China's Post-Reform Economy - Achieving Harmony, Sustaining Growth (Routledge Studies on the Chinese Economy)

267 Pages·2008·2.41 MB·English

by  Richard Sanders

China’s Post-Reform Economy—
Achieving Harmony, Sustaining
Growth
China has enjoyed heroic growth rates in the last twenty-five years of reform and
transition, pulling more people out of poverty more quickly than at any other time in
human history. Nonetheless these successes have had costs: today China is faced with
increasing environmental difficulties and there is a dangerous level of inequality of
income and wealth leading to large numbers of often violent disputes and demonstrations
in the countryside.
This book discusses the very latest issues relating to China’s remarkable economic
growth. It provides comprehensive coverage of these issues, including economic,
political-economic, environmental and philosophical questions, presenting material in as
non-technical a way as possible. The issues discussed reflect key concerns within China
itself at present. These focus not just on how to sustain fast rates of economic growth but
also on how to solve the problems resulting from it, problems including widening levels
of income equality, new forms of environmental degradation including water shortages,
health issues, governance dilemmas, and new problems for the banking, strategic
industrial and agricultural sectors.
This book not only encompasses the current socio-economic situation in China,
accepting its strengths while highlighting dilemmas, but also provides suggestions for
policy. As such, it reflects a growing recognition in China that the attainment of both
continued strong economic growth and a greater degree of social harmony are mutually
interdependent: one will not be achieved without the other.
Richard Sanders is Director of the China and Transitional Economies Research Centre
at the University of Northampton, UK, and past president (2006–07) of the Chinese
Economics Association (UK). His main research interest is the political economy of
modern China, with particular reference to environmental protection, property rights and
organic farming.
Yang Chen is Senior Lecturer in Economics at Northampton Business School, UK, and
is the Assistant Director of the China and Transitional Economy Research Centre. Her
principal research interests are institutional change and evolutionary economics in
transitional countries. Her most important publications examine the change of property
rights and ownership in transitional China.
Routledge Studies on the Chinese Economy
Series Editor
Peter Nolan
University of Cambridge
Founding Series Editors
Peter Nolan
University of Cambridge
and
Dong Fureng
Beijing University
The aim of this series is to publish original, high-quality, research-level work by both
new and established scholars in the West and the East, on all aspects of the Chinese
economy, including studies of business and economic history.
1 The Growth of Market Relations in Post-reform Rural China
A micro-analysis of peasants, migrants and peasant entrepreneurs
Hiroshi Sato
2 The Chinese Coal Industry
An economic history
Elspeth Thomson
3 Sustaining China’s Economic Growth in the Twenty-First Century
Edited by Shujie Yao & Xiaming Liu
4 China’s Poor Regions
Rural-urban migration, poverty, economic reform and urbanisation
Mei Zhang
5 China’s Large Enterprises and the Challenge of Late Industrialization
Dylan Sutherland
6 China’s Economic Growth
Yanrui Wu
7 The Employment Impact of China’s World Trade Organisation Accession
A.S.Bhalla and S.Qiu
8 Catch-Up and Competitiveness in China
The case of large firms in the oil industry
Jin Zhang
9 Corporate Governance in China
Jian Chen
10 The Theory of the Firm and Chinese Enterprise Reform
The case of China International Trust and Investment Corporation
Qin Xiao
11 Globalisation, Transition and Development in China
The case of the coal industry
Huaichuan Rui
12 China along the Yellow River
Reflections on rural society
Cao Jinqing, translated by Nicky Harman and Huang Ruhua
13 Economic Growth, Income Distribution and Poverty Reduction in Contemporary
China
Shujie Yao
14 China’s Economic Relations with the West and Japan, 1949–79
Grain, trade and diplomacy
Chad J.Mitcham
15 China’s Industrial Policy and the Global Business Revolution
The case of the domestic appliance industry
Ling Liu
16 Managers and Mandarins in Contemporary China
The building of an international business alliance
Jie Tang
17 The Chinese Model of Modern Development
Edited by Tian Yu Cao
18 Chinese Citizenship
Views from the margins
Edited by Vanessa L.Fong and Rachel Murphy
19 Unemployment, Inequality and Poverty in Urban China
Edited by Shi Li and Hiroshi Sato
20 Globalisation, Competition and Growth in China
Edited by Jian Chen and Shujie Yao
21 The Chinese Communist Party in Reform
Edited by Kjeld Erik Brodsgaard and Zheng Yongnian
22 Poverty and Inequality among Chinese Minorities
A.S.Bhalla and Shufang Qiu
23 Economic and Social Transformation in China
Challenges and opportunities
An gang Hu
24 Global Big Business and the Chinese Brewing Industry
Yuantao Guo
25 Peasants and Revolution in Rural China
Rural political change in the North China Plain and the Yangzi Delta, 1850–1949
Chang Liu
26 The Chinese Banking Industry
Lessons from history for today’s challenges
Yuanyuan Peng
27 Informal Institutions and Rural Development in China
Biliang Hu
28 The Political Future of Hong Kong
Democracy within Communist China
Kit Poon
29 China’s Post-Reform Economy—Achieving Harmony, Sustaining Growth
Edited by Richard Sanders and Yang Chen
China’s Post-Reform Economy—
Achieving Harmony, Sustaining
Growth
Edited by Richard Sanders and Yang Chen

LONDON AND NEW YORK
First published 2007
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

Simultaneously published in the USA and Canada
by Routledge
270 Madison Ave, New York, NY 10016

Routledge is an imprint of the Taylor & Francis Group, an informa business

This edition published in the Taylor & Francis e-Library, 2006.

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please go to www.eBookstore.tandf.co.uk.”

© 2007 Editorial selection and matter Richard Sanders and Chen Yang;
individual chapters the contributors

All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.

British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library

Library of Congress Cataloging in Publication Data
China’s post-reform economy—achieving harmony, sustaining growth/
edited by Richard Sanders and Chen Yang.
p. cm.—(Routledge studies on the Chinese economy)
Includes bibliographical references and index.
1. China—Economic conditions—2000–2. China—Economic
policy—2000–3. China—Social conditions—2000–1. Sanders,
Richard, 1947–II. Yang, Chen, 1970–
HC427.95.C4565 2007
330.951–dc22
2007027296

ISBN 0-203-93331-1 Master e-book ISBN

ISBN10:0-415-43432-7 (hbk)
ISBN10:0-203-93331-1 (Print Edition) (ebk)
ISBN13:978-0-415-43432-4 (hbk)
ISBN13:978-0-203-93331-2 (Print Edition) (ebk)
Contents

List of figures xi
List of tables xiii
Notes on contributors xv

1 Introduction 1

RICHARD SANDERS
Opening remarks 1
China’s post-reform economy 3
The next twenty-five years? 5
Concluding remarks 9

13
PART I China’s post-reform economy: achieving harmony

2 The origins of China’s quest for a harmonious society: failure on the 15
governance and environmental fronts
WING THYE WOO
October 2006: a turning point in policy making 15
The challenges to continued high growth 17
The need for improved governance to sustain economic growth 18
The need for environmental protection to sustain economic growth 20
Final remarks 24
3 Environment, health and sustainability in twenty-first-century China 30

IAN COOK
The problem of water 30
The quality of the air: dust, desertification and air pollution 33
Health problems 35
Energy use 37
Other environmental questions 38
Policy dimensions 40
4 Challenge, governance reform and disharmony in rural society 44

JOHN Q.TIAN
Introduction 44
WTO and rural China’s integration into the global economy 45
Challenges of global integration and policy reforms 47
Policy reforms and local governance crisis 49
Rural education and inequality 51
Health care and rural poverty 54
Governance crisis and disharmony in rural society 58
Conclusion 59
5 Exit of involution in rural China 68

YANG CHEN
Introduction 68
The evolution of township and village enterprises (TVEs) and the de- 68

involution of rural China
Regional diversity: the formation of two types of ‘semi-industrial, semi- 72

farming’ rural society in the Chinese countryside
An alternative path of development: non-economic cooperatives 78
6 Regional vulnerability, inequality and asset growth 84

YIU FOR CHEN AND RICHARD SCHIERE
Introduction 84
Measuring vulnerability through asset ownership 85
Data description 87
Methodology 89
Results 94
Conclusion and policy implications 97

101
PART II China’s post-reform economy: sustaining growth

7 China’s banking reform 103

CHARLES GOODHART AND XIAOSONG ZENG
Introduction 103
Key problems of China’s banking sector 103
What are the fundamental problems with China’s banking system? 105
Some proposals for banking reform in China 109
What is the way forward for Chinese banks? 113
8 Ownership reform, foreign competition and efficiency of Chinese 116
commercial banks
SHUJIE YAO AND ZHONGWEI HAN
Introduction 116
The reform of China’s banking industry 118
Banking efficiency literature and DEA methodology 122
Efficiency analysis of the Chinese commercial banks 124
The Malmquist index 132
Conclusion 134
Appendix 8.1: Names and abbreviations of national commercial banks in 136

China
9 Local states and the building of a regulatory state 139

BJÖRN ALPERMANN
Introduction 139
Developments at the national level 141
Provincial regulations on the cotton sector 144
Local management of the cotton sector 146
Conclusion 150
Appendix 9.1: Legal and policy documents quoted in the text 152
10 The dynamics of industrial clusters in China 162

WANG JINMIN, YANG CHEN AND RICHARD SANDERS
Introduction 162
Key features of industrial clusters 163
Industrial clusters in developing countries 164
Institutional change and growth of the Ningbo clothing cluster 168
The role of entrepreneurs 169