as well as with Western understandings of Chinese political processes. It thus aims at opening more dialogue between Chinese and Western political theories and understandings about Chinese polity. This study belongs to scholarly traditions of the history of ideas, political philosophy, comparative politics, and China studies. The main finding of this study is that the Chinese theory of democratic centralism is essentially a theory about democracy, but whether its scrupulous practicing alone would be sufficient for making a country a democracy depends on which established definition of democracy one applies and on what kind of democratic deficits are seen as being acceptable within a truly democratic system. Nevertheless, since the Chinese theory of democratic centralism fits well with some established definitions of democracy and since democratic deficits are a reality in all actual democracies, the Chinese themselves are talking about democracy in terms acceptable to Western political philosophy as well.

Meillä ei ole ikuisia ystäviä eikä ikuisia vihollisia. Ikuisia ovat meidän omat etumme. : Suomen suhteet Kiinan kansantasavaltaan 1949 - 1989

"We have neither Eternal Friends nor Eternal Enemies. We have only Eternal Interests .Finland's Relations with China 1949-1989 The study focuses on the relations between Finland and the People s Republic of China from 1949-1989 and examines how a small country became embroiled in international politics, and how, at the same time, international politics affected Finnish-Chinese relations and Finland s China policy formulation. The study can be divided into three sections: relations during the early years, 1949-1960, before the Chinese and Soviet rift became public; the relations during the passive period during the 1960s and 1970s; and the impact of China s Open Door policy on Finland s China policy from 1978-1989. The diplomatically challenging events around Tiananmen Square and the reactions which followed in Finland bring the study to a close. Finland was among the first Western countries to recognise the People s Republic and to establish diplomatic relations with her, thereby giving Finland an excellent position from which to further develop good relations. Finland was also the first Western country to sign a trade agreement with China. These two factors meant that Finland was able to enjoy a special status with China during the 1950s. The special status was further strengthened by the systematic support of the government of Finland for China's UN membership. The solid reputation earned in the 1950s had to carry Finland all the way through to the 1980s. For the two decades in between, during the passive policy period of the 1960s and 1970s, relations between Finland and the Soviet Union also determined the state of foreign relations with China. Interestingly, however, it appeared that President Urho Kekkonen was encouraged by Ambassador Joel Toivola to envisage a more proactive policy towards China, but the Cultural Revolution cut short any such plan for nearly twenty years. Because of the Soviet Union, Finland held on to her passive China policy, even though no such message was ever received from the Soviet Union. In fact, closer relationships between Finland and China were encouraged through diplomatic channels. It was not until the presidency of Mauno Koivisto that the first high-level ministerial visit was made to China when, in 1984, Foreign Minister Paavo Väyrynen visited the People s Republic. Finnish-Chinese relations were lifted to a new level. Foreign Minister Väyrynen, however, was forced to remove the prejudices of the Chinese. In 1985, when the Speaker of the Finnish Parliament, Erkki Pystynen visited China he also discovered that Finland s passive China policy had caused misunderstandings amongst the Chinese politicians. The number of exchanges escalated in the wake of the ground-breaking visit by Foreign Minister Väyrynen: Prime Minister Kalevi Sorsa visited China in 1986 and President Koivisto did so in 1988. President Koivisto stuck to practical, China-friendly policies: his correspondence with Li Peng, the attitude taken by the Finnish government after the Tiananmen Square events and the subsequent choices made by his administration all pointed to a new era in relations with China.

Serum uric acid and metabolic risk factors in three ethnic groups: Asian Indians and Creoles in Mauritius and Chinese in Qingdao, China

In humans with a loss of uricase the final oxidation product of purine catabolism is uric acid (UA). The prevalence of hyperuricemia has been increasing around the world accompanied by a rapid increase in obesity and diabetes. Since hyperuricemia was first described as being associated with hyperglycemia and hypertension by Kylin in 1923, there has been a growing interest in the association between elevated UA and other metabolic abnormalities of hyperglycemia, abdominal obesity, dyslipidemia, and hypertension. The direction of causality between hyperuricemia and metabolic disorders, however, is unceartain. The association of UA with metabolic abnormalities still needs to be delineated in population samples. Our overall aims were to study the prevalence of hyperuricemia and the metabolic factors clustering with hyperuricemia, to explore the dynamical changes in blood UA levels with the deterioration in glucose metabolism and to estimate the predictive capability of UA in the development of diabetes. Four population-based surveys for diabetes and other non-communicable diseases were conducted in 1987, 1992, and 1998 in Mauritius, and in 2001-2002 in Qingdao, China. The Qingdao study comprised 1 288 Chinese men and 2 344 women between 20-74, and the Mauritius study consisted of 3 784 Mauritian Indian and Mauritian Creole men and 4 442 women between 25-74. In Mauritius, re-exams were made in 1992 and/or 1998 for 1 941 men (1 409 Indians and 532 Creoles) and 2 318 non pregnant women (1 645 Indians and 673 Creoles), free of diabetes, cardiovascular diseases, and gout at baseline examinations in 1987 or 1992, using the same study protocol. The questionnaire was designed to collect demographic details, physical examinations and standard 75g oral glucose tolerance tests were performed in all cohorts. Fasting blood UA and lipid profiles were also determined. The age-standardized prevalence in Chinese living in Qingdao was 25.3% for hyperuricemia (defined as fasting serum UA > 420 μmol/l in men and > 360 μmol/l in women) and 0.36% for gout in adults between 20-74. Hyperuricemia was more prevalent in men than in women. One standard deviation increase in UA concentration was associated with the clustering of metabolic risk factors for both men and women in three ethnic groups. Waist circumference, body mass index, and serum triglycerides appeared to be independently associated with hyperuricemia in both sexes and in all ethnic groups except in Chinese women, in whom triglycerides, high-density lipoprotein cholesterol, and total cholesterol were associated with hyperuricemia. Serum UA increased with increasing fasting plasma glucose levels up to a value of 7.0 mmol/l, but significantly decreased thereafter in mainland Chinese. An inverse relationship occurred between 2-h plasma glucose and serum UA when 2-h plasma glucose higher than 8.0 mmol/l. In the prospective study in Mauritius, 337 (17.4%) men and 379 (16.4%) women developed diabetes during the follow-up. Elevated UA levels at baseline increased 1.14-fold in risk of incident diabetes in Indian men and 1.37-fold in Creole men, but no significant risk was observed in women. In conclusion, the prevalence of hyperuricemia was high in Chinese in Qingdao, blood UA was associated with the clustering of metabolic risk factors in Mauritian Indian, Mauritian Creole, and Chinese living in Qingdao, and a high baseline UA level independently predicted the development of diabetes in Mauritian men. The clinical use of UA as a marker of hyperglycemia and other metabolic disorders needs to be further studied. Keywords: Uric acid, Hyperuricemia, Risk factors, Type 2 Diabetes, Incidence, Mauritius, Chinese

Landscape-scale soil erosion modelling and ecological restoration for a mountainous watershed in Sichuan, China

Sichuanissa Tiibetin ylängön metsäkato on pysähtynyt mutta eroosio-ongelmat jatkuvat Viikin tropiikki-instituutin tutkija Ping ZHOU kartoitti trooppisen metsänhoidon alaan kuuluvassa väitöskirjatyössään maaperän eroosioalttiutta ja sen riippuvuutta metsäkasvillisuudesta Jangtsen tärkeää sivuhaaraa Min-jokea ympäröivällä n. 7400 neliökilometrin suuruisella valuma-alueella Sichuanin Aba-piirikunnassa. Aineistonaan hän käytti muun muassa satelliittikartoitustietoja ja mittaustuloksia yli 600 maastokoealalta. Tutkimuksen nimi suomeksi on "Maaperän eroosion mallinnus ja vuoristoisen valuma-alueen ekologinen ennallistaminen Sichuanissa Kiinassa". Aikaisempien tutkimusten perusteella oli tiedossa että metsien häviäminen tällä alueella pysähtyi jo 1980-luvun alussa. Sen jälkeen on metsien pinta-ala hitaasti kasvanut etupäässä sen vuoksi, että teollinen puunhakkuu luonnonmetsissä kiellettiin kokonaan v. 1998 ja 25 astetta jyrkemmillä rinteillä myös maatalouden harjoittaminen on saatu lopetetuksi viljelijöille tarjottujen taloudellisten houkuttimien avulla. Täten myös pelto- ja laidunmaata on voitu ennallistaa metsäksi. Ping Zhou pystyi jakamaan 5700 metrin korkeuteen saakka kohoavan vuoristoalueen eroosioalttiudeltaan erilaisiin vyöhykkeisiin rinteen kaltevuuden, sademäärän, kasvipeitteen ja maalajin perusteella. Noin 15 prosentilla tutkitun valuma-alueen pinta-alasta, lähinnä Min-joen pääuomaa ympäröivillä jyrkillä rinteillä, eroosioriski oli suuri tai erittäin suuri. Eri tyyppisellä kasvillisuudella oli hyvin erilainen vaikutus eroosioalttiuteen, ja myös alueen sijainti vuoriston eri korkeuksilla vaikutti eroosioon. Säästyneet lähes luonnontilaiset havumetsät, joita on etupäässä vuoriston ylimmissä osissa 2600-4000 metrin korkeudella, edistävät tehokkaasti metsän luontaista uudistumista ja levittäytymistä vaurioituneille alueille. Säilyneiden metsien puulajikoostumus antoi tutkimuksessa mahdollisuuden ennustaa metsien tulevaa kehitystä koko tutkitulla valuma-alueella sen eri korkeusvyöhykkeissä ja eri maaperätyypeillä. Ennallistamisen kannalta ongelmallisimpia olivat alueet joilta metsäpeite oli lähinnä puiden teollisen hakkuun vuoksi kokonaan hävinnyt ja joilla maaperä yleisesti oli eroosion pahoin kuluttama. Näillä alueilla ei ole tehty juuri mitään uudistamis- tai ennallistamistoimenpiteitä. Niillä metsien ennallistaminen vaatii myös puiden tai pensaiden istuttamista. Tähän sopivia ovat erityisesti ilmakehän typpeä sitovat lajit, joista alueella kasvaa luontaisena mm. sama tyrnilaji joka esiintyy myös Suomessa. Työssä tutkittiin yli kahdeksankymmenen paikallisen luontaisen puulajin (joista peräti noin kolmannes on havupuulajeja) ekologisia ominaisuuksia ja soveltuvuutta metsien ennallistamiseen. Avainasemassa työn onnistumisen kannalta ovat nyt paikalliset asukkaat, joiden maankäytön muutokset ovat jo selvästi edistänet luonnonmetsän ennalleen palautumista. Suomen Akatemia rahoitti vuosina 2004-2006 VITRI:n tutkimushanketta, josta Ping Zhou'n väitöskirjatyö muodosti keskeisen osan. Kenttätyö Sichuanissa avasi mahdollisuuden hedelmälliseen monitieteiseen yhteistyöhön ja tutkijavaihtoon Kiinan tiedeakatemian alaisen Chengdun biologiainstituutin (CIB) kanssa; tämä tieteellinen kanssakäyminen jatkuu edelleen.

Tibetan Market Participation in China

Since the Chinese government began implementing economic reforms in the late 1970s, China has experienced profound economic change and growth. Like other parts of China, Tibetan areas of China have also experienced wide-ranging economic change with growth even higher than the China-wide average in certain years. Though China s strategic policy of developing the West provided many opportunities for economic and business activities, Tibetans have proven poorly equipped to respond to and take advantage of these opportunities. This study is about people, about market participation and specifically about why Tibetans do not effectively participate in the market in the context of China s economic development process. Many political, social, cultural and environmental factors explain the difficulties met by Tibetan communities. However, this study focuses on three factors: the social and culture context, government policy and education. The Buddhistic nature of Tibetan communities, particularly the political and economic system in traditional Tibetan society, explains this, especially after implementation of new national economic policies. An inclusive economic development policy that promotes local people s participation in the market demands serious consideration of local conditions. Unfortunately, such considerations often ignore local Tibetan realities. The economic development policy in Tibetan areas in China is nearly always an attempt to replicate the inland model and open up markets, even though economic and sociopolitical conditions in Tibet are markedly unlike much of China. A consequence of these policies is increasing numbers of non-Tibetan migrants flowing into Tibetan areas with the ensuing marginalization of Tibetans in the marketplace. Poor quality education is another factor contributing to Tibetan inability to effectively participate in the market. Vocational and business education targeting Tibetans is of very low quality and reflective of government failing to consider local circumstances when implementing education policy. The relatively few Tibetans who do receive education are nearly always unable to compete with non-Tibetan migrants in commercial activity. Encouraging and promoting Tibetan participation in business development and access to quality education are crucial for a sustainable and prosperous society in the long term. Particularly, a localized development policy that considers local environmental conditions and production as well as local culture is crucial. Tibet s economic development should be based on local environmental and production conditions, while utilizing Tibetan culture for the benefit of creating a sustainable economy. Such a localized approach best promotes Tibetan market participation. Keywords: Tibet cultural policy education market participation

Analyzing changes in macro-level drivers of country-specific emissions : The role of consumption, technology and trade

Industrial ecology is an important field of sustainability science. It can be applied to study environmental problems in a policy relevant manner. Industrial ecology uses ecosystem analogy; it aims at closing the loop of materials and substances and at the same time reducing resource consumption and environmental emissions. Emissions from human activities are related to human interference in material cycles. Carbon (C), nitrogen (N) and phosphorus (P) are essential elements for all living organisms, but in excess have negative environmental impacts, such as climate change (CO2, CH4 N2O), acidification (NOx) and eutrophication (N, P). Several indirect macro-level drivers affect emissions change. Population and affluence (GDP/capita) often act as upward drivers for emissions. Technology, as emissions per service used, and consumption, as economic intensity of use, may act as drivers resulting in a reduction in emissions. In addition, the development of country-specific emissions is affected by international trade. The aim of this study was to analyse changes in emissions as affected by macro-level drivers in different European case studies. ImPACT decomposition analysis (IPAT identity) was applied as a method in papers I III. The macro-level perspective was applied to evaluate CO2 emission reduction targets (paper II) and the sharing of greenhouse gas emission reduction targets (paper IV) in the European Union (EU27) up to the year 2020. Data for the study were mainly gathered from official statistics. In all cases, the results were discussed from an environmental policy perspective. The development of nitrogen oxide (NOx) emissions was analysed in the Finnish energy sector during a long time period, 1950 2003 (paper I). Finnish emissions of NOx began to decrease in the 1980s as the progress in technology in terms of NOx/energy curbed the impact of the growth in affluence and population. Carbon dioxide (CO2) emissions related to energy use during 1993 2004 (paper II) were analysed by country and region within the European Union. Considering energy-based CO2 emissions in the European Union, dematerialization and decarbonisation did occur, but not sufficiently to offset population growth and the rapidly increasing affluence during 1993 2004. The development of nitrogen and phosphorus load from aquaculture in relation to salmonid consumption in Finland during 1980 2007 was examined, including international trade in the analysis (paper III). A regional environmental issue, eutrophication of the Baltic Sea, and a marginal, yet locally important source of nutrients was used as a case. Nutrient emissions from Finnish aquaculture decreased from the 1990s onwards: although population, affluence and salmonid consumption steadily increased, aquaculture technology improved and the relative share of imported salmonids increased. According to the sustainability challenge in industrial ecology, the environmental impact of the growing population size and affluence should be compensated by improvements in technology (emissions/service used) and with dematerialisation. In the studied cases, the emission intensity of energy production could be lowered for NOx by cleaning the exhaust gases. Reorganization of the structure of energy production as well as technological innovations will be essential in lowering the emissions of both CO2 and NOx. Regarding the intensity of energy use, making the combustion of fuels more efficient and reducing energy use are essential. In reducing nutrient emissions from Finnish aquaculture to the Baltic Sea (paper III) through technology, limits of biological and physical properties of cultured fish, among others, will eventually be faced. Regarding consumption, salmonids are preferred to many other protein sources. Regarding trade, increasing the proportion of imports will outsource the impacts. Besides improving technology and dematerialization, other viewpoints may also be needed. Reducing the total amount of nutrients cycling in energy systems and eventually contributing to NOx emissions needs to be emphasized. Considering aquaculture emissions, nutrient cycles can be partly closed through using local fish as feed replacing imported feed. In particular, the reduction of CO2 emissions in the future is a very challenging task when considering the necessary rates of dematerialisation and decarbonisation (paper II). Climate change mitigation may have to focus on other greenhouse gases than CO2 and on the potential role of biomass as a carbon sink, among others. The global population is growing and scaling up the environmental impact. Population issues and growing affluence must be considered when discussing emission reductions. Climate policy has only very recently had an influence on emissions, and strong actions are now called for climate change mitigation. Environmental policies in general must cover all the regions related to production and impacts in order to avoid outsourcing of emissions and leakage effects. The macro-level drivers affecting changes in emissions can be identified with the ImPACT framework. Statistics for generally known macro-indicators are currently relatively well available for different countries, and the method is transparent. In the papers included in this study, a similar method was successfully applied in different types of case studies. Using transparent macro-level figures and a simple top-down approach are also appropriate in evaluating and setting international emission reduction targets, as demonstrated in papers II and IV. The projected rates of population and affluence growth are especially worth consideration in setting targets. However, sensitivities in calculations must be carefully acknowledged. In the basic form of the ImPACT model, the economic intensity of consumption and emission intensity of use are included. In seeking to examine consumption but also international trade in more detail, imports were included in paper III. This example demonstrates well how outsourcing of production influences domestic emissions. Country-specific production-based emissions have often been used in similar decomposition analyses. Nevertheless, trade-related issues must not be ignored.