Table of Content

1. US–China external imbalance and the global financial crisis
Justin Yifu Lin; Hinh T. Dinh; Fernando Im
Pages 1 – 24

2. The institutional foundation of China's economic growth
Qiren Zhou
Pages 25 – 32

3. The US, China, and global imbalances
Linda Yueh
Pages 33 – 48

4. Migration and urban poverty and inequality in China
Albert Park; Dewen Wang
Pages 49 – 67

5. What determines China's inflation?
Yiping Huang; Xun Wang; Xiuping Hua
Pages 69 – 86

6. Short sale constraints and the information content of trading
Jianguo Xu
Pages 87 – 104


Article Abstract 文章摘要

1. US–China external imbalance and the global financial crisis
Justin Yifu Lin; Hinh T. Dinh; Fernando Im
Pages 1 – 24
Abstract: This paper advances an alternative explanation of the large external imbalance between the United States and China, and its linkages to the current global financial crisis. We show that US current account deficits dated back long before the emergence of China's recent large trade surpluses, with China accounting at its peak for at most one-third of this deficit. The relative rise in China's savings in recent years can be attributed to an increase in its corporate savings, a trend that reflects distortions arising from the transition process from a planned to a market economy. These distortions exacerbate China's income inequality, causing domestic consumption to remain a small share of GDP. Large recent current account deficits in the United States, on the other hand, can be attributed to public sector disserving and perverse incentives generated by housing and equity bubbles, made possible by loose monetary policy and by “innovative” financial derivatives arising from the financial deregulation in the early 1980s. The paper shows that short-run measures are unlikely to fully address these external imbalances. Both countries require long-run, structural measures to resolve the underlying problems and to restore a sustainable foundation for growth.
Keywords: global imbalance; financial crisis; economic distortion
Link to the original text:
http://www.informaworld.com/smpp/content~db=all~content=a923309488~frm=titlelink

2. The institutional foundation of China's economic growth
Qiren Zhou
Pages 25 – 32
Abstract: China's economic growth is (undoubtedly, undeniably, unquestionably) regarded as a miracle due to the changes it has brought to the lives of the Chinese as well as to the global economic structure. This paper analyzes China's economic growth from the perspective of institutional reforms. The main argument is that, through the redefinition of property rights, the operation costs of China's planned economy under full public ownership have been reduced dramatically. Human resources have greatly improved in terms of productivity and creativity, thus providing China with competitive advantages in the global market.
Keywords: institutional reform; property rights delineation; organization costs; Triffin dilemma
Link to the original text:
http://www.informaworld.com/smpp/content~db=all~content=a923304831~frm=titlelink

3. The US, China, and global imbalances
Linda Yueh
Pages 33 – 48
Abstract: Although there have been surplus and deficit nations in the world for some time, the magnitude of the so- called global imbalances in the 2000s provided the macroeconomic backdrop to the worst financial crisis in nearly a century. The key players are the United States and China, but the global macroeconomic imbalances involve many other emerging economies. Although the genesis of the financial crisis is much more complex and has to do with financial innovation and deregulation, this paper examines the role of global macroeconomic imbalances. It argues that the reserve currency effect of the US dollar alongside an acceleration of global imbalances in the 2000s meant that the reserve accumulation of China and other large surplus countries contributed to an unsustainable level of liquidity in the US economy which fuelled the housing boom, whose collapse in 2007 was a trigger in the ensuing global recession and the subsequent global financial crisis. The findings point to the importance of monitoring global capital flows associated with the US dollar's reserve currency role in the context of persistent global imbalances as part of the G20's efforts to coordinate global governance of markets.
Keywords: global imbalances; reserve currency; United States; China
Link to the original text:
http://www.informaworld.com/smpp/content~db=all~content=a923297624~frm=titlelink

4. Migration and urban poverty and inequality in China
Albert Park; Dewen Wang
Pages 49 – 67
Abstract: Using data from recent surveys of migrants and local residents in ten cities in 2005, this paper examines how migration influences measurements of urban poverty and inequality in China, and also compares how other indicators of well-being differ for migrants and local residents. Contrary to previous studies that report that the income poverty rate of migrant households is 1.5 times that of local resident households, we find relatively small differences in the poverty rates of migrants and local residents. Although the hourly wages of migrants are much lower than those of local residents, migrant workers work longer hours and have lower dependency ratios and higher labor force participation rates. Including migrants increases somewhat measures of urban income inequality. Significant differences between migrants and local residents are found for non-income welfare indicators such as housing conditions and access to social insurance programs.
Keywords: migration; urban; poverty; inequality; social protection; China
Link to the original text:
http://www.informaworld.com/smpp/content~db=all~content=a923326664~frm=titlelink

5. What determines China's inflation?
Yiping Huang; Xun Wang; Xiuping Hua
Pages 69 – 86
Abstract: We examine determinants of inflation in China. Analyses of both year-on-year and month-on-month growth data confirm that excess liquidity, output gap, housing prices, and stock prices positively affect inflation. Impulse response analyses indicate that most effects occur during the initial five months and disappear after ten months. Effects of real interest rates and exchange rates on inflation are relatively weak. Our results suggest that the output gap is as important as excess liquidity in explaining the inflation trajectory. The central bank should closely monitor asset prices given their spillovers to inflation. Currently liquidity measures are still central for controlling inflation, but further liberalization of interest rates and exchange rates are crucial.
Keywords: China; inflation; excess liquidity; output gap; asset prices
Link to the original text:
http://www.informaworld.com/smpp/content~db=all~content=a923324441~frm=titlelink

6. Short sale constraints and the information content of trading
Jianguo Xu
Pages 87 – 104
Abstract: We examine changes in the information content of trading when short sale constraints between prohibition and restriction exist on a stock exchange. This is made possible by a unique institutional arrangement at the Stock Exchange of Hong Kong. It maintains a list of stocks which can be sold short under regulations. Stocks not on the list are prohibited from short selling. The list is revised on a quarterly basis based on predetermined criteria. We find that the probability of information-based trading (PIN) significantly increases when a stock is added to the list. Further analysis shows that this is mainly because uninformed traders are driven out of the market. Elimination of uninformed traders also causes the aggregate trading volume to decrease rather than increase. In comparison, the PIN does not change when a stock is dropped from the list. We also find that market liquidity, measured by volatility and bid-ask spreads, slightly decreases when a stock is added to the list and significantly increases when a stock is dropped from the list. Possible explanations are discussed.
Keywords: short sale constraints; PIN; trading volume; volatility; bid-ask spread; liquidity; information competition
Link to the original text:
http://www.informaworld.com/smpp/content~db=all~content=a923318960~frm=titlelink