According to a story reported in China's Caijing magazine, a tax firm (let's call it firm A) in the coastal Zhejiang province has filed a complaint to the court that a local government has violated the newly implemented antitrust law.
According to the story, firm A complains that another tax firm (let's call it B) has been allowed to have an office at the local government building while similar demand from firm A is denied. Apparently firm B has close government ties with the local government. Hence, the complaint. It will be very interesting to see how the court rules in this case. Stay tuned for more reporting on the case.
Here is the story, sorry folks in simplified Chinese only.
Now even if the mainland's antitrust law does allow cases against the government (some other jurisdictions as well like Australia), one wonders why in HK government's consultation paper on competition law, the government is exempted from the law.
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Tuesday, August 05, 2008
Tuesday, July 08, 2008
Best Indicator of China's Economic Growth. No, it's Not GDP
No, no, no, definitely not GDP figures as a lot of pundits like to charge them as not reliable and cooked.
What is a better, more reliable indicator then? One that the government would find it hard to tinker with.
I think I have found one, the number of obese men in China.
According to a study done by researcher up at U of North Carolina, "more than 25% of adults in the country are overweight or obese and that the number could double over the next 20 years.
The report, based on data collected from 20,000 patients in China over the past 15 years, says obesity has increased 1.2% a year among men in that time -- higher than the rate for adult men in the U.S., U.K. and Australia."
According to Professor Barry Popkin, the reason for such hefty growth in the number of obese people has nothing to do with increased consumption of fast food or other Western foods in China.
Rather, improving living standards mean that growing numbers of Chinese can now afford vegetable oil, beef and dairy-food sources that until recently had been too costly.
The study is reported in this WSJ story.
What is a better, more reliable indicator then? One that the government would find it hard to tinker with.
I think I have found one, the number of obese men in China.
According to a study done by researcher up at U of North Carolina, "more than 25% of adults in the country are overweight or obese and that the number could double over the next 20 years.
The report, based on data collected from 20,000 patients in China over the past 15 years, says obesity has increased 1.2% a year among men in that time -- higher than the rate for adult men in the U.S., U.K. and Australia."
According to Professor Barry Popkin, the reason for such hefty growth in the number of obese people has nothing to do with increased consumption of fast food or other Western foods in China.
Rather, improving living standards mean that growing numbers of Chinese can now afford vegetable oil, beef and dairy-food sources that until recently had been too costly.
The study is reported in this WSJ story.
Monday, June 30, 2008
Coase, Chicago and China Conference
The conference organized by R. Coase on China is forthcoming in mid-July.
Stars who will attend include Coase, Bob Mundell, Doug North, Bob Fogel, Janet Landa and Gordon Tullock. You can access the conference's program here. Enjoy!
And yes, Professor Steven N S Cheung's paper would be the first paper to be presented at the conference, and discussants are Bob Fogel and Bob Mundell.
Stars who will attend include Coase, Bob Mundell, Doug North, Bob Fogel, Janet Landa and Gordon Tullock. You can access the conference's program here. Enjoy!
And yes, Professor Steven N S Cheung's paper would be the first paper to be presented at the conference, and discussants are Bob Fogel and Bob Mundell.
Thursday, June 19, 2008
Thursday, February 21, 2008
Privatization, Chinese Style
We document the market response to an unexpected announcement of proposed sales of government-owned shares in China. In contrast to the "privatization premium" found in earlier work, we find a negative effect of government ownership on returns at the announcement date and a symmetric positive effect in response to the announced cancellation of the government sell-off.
We argue that this results from the absence of a Chinese political transition to accompany economic reforms, so that the positive effects on profits of political ties through government ownership outweigh the potential efficiency costs of government shareholdings.
Read the paper here.
We argue that this results from the absence of a Chinese political transition to accompany economic reforms, so that the positive effects on profits of political ties through government ownership outweigh the potential efficiency costs of government shareholdings.
Read the paper here.
Tuesday, November 27, 2007
Hoover Scholar, Kitty Hawk, and China
Alvin Rabushka, the David and Joan Traitel Senior Fellow at the Hoover Institution, and a longtime advocate of the flax tax, wrote:
A Wall Street Journal editorial on November 26, 2007, complained of China’s refusal to allow the USS Kitty Hawk and its carrier battle group to dock in Hong Kong on Thanksgiving day. China relented a day later after the fleet was on its way to Japan. The Journal charged that China stole Thanksgiving family dinners from American sailors as 290 crew members of families had flown into Hong Kong to meet them.
On this action, the Journal proclaimed that China is not a reliable military partner. On what basis did the Journal believe that China was a reliable military partner? Is China to accede to every U.S. request or dictum, without the freedom to change its mind in response to U.S. actions such as selling military upgrades to Taiwan’s missile defense system?
...Secretary of the Treasury Hank Paulson, other U.S. government officials, and Members of Congress routinely advise China on what it must do and how it must behave on a host of issues, from the exchange rate of its currency to human rights. These suggestions are invariably rejected as China pursues its own course. China is no longer a land of coolies and compradors serving Western interests. How would the American government and people respond if China routinely advised the United States on what it must do and how it must behave? Hectoring China is likely to be increasingly unproductive as it gains in strength and influence.
More here.
A Wall Street Journal editorial on November 26, 2007, complained of China’s refusal to allow the USS Kitty Hawk and its carrier battle group to dock in Hong Kong on Thanksgiving day. China relented a day later after the fleet was on its way to Japan. The Journal charged that China stole Thanksgiving family dinners from American sailors as 290 crew members of families had flown into Hong Kong to meet them.
On this action, the Journal proclaimed that China is not a reliable military partner. On what basis did the Journal believe that China was a reliable military partner? Is China to accede to every U.S. request or dictum, without the freedom to change its mind in response to U.S. actions such as selling military upgrades to Taiwan’s missile defense system?
...Secretary of the Treasury Hank Paulson, other U.S. government officials, and Members of Congress routinely advise China on what it must do and how it must behave on a host of issues, from the exchange rate of its currency to human rights. These suggestions are invariably rejected as China pursues its own course. China is no longer a land of coolies and compradors serving Western interests. How would the American government and people respond if China routinely advised the United States on what it must do and how it must behave? Hectoring China is likely to be increasingly unproductive as it gains in strength and influence.
More here.
Monday, October 29, 2007
Should China Adopt a More Flexible Nominal Exchange Rate Regime?
Many people, economists included, have urged China to adopt a more flexible nominal exchange rate regime. (The emphasis is deliberate here)
Reasons for advocating such a nominal exchange rate regime are two-folded:
1) It would help facilitate adjustment in global current accounts;
2) It would enhance the effectiveness of China's monetary policy.
Latest research shows that both claims are way overblown. More here.
Reasons for advocating such a nominal exchange rate regime are two-folded:
1) It would help facilitate adjustment in global current accounts;
2) It would enhance the effectiveness of China's monetary policy.
Latest research shows that both claims are way overblown. More here.
Monday, October 22, 2007
China Contemplates Reform on Stake Cap on Banks
The China Banking Regulatory Commission is evaluating whether to raise or lower the stake cap on foreign lenders' holdings in banks.
Chairman Liu Mingkang told The Standard it is now looking into synergies and problems brought about by the 20 percent cap. Any decisions will be announced by the first quarter of next year.
More here.
China should let foreign lenders have higher stakes in Chinese banks, that should be an indispensable way to wean state banks from their dependence on taxpayers' support. More importantly, it will intensify competition among banks and improve credit allocation.
Chairman Liu Mingkang told The Standard it is now looking into synergies and problems brought about by the 20 percent cap. Any decisions will be announced by the first quarter of next year.
More here.
China should let foreign lenders have higher stakes in Chinese banks, that should be an indispensable way to wean state banks from their dependence on taxpayers' support. More importantly, it will intensify competition among banks and improve credit allocation.
Monday, October 01, 2007
China's Alleged Pro-FDI Bias
The hypothesis of the existence of such pro-FDI bais in China originated from MIT professor Huang Yasheng.
Now some reseachers garner evidence indicating that such a bias does not exist:
"Recent arguments that China's FDI inflow is inefficiently large because weak institutions deter domestic investment while special initiatives attract FDI are thus either unsupported or not unique to China."
Read the paper here.
Now some reseachers garner evidence indicating that such a bias does not exist:
"Recent arguments that China's FDI inflow is inefficiently large because weak institutions deter domestic investment while special initiatives attract FDI are thus either unsupported or not unique to China."
Read the paper here.
Wednesday, June 27, 2007
China vs India
In 2040, the Chinese economy will reach $123 trillion, or nearly three times the output of the entire globe in the year 2000, despite the influence of several potential political and economic constraints. India's economy will also continue to grow, although significant constraints (both political and economic) will keep it from reaching China's levels.
That is from Nobel Prize winner Bob Fogel, more here.
That is from Nobel Prize winner Bob Fogel, more here.
Friday, June 08, 2007
FDI and Judiciary Independence
Wu Bangguo, head of National People's Congress (China's legislature) made a few remarks on the relationship between the central government and HK Special Administrative Region the other day. See this story here.
Former Chief Secretary for Administration Anson Chan warned that if the central goverment and the HK government are not going to come out to clarify whether Wu's remarks imply that Beijing is having a rethink on HK's judiciary independence, this might have adversely affect investors' confidence HK. Read more here.
If I understand Anson's logic correctly, she is trying to argue that investors would likely leave HK or at least not increase their investments here if we don't have judiciary independence any more.
Really?
If that were true, you would expect say democratic India to have far more FDI than say our motherland China then. The reality is that, China, a place where judiciary independence is at best a work in progress, is a FDI magnet and China's FDI flows dwarf those of India's. See the relevant charts here.
Former Chief Secretary for Administration Anson Chan warned that if the central goverment and the HK government are not going to come out to clarify whether Wu's remarks imply that Beijing is having a rethink on HK's judiciary independence, this might have adversely affect investors' confidence HK. Read more here.
If I understand Anson's logic correctly, she is trying to argue that investors would likely leave HK or at least not increase their investments here if we don't have judiciary independence any more.
Really?
If that were true, you would expect say democratic India to have far more FDI than say our motherland China then. The reality is that, China, a place where judiciary independence is at best a work in progress, is a FDI magnet and China's FDI flows dwarf those of India's. See the relevant charts here.
Tuesday, May 22, 2007
No Quick Fix for Yuan
Matt Slaughter at Dartmouth has an excellent oped in WSJ, here's the bottom line:
"Put it this way: In a counter-factual world where over the past decade China allowed the yuan to float against the dollar, the U.S. would still have run a large and growing trade deficit with China. The real economic forces of comparative advantage that drive trade flows operate regardless of which nominal prices central banks choose to fix."
More here.
"Put it this way: In a counter-factual world where over the past decade China allowed the yuan to float against the dollar, the U.S. would still have run a large and growing trade deficit with China. The real economic forces of comparative advantage that drive trade flows operate regardless of which nominal prices central banks choose to fix."
More here.
Tuesday, April 24, 2007
Informal Finance in China, Less Important than You Think
I have always believed that informal finance serves a very important function in China's growth. Now a paper, an empirical one, forces me to think about it again.
Here is the abstract:
China is often mentioned as a counterexample to the findings in the finance and growth literature since, despite the weaknesses in its banking system, it is one of the fastest growing economies in the world. The fast growth of Chinese private sector firms is taken as evidence that it is alternative financing and governance mechanisms that support China’s growth.
This paper takes a closer look at firm financing patterns and growth using a database of 2400 Chinese firms. We find that a relatively small percentage of firms in our sample utilize formal bank finance with a much greater reliance on informal sources. However, our results suggest that despite its weaknesses, financing from the formal financial system is associated with faster firm growth, whereas fund raising from alternative channels is not. Using a selection model, we find no evidence that these results arise because of the selection of firms that have access to the formal financial system.
While firms report bank corruption, we do not find evidence that it significantly affects the allocation of credit or the performance of firms that receive the credit. We find that an important determinant of access to bank loans is the ability to post collateral, which is in turn a function of firm size, level of fixed assets and firm location.
Our findings suggest that the role of reputation and relationship based financing and governance mechanisms in financing the fastest growing firms in China is likely to be overestimated.
Read the paper here.
Here is the abstract:
China is often mentioned as a counterexample to the findings in the finance and growth literature since, despite the weaknesses in its banking system, it is one of the fastest growing economies in the world. The fast growth of Chinese private sector firms is taken as evidence that it is alternative financing and governance mechanisms that support China’s growth.
This paper takes a closer look at firm financing patterns and growth using a database of 2400 Chinese firms. We find that a relatively small percentage of firms in our sample utilize formal bank finance with a much greater reliance on informal sources. However, our results suggest that despite its weaknesses, financing from the formal financial system is associated with faster firm growth, whereas fund raising from alternative channels is not. Using a selection model, we find no evidence that these results arise because of the selection of firms that have access to the formal financial system.
While firms report bank corruption, we do not find evidence that it significantly affects the allocation of credit or the performance of firms that receive the credit. We find that an important determinant of access to bank loans is the ability to post collateral, which is in turn a function of firm size, level of fixed assets and firm location.
Our findings suggest that the role of reputation and relationship based financing and governance mechanisms in financing the fastest growing firms in China is likely to be overestimated.
Read the paper here.
Tuesday, April 17, 2007
China Further Liberalizes its Banking Sector
A story in a weekend edition of the SCMP reports:
"The mainland's banking regulator will allow the country's 114 city commercial banks to expand their businesses nationwide, a move that will strengthen their competitiveness and boost their attractiveness to investors."
Read more here.
In other words, from now on the city banks would be free to build their branches nationwide and diversify their businesses as well as risks. Needless to say this policy is a boon to these city commercial banks.
This policy certainly is not what the dominant players like Bank of China and ICBC would like to see though. Because the new policy would inevitably intensify the competition between the city banks and the dominant players. And it is not hard to imagine that the dominant players would try very hard in lobbying the government to prevent this policy from implemented in the first place.
The question is then why these dominant players would let this happen, why now?
I guess this might have something to do with the fact that foreign banks now could, on paper at least, compete head on with the Mainland's dominant players on a level playing field starting this year as part of China's fulfilment of its WTO commitments. Read more here.
Afterall, if you would have to compete with the likes of Citibank and HSBC, you wouldn't mind letting the city banks jump into the fray, would you? Hence, the timing of the policy.
"The mainland's banking regulator will allow the country's 114 city commercial banks to expand their businesses nationwide, a move that will strengthen their competitiveness and boost their attractiveness to investors."
Read more here.
In other words, from now on the city banks would be free to build their branches nationwide and diversify their businesses as well as risks. Needless to say this policy is a boon to these city commercial banks.
This policy certainly is not what the dominant players like Bank of China and ICBC would like to see though. Because the new policy would inevitably intensify the competition between the city banks and the dominant players. And it is not hard to imagine that the dominant players would try very hard in lobbying the government to prevent this policy from implemented in the first place.
The question is then why these dominant players would let this happen, why now?
I guess this might have something to do with the fact that foreign banks now could, on paper at least, compete head on with the Mainland's dominant players on a level playing field starting this year as part of China's fulfilment of its WTO commitments. Read more here.
Afterall, if you would have to compete with the likes of Citibank and HSBC, you wouldn't mind letting the city banks jump into the fray, would you? Hence, the timing of the policy.
Wisdom of the Day
"How does one then asses the efforts of Treasury Secretary Paulson to ask for financial sector reforms in China?
Frankly, while such reforms are likely to be good for China itself, I do not see our pressures for them as anything other than using our confrontations with China to open the Chinese market more rapidly and deeply to our financial firms on Wall Street: this is good for Wall Street but it is not clear how it will benefit the US in any other Chinese-macroeconomics-related benefit spillovers."
Read more here.
Frankly, while such reforms are likely to be good for China itself, I do not see our pressures for them as anything other than using our confrontations with China to open the Chinese market more rapidly and deeply to our financial firms on Wall Street: this is good for Wall Street but it is not clear how it will benefit the US in any other Chinese-macroeconomics-related benefit spillovers."
Read more here.
Monday, March 26, 2007
A Free Marketeer Leads Shanghai
According to a NYT story:
"The ruling Communist Party appointed Xi Jinping as the top leader of Shanghai...Mr. Xi, 53, was the party boss of neighboring Zhejiang Province and is regarded by political analysts in China as favoring deeper market-oriented reforms."
What's the likely impact of picking Xi to lead Shangahi?
My take is that, barring a heavy hand extending from Beijing to slow Shanghai's explosive development in order to preserve HK's status as China's financial hub, the appointment of Xi might help speed up the development of market infrastructure in Shanghai. Legal infrastructure and other norms of behaviour which are prerequisites in a market economy are what I have in mind here. Growth rates of Shanghai would inevitably rise as a consquence.
The ironic of all this is that just as we have just picked a Chief Executive here in HK who tries extremely hard to make sure that the development of this ex-colony fits in with China's five-year plan and slow Shanghai's growth in order to protect HK's position China's financial center, Beijing has picked a market reformer to lead Shanghai.
**Picture above shows US Treasury Secretary Henry Paulson and Xi walking together during the former's trip to China last year.
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