Economic Growth, Transition and Globalization in China
Bowles, Paul, The China Journal
Economic Growth, Transition and Globalization in China, edited by Yanrui Wu. Cheltenham: Edward Elgar, 2006. x + 241 pp. £59.95/US$90.00 (hardcover).
The eleven chapters of this book were originally presented at a conference in Perth in mid-2005, with most of the contributors being from Australia and the PRC. The book is organized into three sections, "Economic Growth and Outlook", "Urban Economy, Migration and Labour Market", and "Banking, Exchange Rates and Globalization"; these section headings have been shortened to provide the book's somewhat misleading title.
The contributors are overwhelmingly economists, and most of the chapters follow the standard format for presentation in this discipline, namely, a short literature review, a theoretical model, an empirical analysis using a large data set, followed by a short conclusion which summarizes the results and throws in a few comments about policy implications. By and large, the chapters are rather disappointing, in some cases because the data used is not of sufficiently high quality to permit definitive conclusions and in others because the conclusions are hardly surprising.
There are two exceptions to this, one chapter by Ingrid Nielsen and Russell Smyth on "Rural Migrants and Public Security" and the other by James Laurenceson and Fengming Qin on "The Exchange Rate Debate". Neilsen and Smyth examine perceptions of crime among the Chinese population. Interestingly, they find that many of the standard variables have little effect on these perceptions. Thus, education levels, income levels, neighborhood characteristics, age, gender and marital status, for example, all had little explanatory power in determining perceptions of public safety. However, the authors did find "strong support for our central hypothesis that the individual's attitude to migrants affects his or her perception of public safety" (p. 146). This interesting empirical study provides evidence of the social tensions which China's economic transition is creating.
The paper by Laurenceson and Qin examines the argument that the yuan is undervalued with respect to the US dollar and that it would be in China's best interests to move to a more flexible exchange rate regime. As they state, this has become the consensus view. Their paper documents four reasons that the yuan is typically considered to be undervalued, and provides a careful analysis of each, leading them to conclude that the usual arguments "have a poor basis in evidence" (p. 200). They then proceed to argue that China has managed its external economic relations reasonably well and that no dramatic change in the exchange rate regime is needed. The area most in need of policy attention, they argue, is the domestic financial sector, rather than the exchange rate regime which has attracted so much international attention.
In other chapters, Nazrul Islam, Erbiao Dai and Hiroshi Sakamoto propose a dual growth accounting approach to examine the sources of growth in the Chinese economy and, in particular, to resolve controversies over the contribution of total factor productivity growth. Ultimately, however, they are left to lament the data deficiencies which hampered their efforts to do so. …