Infrastructure development and economic growth in China

China is the fastest growing country in the world for last few decades and one of the defining features of China's growth has been investment-led growth. China's sustained high economic growth and increased competitiveness in manufacturing has been underpinned by a massive development of physical infrastructure. In this context, we investigate the role of infrastructure in promoting economic growth in China for the period 1975 to 2007. Overall, the results reveal that infrastructure stock, labour force, public and private investments have played an important role in economic growth in China. More importantly, we find that Infrastructure development in China has significant positive contribution to growth than both private and public investment. Further, there is unidirectional causality from infrastructure development to output growth justifying China's high spending on infrastructure development since the early nineties. The experience from China suggests that it is necessary to design an economic policy that improves the physical infrastructure as well as human capital formation for sustainable economic growth in developing countries.

Exploring the sources of China's challenge to Japan : models of industrial organisation in the motorcycle industry

In view of the recent rise of China, this paper looks into one of the most important yet relatively overlooked ingredients of the Chinese success: industrial organisation. It will examine the case of the motorcycle industry, in which the rise of Chinese manufacturers even disrupted the established dominance of Japanese industry leaders. Adopting the modified version of the global value chain governance framework, this paper shows that the rise of China has been driven by a distinctive arm’s-length model of industrial organisation, which is in sharp contrast to the conventional captive model that has sustained the Japanese leadership.

Case study of the effects of atmospheric aerosols and regional haze on agriculture: An opportunity to enhance crop yields in China through emission controls?

The effect of atmospheric aerosols and regional haze from air pollution on the yields of rice and winter wheat grown in China is assessed. The assessment is based on estimates of aerosol optical depths over China, the effect of these optical depths on the solar irradiance reaching the earth’s surface, and the response of rice and winter wheat grown in Nanjing to the change in solar irradiance. Two sets of aerosol optical depths are presented: one based on a coupled, regional climate/air quality model simulation and the other inferred from solar radiation measurements made over a 12-year period at meteorological stations in China. The model-estimated optical depths are significantly smaller than those derived from observations, perhaps because of errors in one or both sets of optical depths or because the data from the meteorological stations has been affected by local pollution. Radiative transfer calculations using the smaller, model-estimated aerosol optical depths indicate that the so-called “direct effect” of regional haze results in an ≈5–30% reduction in the solar irradiance reaching some of China’s most productive agricultural regions. Crop-response model simulations suggest an ≈1:1 relationship between a percentage increase (decrease) in total surface solar irradiance and a percentage increase (decrease) in the yields of rice and wheat. Collectively, these calculations suggest that regional haze in China is currently depressing optimal yields of ≈70% of the crops grown in China by at least 5–30%. Reducing the severity of regional haze in China through air pollution control could potentially result in a significant increase in crop yields and help the nation meet its growing food demands in the coming decades.

Modelling and testing volatility spillovers in oil and financial markets for USA, UK and China

The primary purpose of the paper is to analyze the conditional correlations, conditional covariances, and co-volatility spillovers between international crude oil and associated financial markets. The paper investigates co-volatility spillovers (namely, the delayed effect of a returns shock in one physical or financial asset on the subsequent volatility or co-volatility in another physical or financial asset) between the oil and financial markets. The oil industry has four major regions, namely North Sea, USA, Middle East, and South-East Asia. Associated with these regions are two major financial centers, namely UK and USA. For these reasons, the data to be used are the returns on alternative crude oil markets, returns on crude oil derivatives, specifically futures, and stock index returns in UK and USA. The paper will also analyze the Chinese financial markets, where the data are more recent. The empirical analysis will be based on the diagonal BEKK model, from which the conditional covariances will be used for testing co-volatility spillovers, and policy recommendations. Based on these results, dynamic hedging strategies will be suggested to analyze market fluctuations in crude oil prices and associated financial markets.

China's Strategic Choices towards North Korea and Iran

This study tests two hypotheses. First, China cooperates with the United States only when it is able to obtain material rewards. Second, without material incentives from the United States, China straddles between the United States on one hand and Iran and North Korea on the other. My findings show that neither Structural Realism, which holds anti-hegemonism alliance, nor Constructivism, which holds positive assimilation of the nuclear nonproliferation norm explains Chinese international behavior comprehensively. My balance of interest model explains Chinese foreign policy on the noncompliant states better. The cases cover the Sino-North Korean and Sino-Iranian diplomatic histories from 1990 to 2013 vis-à-vis the United States. The study is both a within-case comparison—that is, changes of China’s stance across time—and a cross-case comparison in China’s position regarding Iran and North Korea. My comparisons contribute to theoretical and empirical analyses in international relations literature. Theoretically, the research creates different options for the third party between the two antagonistic actors. China will have seven different types of reaction: balancing, bandwagoning, mediating, and abetting that foster strategic clarity versus hiding, delaying, and straddling which are symptomatic of strategic ambiguity. I argue that there is a gradation between pure balancing and pure supporting. Empirically, the test results show that Chinese leaders have tried to find a balance between its material interests and international reputation by engaging in straddling and delaying inconsistently. There are two major findings. First, China’s foreign policy has been reactive. Whereas prior to 2006, balancing against the U.S. had been a dominant strategy, since 2006, China has shown strategic ambiguity. Second, Chinese leaders believe that the preservation of stability in the region outweighs denuclearization of the noncompliant states, because it is in China’s interest to maintain a manageable tension between the U.S. and the noncompliant states. The balance of interest model suggests that the best way to understand China’s preferences is to consider them as products of rough calculation of risks and rewards on both the U.S. and the noncompliant states.

A Discursive Perspective on China's Global Politics of Climate Change, 1992-2013

This dissertation investigates China’s recent shift in its climate change policy with a refined discourse approach. Methodologically, by adopting a neo-Gramscian notion of hegemony, a generative definition of discourse and an ontological pluralist position, the study constructs a theoretical framework named “discursive hegemony” that identifies the “social forces” for enabling social change and focuses on the role of discursive mechanisms via which the forces operate and produce effects. The key empirical finding of this study was that it was a co-evolution of conditions that shaped the outcome as China’s climate policy shift. In examining the case, a before-after within-case comparison was designed to analyze the variations in the material, institutional, and ideational conditions, with methods including interviews, conventional narrative/text analysis and descriptive statistics. Specifically, changes in energy use, the structure of decision-making body, and the narratives about sustainable development reflected how the above three types of social force processed in China in the first few years of the 21st century, causing the economic development agenda to absorb the climate issue, and turning the policy frame for the latter from mainly a diplomatic matter to a potential opportunity for better-quality growth. With the discursive operation of the “Science-based development”, China’s energy policy has been a good example of the Chinese understanding of sustainability characterized by economic primacy, ecological viability and social green-engineering. This way of discursive evolution, however, is a double-edged sword that has pushed forward some fast, top-down mitigation measures on the one hand, but has also created and will likely continue creating social and ecological havoc on the other hand. The study makes two major contributions. First and on the empirical level, because China is an international actor that was not expected to cooperate on the climate issue according to major IR theories, this study would add one critical case to the studies on global (environmental) governance and the ideational approach in the IR discipline. Second and on the theory-building level, the model of discursive hegemony can be a causally deeper mode of explanation because it traces the process of co-evolution of social forces.

La elección entre tipos de inversión directa en el exterior: evidencia empírica de las empresas españolas en China

Una de las cuestiones que más interés despierta entre los investigadores del campo de la internacionalización empresarial es la selección de la estrategia de entrada en un país extranjero. Actualmente, China es uno de los destinos que está cobrando una mayor relevancia en la expansión internacional de muchas empresas. En ese contexto, este trabajo examina la influencia de diversos factores empresariales sobre el nivel de compromiso asumido por las compañías españolas que han entrado en China a través de inversiones directas.

Spatiotemporal characteristics of the Huangtupo landslide in the Three Gorges region (China) constrained by radar interferometry

The Huangtupo landslide is one of the largest in the Three Gorges region, China. The county-seat town of Badong, located on the south shore between the Xiling and Wu gorges of the Yangtze River, was moved to this unstable slope prior to the construction of the Three Gorges Project, since the new Three Gorges reservoir completely submerged the location of the old city. The instability of the slope is affecting the new town by causing residential safety problems. The Huangtupo landslide provides scientists an opportunity to understand landslide response to fluctuating river water level and heavy rainfall episodes, which is essential to decide upon appropriate remediation measures. Interferometric Synthetic Aperture Radar (InSAR) techniques provide a very useful tool for the study of superficial and spatially variable displacement phenomena. In this paper, three sets of radar data have been processed to investigate the Huangtupo landslide. Results show that maximum displacements are affecting the northwest zone of the slope corresponding to Riverside slumping mass I#. The other main landslide bodies (i.e. Riverside slumping mass II#, Substation landslide and Garden Spot landslide) exhibit a stable behaviour in agreement with in situ data, although some active areas have been recognized in the foot of the Substation landslide and Garden Spot landslide. InSAR has allowed us to study the kinematic behaviour of the landslide and to identify its active boundaries. Furthermore, the analysis of the InSAR displacement time-series has helped recognize the different displacement patterns on the slope and their relationships with various triggering factors. For those persistent scatterers, which exhibit long-term displacements, they can be decomposed into a creep model (controlled by geological conditions) and a superimposed recoverable term (dependent on external factors), which appears closely correlated with reservoir water level changes close to the river's edge. These results, combined with in situ data, provide a comprehensive analysis of the Huangtupo landslide, which is essential for its management.

Imaging Land Subsidence Induced by Groundwater Extraction in Beijing (China) Using Satellite Radar Interferometry

Beijing is one of the most water-stressed cities in the world. Due to over-exploitation of groundwater, the Beijing region has been suffering from land subsidence since 1935. In this study, the Small Baseline InSAR technique has been employed to process Envisat ASAR images acquired between 2003 and 2010 and TerraSAR-X stripmap images collected from 2010 to 2011 to investigate land subsidence in the Beijing region. The maximum subsidence is seen in the eastern part of Beijing with a rate greater than 100 mm/year. Comparisons between InSAR and GPS derived subsidence rates show an RMS difference of 2.94 mm/year with a mean of 2.41 ± 1.84 mm/year. In addition, a high correlation was observed between InSAR subsidence rate maps derived from two different datasets (i.e., Envisat and TerraSAR-X). These demonstrate once again that InSAR is a powerful tool for monitoring land subsidence. InSAR derived subsidence rate maps have allowed for a comprehensive spatio-temporal analysis to identify the main triggering factors of land subsidence. Some interesting relationships in terms of land subsidence were found with groundwater level, active faults, accumulated soft soil thickness and different aquifer types. Furthermore, a relationship with the distances to pumping wells was also recognized in this work.

Rulemaking in Super-RTAs: Implications for China and India. Bruegel Working Paper 2014/03, March 2014

The faltering Doha round has led to a renewed focus on large regional trade agreements. There are two super-RTAs in the making in the Asia-Pacific and one in the Atlantic, all with rather ambitious negotiation targets, and presented as alternate means to reset global trade rules and take the multilateral trade liberalisation agenda forward. So what does this development mean for large emerging markets such as China and India that are on the fringes of these regional trade negotiations? Can these agreements become alternate means of pressuring these Asian economies to follow new trade rules set by industrialised countries, especially given the progressive erosion of the policy dominance of industrialised countries and the strong dissenting voice of developing countries in the Doha Round? This paper examines how super-RTAs may emerge as game changers in the multilateral trading system as promulgated by the WTO, and the implications for China and India. The paper analyses the new economic governance system that is likely to emerge given the renewed interest in regionalism, and argues that while the super-RTAs will not be entirely benign in their impact on China and India, rather than forcing these economies to accept the higher new regulatory standards enshrined in the super-RTAs, a distinct possibility in the medium-term is the emergence and entrenchment of a dual regulatory regime in these economies.

Financial openness of China and India: Implications for capital account liberalisation. Bruegel Working Paper 2014/05, May 15 2014

We gauge the de-facto capital account openness of the Chinese and Indian economies by testing the law of one price on the basis of onshore and offshore price gaps for three key financial instruments. Generally, the three measures show both economies becoming more financially open over time. Over the past decade, the Indian economy on average appears to be more open financially than the Chinese economy, but China seems to be catching up with India in the wake of the global financial crisis. Both have more work to do to open their capital accounts.

The US-China Joint Announcement on Climate Change: Can the G2 make a difference? CEPS Commentary, 26 November 2014

This Commentary finds that the US-China joint declaration on climate change, issued following the Asia-Pacific Economic Cooperation (APEC) Summit in Beijing on November 12th, is undoubtedly an important announcement by the two global economic giants responsible for emitting over 30% of the world’s GHG emissions. As such, it needs to be seen as important and relevant – a very positive development towards a new global climate change agreement in Paris. It is a challenge to those that have announced their pledges and are seen as capable of doing more, as well as to those that have not yet announced their intentions. It shows the importance and success of the UN climate change conference in Warsaw last year, when the decision was made that all Parties should announce their commitments by the first quarter of 2015. It also represents a total breakdown of the Kyoto Protocol-style separation in climate change negotiations between countries into Annex 1 and non-Annex 1, with China signalling that it is taking on the leadership role that comes with being a great economic power. In broader terms, it shows that there is scope for cooperation between the two main economic actors, even in the face of competition in other spheres. It is also a challenge to the EU, which was a leader and needs to show that there is a benefit in maintaining its leadership. Finally, agreements are deemed historic only by history. This one is important, and a potential game-changer, on the face of it. But it needs to live up to its promise. There is sufficient uncertainty for us to withhold final judgement and see if its promise materialises through implementation. But, as sober a judgement as we must make on such important matters, this announcement certainly gives us great hope that it is possible to do what needs to be done, and we must wholeheartedly welcome and applaud it.

The EU’s Human Rights Promotion in China and Myanmar: Trading Rights for Might? EU Diplomacy Paper No. 5, October 2014

This paper aims to answer two questions: generally, to what extent the human rights promotion of the European Union (EU) in third countries is consistent, and more specifically, why the EU’s approach towards human rights promotion in China and Myanmar differs despite similar breaches of human rights. It compares the EU’s approach to the two countries over two time periods in the late 1980s and 1990s in the context of the EU’s evolving human rights promotion. Based on the two case studies, this paper finds that the EU’s human rights promotion in third countries varies significantly. Whereas one would expect the EU’s approach to become increasingly assertive throughout the 1990s, this has only been the case with Myanmar. China’s economic and political importance to the EU appears to have counterweighed the general rise in European attention to third countries’ human rights records. In other words, this paper finds that commercial interests take precedence over human rights concerns in case of important trading partners.

The Importance of Being Earnest: The green economy and sustainable development in China. Asia Policy Brief 2012/02, November 2012

China's past economic development model has not been sustainable, at least in environmental terms. In recent years, the Chinese government has dedicated considerable time, planning energy, policy and rhetoric to "green" issues. However, there is a risk that this trend will be stalled by struggles related to pending economic problems and the upcoming leadership transition. Consequently, the international community should acknowledge China’s achievements in terms of environmental policy and cooperation as one way of serving the global public interest.

Tomorrow's silk road: Assessing an EU-China Free Trade Agreement.

Foreword. The Foreign Trade Association, which represents the European and international distribution and retail sector, commissioned this study in light of the importance of China as a sourcing country and its attractiveness as a rapidly growing consumer market. We believe that open borders and free trade can contribute to a broader choice and lower costs for consumers and create growth and employment in both Europe and China. This independent study aims to provide an in-depth contribution on the status of bilateral economic exchanges and persistent trade barriers that exist between the European Union and China. The second objective of the report is to encourage a frank and open dialogue, based on a scientific evaluation and without prejudice, on the possibility of a preferential trade agreement between the two sides. This study should be read by anyone who is interested in economic relations between the EU and China and in trade policy in general. The report provides many interesting findings and raises a number of surprising points. Overall, this study is one of the most significant contributions to the discourse on EU-China relations in recent years. We hope that this study will stimulate fresh thoughts on the benefits of closer future cooperation between two regions that have been interlinked since the times of antiquity and the first Silk Road.