Legal origin: A Chinese perspective
Debin Ma 14 September 2011
Recent research stresses the key role of a nation’s 'legal origin' – for example, common law versus civil law regimes – in determining economic performance. This column explores the much-overlooked origin of Chinese law and the role it is playing in the country’s development.
Recent scholarship stresses the key role of a nation’s 'legal origin' – eg common law versus civil law regimes – in accounting for growth performance, and current financial institutions (La Porta et al 1998). This work, however, has a big hole in it – non-Western legal traditions are nowhere mentioned. This is curious since Western intellectual giants such as Max Weber stressed the importance of such systems.
Development Economic history Frontiers of economic research Institutions and economics
China, legal origin
China: Temporary trade barriers and recent trends
Piyush Chandra 04 September 2011
As tariffs have decreased around the world, many countries have started using other measures of protection, such as antidumping duties. This column explores China's imposition of such duties during 1997-2009. It finds that China’s antidumping duties disproportionally targeted high-income countries and were almost all in five sectors – chemicals, paper and pulp, plastics and rubber, steel, and textiles.
As tariffs have decreased around the world, many countries have started using other contingent measures of protection, such as antidumping duties, countervailing duties, and safeguards. China too had a period of dramatic tariff liberalisation, with its average tariff decreasing substantially from roughly 40% in 1993 to about 17% in 2000. As it entered the WTO in December 2001, its average applied tariffs declined further. However, during this period China also started using temporary trade protection, primarily in the form of antidumping duties (Messerlin 2004; Bown 2010).
The global saving glut will hold bond yields down
Heleen Mees 08 August 2011
As fears mount of another phase in the global crisis, this column points out that despite the growing uncertainty, US Treasury and German Bund yields have actually declined in recent weeks. The reason, it argues, is the global saving glut theory.
The saving glut theory has gone out of fashion – unjustly so. In spite of twin financial crises looming on either side of the Atlantic, US Treasury and German Bund yields have declined in recent weeks. This can be explained by not only the dismal economic growth of the US economy in the first semester of 2011, but also the unrelenting build-up in total debt securities outstanding.
US, global imbalances, China, global crisis, fiscal crises, Eurozone crisis
On the Chinese house-price bubble
Christian Dreger, Yanqun Zhang 15 July 2011
For a while now, analysts have been arguing there is a bubble in China’s property market. Using records from 35 major cities this column finds evidence of a housing bubble. It compares house prices to cointegrated fundamentals and finds that property in China is in general overvalued by around 20% – and even more so in the boom towns.
For many observers, the Chinese economy has been spurred by a bubble in the real-estate market, probably driven by the fiscal stimulus package and massive credit expansion (Nicolas 2009). For example, the stock of loans increased by more than 50% since the end of 2008.
house prices, China, Property market
Emerging partners create policy space for Africa
Helmut Reisen, Jean-Philippe Stijns 12 July 2011
Many discussions of official development assistance express concerns about China's growing investment and involvement in Africa economies. This column, summarizing the 2011 African Economic Outlook report, emphasizes the benefits of emerging economies' increasing presence in Africa, including the opening of African policy space due to Western donors' decline in relative influence.
Western politicians have watched the increased presence of emerging countries in Africa with much suspicion. Insinuations run from emerging countries – above all China – bringing down governance standards in Africa to them re-indebting, de-industrialising, and cornering African countries into the production of commodities while only enriching the elites. On a recent Africa tour, US Secretary of State Hillary Clinton warned Africa to beware of “new colonialism” as China expands ties there and focus instead on partners able to help build productive capacity on the continent.
Development International trade
China, Africa, India, emerging markets, South Korea, Brazil, Turkey
Asia’s supply chain: Implications for rebalancing
Olaf Unteroberdoerster, Jade Vichyanond, Adil Mohommad 12 June 2011
Persistent global imbalances are raising concerns about the sustainability of the global recovery and economic growth in general. This column argues that a proper appreciation of the influence of exchange rates and demand on global imbalances requires taking into account an important feature of Asia’s trade – cross-border supply chains or “vertical integration”.
Persistent global imbalances are raising concerns about the sustainability of the global recovery and longer-term growth. Global imbalances owe in part to the pattern of exchange rates and demand across major countries. A proper appreciation of the influence of exchange rates and demand on global imbalances requires that we take into account an important feature of Asia’s trade – cross-border supply chains or “vertical integration”.
global imbalances, China, Asia, vertical integration, supply chain
The elephant in the "green room": China and the Doha Round
Aaditya Mattoo, Francis Ng, Arvind Subramanian 21 May 2011
With the Doha Round on the brink of failure, the blame game is moving into high gear. This column argues that the political perception of China’s export competitiveness and its exchange-rate policy are a real problem. In effect, the whole basis for exchanging trade policy concessions is being undermined because a de facto trade policy instrument – the exchange rate – is seen as nullifying these concessions while remaining beyond the scope of multilateral negotiations and discipline.
The puzzle about the Doha Round of multilateral trade negotiations is not why it is on life support now but how it has survived as a viable multilateral initiative for so long (Schwab 2011). From the very beginning, it was clear that the Round suffered from a lack of private-sector interest, the engine that had driven previous rounds of successful trade negotiations. At most, Doha promised to secure unilateral liberalisation previously undertaken by countries and deliver some modest incremental market opening (Martin and Mattoo 2009).
China, Doha Round
Geography and offshoring to China
Alyson C Ma, Ari Van Assche 18 May 2011
Why do firms offshore manufacturing to China? This column uses data from China’s processing trade regime to argue that a hidden driver is the country’s geographic proximity to its East Asian neighbours.
Anecdotal evidence is rife with tales of multinational firms that have offshored their production to China, stoking fears that it is leading to a hollowing-out of manufacturing around the world. Many private sector analysts and policymakers attribute this offshoring wave to Chinese home-grown factors such as its low labour costs, stable political system, aggressive export promotion policies, and undervalued exchange rate.
Why are reserves so big?
Uri Dadush, Bennett Stancil 09 May 2011
Between 2000 and 2009, developing countries added almost $5 trillion to their foreign-exchange reserves – a number deemed too high by many, prompting accusations of protectionism. But this column argues that developed countries are equally to blame – as well as failures in international coordination. It concludes that remedies therefore require action by both groups.
Foreign-exchange reserves play a crucial role in macroeconomic management. They provide a safety net during times of economic turmoil and, for most developing countries, a means to peg the nominal exchange rate. They also provide a means to manage windfalls from commodity exports or from sudden surges of capital.
US, global imbalances, China, Japan, exchange-rate policy
What to do about Doha
Anne Krueger 28 April 2011
The Doha Round is in peril. This essay argues that if the impasse is intractable, world leaders face three choices: to quickly finish the low-ambition package on the table, to explicitly terminate the Doha Round, or to let it die a slow death. It says the last option would be by far the worst – even if it is the most likely.
In an ideal world, the Doha Round would have been completed by now.
Since it has not been, the best outcome now would be to have a strong agreement that could quickly be negotiated, especially enhancing the agreements on the liberalisation of services and agriculture.
US, China, Doha Round, India, global governance, Brazil