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Series on Economic Development and Growth (ISSN: 1793-3668)
Series Editor: Linda Yueh {University of Oxford & London School of Economics
and Political Science, UK)
Advisory Board Members: John Knight {University of Oxford, UK)
Li Shi {Beijing Normal University, China)
Published
Vol. 1 Globalisation and Economic Growth in China
edited by Yang Yao & Linda Yueh
SERIES ON
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Edited by
Yang Yao
Beijing University, China
Linda Yueh
University of Oxford & London School of Economics and Political Science, UK
HP World Scientifi
NEW JERSEY • LONDON • SINGAPORE • BEIJING • SHANGHAI • HONG KONG . TAIPEI • CHENNAI
Published by
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Library of Congress Cataloging-in-Publication Data
Globalisation and economic growth in China / edited by Yang Yao &
Linda Yuen.
p. cm. — (Series on economic development and growth, 1793-3668 ; vol. 1)
Includes bibliographical references and index.
ISBN 981-256-855-7
1. China—Economic conditions-21st century—Congresses. 2. Globalization—China-
Congresses. 3. China—Economic policy—Congresses. I. Yao, Yang. II. Yueh, Linda Y.
(Linda Yi-Chuang)
HC427.95 .L74 2005
330.95 l-dc22
2006048637
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
Copyright © 2006 by World Scientific Publishing Co. Pte. Ltd.
All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means,
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For photocopying of material in this volume, please pay a copying fee through the Copyright
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ACKNOWLEDGEMENTS
CENTRE for ECONOMIC
P E R F O R M A N CE
Many of the papers from the volume were from the first annual LSE-
PKU conference held at Beijing University in August 2005. The output
therefore reflects in large part the fruitful collaboration between the
China Center for Economic Research (CCER) at Beijing University and
the London School of Economics, particularly the Globalisation
Programme at the Centre for Economic Performance (CEP). The book
benefited greatly from the editorial work of Gillian Lodge, and the
support of the CCER, CEP and the LSE Partnership Programmes Office.
Finally, we are pleased to be the first volume of the Series on Economic
Development and Growth published by World Scientific, and would like
to thank the publishers, particularly Max Phua, Chean Chian Cheong and
Yvonne Tan Hui Ling.
V
CONTENTS
Acknowledgements
1. Introduction
Yang Yao & Linda Yueh
Part I: Growth and Internal Reforms
2. Is China's Growth Real and Sustainable? 9
Justin Yifu Lin
3. Market Instability and Economic Complexity: Theoretical Lessons
from Transition Experiments 35
Ping Chen
4. The Impact of Privatisation on Firm Performance in China 59
Ligang Song & Yang Yao
Part II: External Reforms and Impact
5. Putting the Cart before the Horse? Capital Account
Liberalisation and Exchange Rate Flexibility in China 115
Eswar Prasad, Thomas Rumbaugh & Qing Wang
6. China's Competitiveness, Intra-Industry and Intra-Regional
Trade in Asia 139
Linda Yueh
VII
viii Contents
7. The Economic Impact of Globalisation in Asia-Pacific:
The Case of the Flying Geese Model 159
Christer Ljungwall & Orjan Sjoberg
8. China's Trade Policies in Wider Asian Perspective 179
Razeen Sally
9. After the CMI: The Future of Asian Monetary Cooperation
and China's Role 235
He Fan, Zhang Bin & Zhang Ming
Part III: Conclusions and Implications
10. China's Economic Reforms in the Globalisation Era 269
Justin Yifu Lin, Yang Yao & Linda Yueh
Index 287
CHAPTER 1
INTRODUCTION
Yang Yao & Linda Yueh
In the 27 years since market-oriented reforms were introduced, China has
grown remarkably well and has emerged onto the world stage as a major
economic presence, particularly since accession to the World Trade
Organisation (WTO) in 2001. China's influence on the regional and
world economy is notable, as are the effects of further integration with
the international economic order on China's growth prospects and the
direction of its development.
The book brings together a collection of papers on the topic of China's
economic growth prospects and reforms in the context of globalisation.
The question of the sustainability of China's continuing economic reform
and the necessary reforms to sustain that growth are among the questions
explored in this volume. Also, the considerable effects of integration
into the global economy and its implications for the conduct of Chinese
economic policies, including its exchange rate regime and trade policy,
are examined. The influence of China on the regional and world
economy is the final area of coverage. China's competitiveness in
exports has begun to challenge the market share of developing and
developed economies and its role in intra-regional trade and monetary
cooperation will be explored.
The first section of the book focuses on internal elements of China's
reform path. The section starts with a chapter by leading economist,
Justin Yifu Lin, who provides a cogent analysis of economic growth in
China. He analyses why it was possible for China to maintain a high
growth rate alongside falling energy consumption during a deflationary
period. He also discusses the prospect for China's long-term growth,
1
