China

Over the past two decades, China has embarked on an ambitious program of expressway network expansion. By facilitating market integration, this program aims both to... Show More + promote efficiency at the national level and to contribute to the catch-up of lagging inland regions with prosperous Eastern ones. This paper evaluates the aggregate and spatial economic impacts of China's newly constructed National Expressway Network, focussing, in particular, on its short-run impacts. To achieve this aim, the authors adopt a counterfactual approach based on the estimation and simulation of a structural "new economic geography" model. Overall, they find that aggregate Chinese real income was approximately 6 percent higher than it would have been in 2007 had the expressway network not been built. Although there is considerable heterogeneity in the results, the authors do not find evidence of a significant reduction in disparities across prefectural level regions or of a reduction in urban-rural disparities. If anything, the expressway network appears to have reinforced existing patterns of spatial inequality, although, over time, these will likely be reduced by enhanced migration. Show Less -

In the urban planning literature, it is frequently explicitly asserted or strongly implied that ongoing urban sprawl and decentralization can lead to development patterns... Show More + that are unsustainable in the long run. One manifestation of such an outcome is that if extensive road investments occur, urban sprawl and decentralization are advanced and locked-in, making subsequent investments in public transit less effective in reducing vehicle kilometers traveled by car, gasoline use and carbon dioxide emissions. Using a simple core-periphery model of Beijing, the authors numerically assess this effect. The analysis confirms that improving the transit travel time in Beijing’s core would reduce the city’s overall carbon dioxide emissions, whereas the opposite would be the case if peripheral road capacity were expanded. This effect is robust to perturbations in the model’s calibrated parameters. In particular, the effect persists for a wide range of assumptions about how location choice depends on travel time and a wide range of assumptions about other aspects of consumer preferences. Show Less -

China has been the most successful developing country in this modern era of globalization. Since initiating economic reform after 1978, its economy has expanded at a... Show More + steady rate over 8 percent per capita, fueling historically unprecedented poverty reduction (the poverty rate declined from over 60 percent to 7 percent in 2007). Other developing countries struggling to grow and reduce poverty are naturally interested in what has been the source of this impressive growth and what, if any, lessons they can take from China. This paper focuses on four features of modern China that have changed significantly between the pre-reform period and today. The Chinese themselves call their reform program Gai Ge Kai Feng, "change the system, open the door." "Change the system" means altering incentives and ownership, that is, shifting the economy from near total state ownership to one in which private enterprise is dominant. "Open the door" means exactly what it says, liberalizing trade and direct investment. A third lesson is the development of high-quality infrastructure: China's good roads, reliable power, world-class ports, and excellent cell phone coverage throughout the country are apparent to any visitor. What is less well known is that most of this infrastructure has been developed through a policy of "cost recovery" that prices infrastructure services at levels sufficient to finance the capital cost as well as operations and maintenance. A fourth important lesson is China's careful attention to agriculture and rural development, complemented by rural-urban migration. Show Less -

Part 1 of the paper reviews recent trends in fossil fuel use and associated externalities. It also argues that the recent run-up in international oil prices reflects... Show More + growing concerns about supply constraints associated with declining spare capacity in OPEC, refining bottlenecks, and geopolitical uncertainties rather than growing incremental use of oil by China and India. Part 2 compares two business as usual scenarios with a set of alternate scenarios based on policy interventions on the demand for or supply of energy and different assumptions about rigidities in domestic and international energy markets. The results suggest that energy externalities are likely to worsen significantly if there is no shift in China's and India's energy strategies. High energy demand from China and India could constrain some developing countries' growth through higher prices on international energy markets, but for others the "growth retarding" effects of higher energy prices are partially or fully offset by the "growth stimulating" effects of the larger markets in China and India. Given that there are many inefficiencies in the energy system in both China and India, there is an opportunity to reduce energy growth without adversely affecting GDP growth. The cost of a decarbonizing energy strategy will be higher for China and India than a fossil fuel-based strategy, but the net present value of delaying the shift will be higher than acting now. The less fossil fuel dependent alternative strategies provide additional dividends in terms of energy security. Show Less -

Before reform, China's trade was dominated by a few foreign trade corporations with monopolies on the trade of specific ranges of products. Planners could control imports... Show More + through these corporations so there was little need for conventional instruments such as tariffs, quotas, and licenses. Trade reforms increased the range of enterprises eligible to trade in specific commodities and led to the development of indirect new trade instruments, such as duty exemptions. Duty exemptions almost completely liberalized the imports of intermediate inputs used to produce exports and investment goods used in joint ventures with foreign enterprises. Comprehensive liberalization measures in China's World Trade Organization (WTO) accession package will help ease this problem as tariff reduction reduces the costs of domestic inputs to exporters. WTO commitments will also lead to the abolition of most nontariff barriers and of quotas on textiles and clothing. With accession, China's share of world exports may almost double between 1995 and 2005 - an estimate that is smaller than those found in studies that do not incorporate duty exemptions. (Duty exemptions were a form of partial liberalization, so any further reduction in protection will boost trade volume less than some estimate.) With reform, labor-intensive industries are expected to grow most, especially exports of apparel. Wages of unskilled worker should rise. Show Less -