China: Competing in the Global Economy
Format: PDF / Kindle (mobi) / ePub
China's economic reforms over the past two decades have brought tremendous economic transformation, rapid growth, and closer integration into the global economy. Real income per capita has increased fivefold, raising millions of Chinese out of poverty. Despite these achievements, difficult reforms--involving the state-owned enterprises and the financial sector--must still be completed, while social pressures from rising unemployment and income inequalities need to be addressed. China's recent accession to the World Trade Organization will bring benefits but will also impose obligations on the economy, and could prove to be a watershed for the reform process. China: Competing in the Global Economy looks at the country's reform process, its past successes and future challenges.
foreign borrowing, because the inflows in question (mainly for infrastructure) were guaranteed a specified rate of return. Misreporting may also be a problem, because local officials have an incentive to exaggerate their ability to attract FDI, and foreign investors have an incentive to overstate their actual investment in order to report lower taxable income. Hong Kong SAR and Taiwan Province of China have traditionally been important sources of FDI in China (Table 5.2). Their importance
that his revitalization objective had been “realized on the whole,” citing the following indicators: Overall SOE performance had improved dramatically. Industrial SOEs had achieved profits of Y 239.2 billion in 2000, the highest level ever and 2.9 times their level of 1997. Most of the industrial sectors that had been recording large losses were now making profits. Of the 14 “key” industrial sectors targeted, 12 had become profitable by 2000, and the other two, the coal and defense industries,
bankruptcy proceedings have yet to be applied widely to medium-size and large enterprises. The State Economic and Trade Commission (SETC) estimates that by mid-2001 only 2,300 enterprises, with assets totaling Y 290 billion (less than 4 percent of total assets of all medium-size and large SOEs), had exited the market since the special merger and bankruptcy procedures established under the pilot cities program were applied on a national scale in 1998. These figures are small in relation to the
are locally financed, and in some cities stipends are very low or not paid at all because of local fiscal constraints. Although the coverage of this social safety net has been far from complete, it has facilitated an acceleration of labor downsizing in the SOEs in recent years. By the end of 2000, some 21 million xiagang had entered the reemployment centers, and about 95 percent were reported to have received formal income support payments. Of these, 13 million have been reemployed elsewhere in
avoid their foreign currency liabilities becoming a contingent liability of the government and a potential claim on central bank foreign reserves. Foreign exchange risk management will assume even greater importance as the exchange rate regime becomes more flexible over time. Regulations for managing foreign exchange risk need to be strengthened (Table 10.3). For example, the minimum liquidity ratio does not provide adequate protection against foreign currency liquidity risks, because short-term