Supervisor(s): Chinese Academy of Social Sciences Sponsor(s): Institute of World Economics and Politics Chinese Academy of Social Sciences CN：11-3799/F
International Economic Review is supervised by Chinese Academy of Social Sciences, and sponsored by Institute of World Economics and Politics, Chinese Academy of Social Sciences. It is the only publication dedicated to publish academic reviews on the international economy in China. It aims to review the international economic and political activities based on China’s position from an academic perspective. Its scope covers international economic and political activities and development, particularly those with an emphasis on the international economic activities related to China. The journal is included in CSSCI.
China can strengthen its economic and trade prowess through expanding foreign direct investment of its circulation industry, which will promote the role of such industry in bridging global production and consumption. China can learn from experience of the developed countries in making foreign direct investment of the circulation industry so that it can improve the quality of its own foreign direct investment in this sector. Drawing from experience of the U.S., China should expand its foreign direct investment in the circulation industry during the 13th Five-year Plan period (2016–2020) and carry out the following tasks: it should make sure the indigenous circulation enterprises can fully dominate the domestic market, which will provide a solid foundation for China’s foreign direct investment in the circulation industry; it should make a national strategy and devise relevant policies to guide the direction of such investment to ensure safety and returns of investment; and it should promote the coordination between the circulation industry and other industries in making such investment to build a global value chain dominated by Chinese enterprises.
After expanding at a fast pace for nearly 40 years, the Chinese economy has gradually stepped into a “new normal” stage that emphasizes quality of growth, which requires further economic liberalization to “develop an open economy of higher standards.” To achieve industrial upgrading and move up in global value chain, it is a must for China to reduce service trade barriers, appropriately open up service sectors, and encourage foreign investment in producer services. Services liberalization will promote the development of services and manufacturing sectors, and help balance the international balance of payments structure. Moreover, with the direct substitution effect and implicit trade effect, the opening-up of trade and investment in services will increase the value added embedded in manufacturing exports.
Forward guidance, quantitative easing, negative interest rate, structural monetary policy in China and other non-traditional monetary policies have expanded the theoretical boundaries of monetary policy. Monetary policy can not only increase total demand and reduce systemic financial risks, but also solve the structural macroeconomic problems. This article makes a systematic analysis of unconventional monetary policies from three perspectives: theoretical basis, classification of tools and transmission channels. On the basis of the analysis, it adopts the event study method to evaluate the effect of such policies by European Central Bank and People’s Bank of China and finds that non-traditional monetary policies can significantly reduce the interest rate of the money and bond markets to ensure financial stability. With the continual use of the tool, the effect diminishes, and in China, structural monetary policy tools are significantly stronger than others. Finally, this article provides advices on improving China’s structural monetary policy from the perspectives of drawbacks of the tool, emphasis on market mechanism, spillover and exit risks, market mechanism and tool innovation.
Much headway has been made in China’s supply-side structural reform, especially overcapacity reduction, since 2016, which is highly commendable. Against the macroeconomic backdrop of favorable external demand, China may hopefully make more progress in the reform. Reduction of excessive production capacity is a top priority of the supply-side structural reform and achievement in cutting overcapacity can also be reflected in the improved operation of zombie enterprises, falling leverage levels, declining NPL ratios and increased soundness of the financial system. However, the improvement in the operation of enterprises, mainly SOEs and those in upstream and heavy industries, to a large extent, is a result of redistribution of inter-industrial interests; it has been achieved at the price of rising costs and declining profits of other industries, mainly concerning downstream and non-state enterprises and those in light industries. Such a scenario could mean resource misallocation and, once external demand is disrupted, it would become a great challenge to keep the sustainability of the overcapacity reduction drive. Therefore, although it has made some headway in cutting overcapacity, China should further push other fundamental reforms, including the supply-side structural reform.
After expanding rapidly for more than thirty years, China has started the upper middle-income (UMI) stage in terms of GDP per capita. Now, it may draw international experience to transit from UMI stage to high-income stage. This paper divided the countries into three groups (i.e., front group, successful catch-up group and failed catch-up group) by duration at the middle-income stage, compared the three by foreign trade, investment, exchange rate regime, and capital account openness, and found successful catch-up group managing to narrow their gaps with the front group, while failed catch-up group has remained at the bottom or even stagnant in some aspects. This paper argued that opening-up policies are beneficial in encouraging market competition, improving the efficiency of global resources allocation, and boosting industrial upgrading and structural transformation; meanwhile, a proper exchange rate regime and prudent capital account opening-up are crucial for China’s macroeconomic stability.
Renminbi internationalization is a systematic project. What is “high-quality renminbi internationalization”? This paper argues that successful renminbi internationalization is symbolized by the following: firstly, during each step of the internationalization, whether or not exchange rate is dominated by Chinese-funded financial institutions in the onshore market rather than by other international financial institutions in the offshore market; and whether or not the central bank can maintain a low-cost influence on the market exchange rate’s movement; and secondly, whether or not the return rate of the overseas assets denominated by renminbi and held by China exceed the yield of similar assets in the onshore market or keep positive, stable and sustainable at least. The potential targets of renminbi internationalization should mainly be countries with rich resources as well as Southeast Asian and Central Asian countries along the “Belt and Road” route. We can encourage those countries to directly use renminbi for denominating and settlement of commodities such as crude oil and ores, carry out more renminbi-denominated outbound direct investment and financing with higher net yield than that in the domestic market, and help them establish and develop more processing trade industrial parks, where the manufactured products will be sold to other countries including China by renminbi for denominating and settlement; meanwhile, we should speed up cultivation and development of government bonds and quasi- government bonds markets with width and depth, safety, and ample liquidity, which should be opened up to the outside world in an orderly way at right time. To that end, this paper proposes a strategy with Chinese characteristics for renminbi internationalization that adjusts the tempo of the process in accordance with changing situation.
Survey results show that Vladimir Putin has broad political support and there is no suspense that he will win Russia’s presidential election in March 2018. Despite the political support he has, the weak Russian economy still has some impact on his election. Lower income and reduced welfare will seriously affect people’s political assessment of Putin. However, the negative effect only exists in the horizontal comparison between different groups. Within groups of varying income levels and professions, the support for Putin still prevails. More importantly, against the background of the confrontation between Russia and the West, the consideration for Russia’s international status has had a larger, positive effect that overweighs the negative effect of economic factors. In addition, trust in Putin, especially confidence that Putin will lead the country to achieve sound development in the future, has largely reduced the negative impact of welfare deterioration. On the other hand, inadequate economic governance will, in the long term, drag on political support Putin has. If the economy continues to deteriorate in the future, or the outside hostility eases, appeal for economic development may become a key factor in the formation of people’s political attitude. Economic factors, therefore, will have a significant bearing on Putin’s policy direction in his next presidential term even if they won't be a drag on Putin’s victory in the presidential election in 2018. Considering the next term may also be Putin’s last term, his performance, in terms of economic governance, will determine whether he can retire unscathed. Therefore, Putin should make efforts to win support from businesspeople and entrepreneurs through improving the business environment, which is the key to achieving innovation-based development and getting more political support to achieve a real Russian miracle. There is no doubt that he will do his best in that respect in his new term.
