How China Works: An Introduction to China’s State-led Economic Development [2024 ed.] 9819700795, 9789819700790

Table of contents :
Foreword
Organization of the Book
Expressions of Gratitude
Translator’s Note
Contents
List of Figures
Microeconomic Environment
1 The Roles and Responsibilities of Local Government
Section 1: Government with Chinese Characteristics
Section 2: Externalities and Economies of Scale
The Boundary of Public Goods and Services
Population Density, Geography and Cultural Differences
The Economics of Administrative Boundaries
Section 3: Complex Information
Information and Power
Acquisition and Concealment of Information
Section 4: Incentive Compatibility
Vertical Management
Local Management
Summary: The Three Principles of Government Power Allocation
Section 5: Attracting Investment
Summary
Further Readings
References
2 Finance, Taxation and Government Behavior
Section 1: Tax Sharing Reforms
Fiscal Contracting and Its Consequences (1985–1993)
Tax Sharing Reform and the Resistance of Local Governments
Section 2: Land Finance
Attracting Investment and Taxation
Land Finance 101
Taxation, Ground Rent and Local Government Competition
Section 3: Horizontal and Vertical Imbalances
Financial Troubles in Lower-Level Governments (Vertical Imbalances)
Regional Inequality (Horizontal Imbalances)
Summary
Further Readings
References
3 Government Investment, Financing and Debt
Section 1: Urban Investment Corporations and Land Finance
Local Government Financing Vehicles: Starting in Chengdu
Industrial Park Development: Suzhou Industrial Park vs China Fortune Land Development
Section 2: Local Government Debts
Financing Development: China Development Bank and Urban Investment Bonds
Risks of Local Government Debts
Policies and Reforms on Local Government Debts
Section 3: The Role of Local Officials in Attracting Investment
Local Officials Performance Management and Incentive Mechanism
Corruption and Anti-Corruption
Summary
Further Readings
References
4 The Role of Government in Industrialization
Section 1: The Story of BOE and Government Investment
The Story of BOE and Local Government Investment
Economic Lessons
Local Government Competition
Section 2: Solar Industry and Government Subsidies
The Story of the Solar Industry
Economic Lessons
Local Government Competition and Overcapacity
Section 3: Government Industry Guidance Funds
Private Equity Funds and Industry Guidance Funds
Institutional Conditions Supporting the Rise of Guidance Funds
Financial and Industrial Conditions Supporting the Rise of Guidance Funds
Successes and Challenges of Government Guidance Funds
Summary
Further Readings
References
Macroeconomic Consequences
5 Urbanization and Imbalances
Section 1: House Prices and Household Debt
House Prices and the Supply and Demand for Land
House Prices and Household Debt: Lessons from Europe and the US
House Prices and Household Debt: The Situation in China
House Prices and Household Debt Risk
Section 2: Factor Market Reform
Population Mobility and Income Inequality
Reforms on Land Transfers and Household Registration System
Section 3: Economic Development and Income Inequality
Income Inequality
Tolerance for Income Inequality
Summary
Further Readings
References
6 China’s Debt Problem
Section 1: Debt and Recession
Section 2: Why Is There so Much Debt? Lessons from Europe and the US
The Supply of Credits and Bank Deregulation
Inequality Between Countries and Within a Country
Insufficient Investment of the Real Economy
Section 3: Debt Risks in China
An Introduction to China’s Debt Accumulation: 2008–2018
China’s Corporate Debt
Bank Risk
Section 4: Solve the Debt Problem
Repaying Existing Debt
Curbing New Debt Issuance
Summary
Further Readings
References
7 International Imbalances
Section 1: Low Consumption and Excess Production
High Household Savings Rate
Low Share of National Income Going to Households
Overcapacity, Debt Risk and External Imbalances
Section 2: US-China Trade War
Shocks on Employment and Politics
Technology Shocks
Section 3: Rebalancing and the Strategy of Dual Circulation
Summary
Further Readings
References
8 Government and Economic Development
Section 1: Local Government Competition
Section 2: The Development and Transformation of Government
Section 3: Development Goals and the Development Process
Summary
Further Readings
References
Epilogue
References
Index