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New Dynamics of Economic Development in a Changing World (II)

On the afternoon of November 4th, one sub-session of the panel session “New Dynamics of Economic Development in a Changing World” of Beijing Forum 2017 was held in Sunlight Hall, Yingjie Exchange Center, Peking University. The theme of this sub-session is “Belt and Road Initiative and Global Economic Governance”. The session was divided into two parts. Six speakers gave their talks, including Professor Zhao Pengjun from Peking University, Professor Cecilia Wong from Manchester University, Professor Thomas Byrne, Professor Eddie CM Hui from The Hong Kong Polytechnic University, Professor Jack W. Hou from California State University and Professor Seung-Youn Oh from Bryn Mawr College. Professor Wang Dashu from Peking University chaired the two parts of the session. 

Professor Wang Dashu gave a brief introduction of the session theme. He pointed out that the Belt and Road Initiative is the core development solution to the difficulties faced by developing countries. Moreover, the global economic governance will provide important and major power to the local governments of countries along Belt and Road and guarantee sustainable development in these countries. He further stressed the importance of global cooperation. In the end, he announced the meeting open. 

At 2pm, Professor Cecilia Wong focused on the topic of “Integrating Community Well-being to Plan for Sustainable Urbanization in China”. She said that the introduction of the “National New-type Urbanization Plan” by the Chinese government in March 2014 signifies a shift in its urban development strategy towards a more human-centered and environmentally sustainable pathway. On the one hand, we should promote urbanization; on the other hand, we should promote economic development while realizing economic and ecological benefits. Rapid urbanization has brought challenges and opportunities to the new urbanization of economy and environment. Sustainable human settlements need to be planned to establish good links between urban and rural economic, social and environmental conditions. The realization of the goal of "Well-off Society" should not only be limited to the economic and material culture, but also to the well-being of communities, such as ecological civilization. She investigated the traffic conditions, the public facilities (sports, park, playground, green space, etc.) and satisfaction about environmental quality in central districts of Beijing, deputy districts and suburb dweller separately. Generally, she found that, most Beijing residents were satisfied with the quality of life and the living environment of the city; People`s satisfaction about primary education was higher than that of middle or higher education; Suburban residents were less satisfied with their commute. Finally, she pointed out that the government should implement some encouragements to change the attitudes and behaviors of residents. 

Professor Thomas Byrne gave a presentation entitled “Belt and Road Initiative Global Economic Governance”, which mainly discussed the actual implementation situation, infrastructure and investment risks of the Belt and Road Initiative (BRI). He pointed out the reason for his choice of this topic is that “history” had not ended and that the major powers, both the status quo and newly emerging powers are seeking to maintain and advance world order and global governance but are struggling to find a common path. Then, he expressed that BRI has a very important position in China`s diplomatic and economic development. So the new Silk Road spirit focused on the dialogues among connectivity, trade and inter-civilization, BRI is not China`s Marshall Plan. After that, he highlighted that China`s investments in countries along the BRI has risen, and China’s influence on these countries has gradually increased. Through bilateral trade swaps, the currency swap agreement has brought further impetus to the internationalization of the RMB. Besides that, he further analyzed the risks that BRI brought to China: Two-thirds of the countries along BRI are less developed, and their national ratings are too low to ensure revenue, repayment risk, etc.; In addition to Singapore, 55% of the investment were directed into the BRI countries with high risks. He also cited the NDRC`s (National Development and Reform Commission) emphasis on reducing irrational outbound investment. He believes that BRI can improve the level of governance of countries along the BRI. He also stressed that institutional development must be combined with infrastructure investment to achieve sustainable development. He said that the BRI will be transformational in regard to institution building and governance strengthening in the BRI countries. According to the World Bank’s global governance indicators, another challenge faced by BRI is controlling corruption. Low-income countries corruption control is low. Finally, he pointed out that whether BRI can promote reform and break the middle-income trap, required the development and reform of parallel mechanism, so as to control corruption and keep the sustainability of investments. 

Professor Eddie CM Hui presented on the topic of “Housing Price, Consumption and Financial Market”. Recently, we have seen rising housing prices and declining consumer demands in China. He noted that few previous studies have combined house prices, consumption and financial market development simultaneously. Meanwhile, he stressed that financial development strengthens the wealth effect and dampens the substitution effect. The financial market development influences the housing price through influencing the housing price. Finding the relationship between these three variables can provide the scientific basis for the regulation of the real estate market, the formulation of long-term economic and financial strategies and the sustainable development of the economy. In the end, he expressed several implications: Firstly, encouraging the development of the financial market is beneficial for people to utilize a wide range of financial products and refinance through home mortgages. This helps to convert housing wealth into consumption and stimulates the demands for other industries, which in turn balances the development of various industries within and across each region. Secondly, local government can provide some preferable financial policies to stimulate the development of financial market and help renters to buy houses, which can directly or indirectly attract migrant talents to come to a city and therefore increase its competitiveness. 

Professor Jack W. Hou made a presentation about “Does Father’s Income Matter? Causal Mechanism of Intergeneration Transmission of Income in China”. His research is based on the question about the lack of mobility in income: is it due to human capital or to parent-child income? He said that intergenerational income elasticity (IIE) is useful in measuring intergenerational income mobility, but it fails to reveal the determinants of this intergenerational income correlation. He believes that before our economic reforms, China was a very equal income country. However, the inequality of income distribution has become a social issue of grave concern later. He found that the majority of the intergenerational income elasticity can be explained by the father’s financial resources. Specifically, he showed the lower bound estimate of the elasticity is 0.339, with the true value closer to 0.6. In the end, he showed the policy implication that any effort at improving the current income distribution will not only have a concurrent effect, it will also have a profound “panel” effect as it will also improve the distribution for generations to come. In the end, he also advised graduate students and young scholars not to pursue topics, to stick to certain areas of research, and to have long-term plans and interests to enhance the authority of this field. 

Professor Seung-Youn Oh analyzed “Varieties of Globalization: Competing Strategies for Sub-National State Capitalism and Supplier Network Development in the Chinese Auto Industry”. Her research focused on how Chinese government promotes upward competition, not down competition, and how to manage the second change in industrial upgrading. Firstly, she explained the concept of industrial upgrading through explaining how the Chinese government has conducted its second industrial upgrade and escaped the low income trap. Then, she contrasted the economic rises of Japan and Korea with China in four aspects: firstly, the openness to foreign investment; secondly, the power structure; thirdly, the competition model; fourthly, the model of industrial upgrading model. Her second research topic is how to manage a declining industry and to bring in emerging competitive industries. She thought that state-owned enterprises should maximize their use of foreign capital in economic power, since they are the node between local and global power. Taking the automotive industry as an example, the Chinese government has established a localization requirement and its own network of suppliers. China is the world`s largest car market, which accounts for 30% of the world`s total amount. The localization rate of enterprises is fixed. She observed that China was promoting auto companies to export Chinese self-branded cars to central Asia, the Middle East and Africa, through "Belt and Road". She expected that China would weed out gasoline cars and catch up by 2040. China should establish an updated competition mechanism through electric vehicles, and use artificial intelligence, big data, and cloud computing, to integrate into the automobile industry and to complete industrial upgrading. 

Professor Zhao Pengjun explored “Growth of the Bottom: An Investigation of Economic and Financing Situations in China 121 Townships”. By looking at the survey data collected in 121 small townships during the period 2015-2016, he analyzed the situations of GDP and employment growth, survival of enterprises, and financing of small townships. He pointed out that over the past 30 years, China`s development has been commonly recognized, and the development of township economy has not been given enough attention. Farmers` income growth is slow, the rural economy lags behind, the gap between urban and rural development is gradually increasing, and the urban and rural areas face relatively serious economic problems. Meanwhile, existing Chinese urbanization is only the urbanization of the population, 70% of the population are still in the townships, and 60% are still engaging in agricultural production. And the farmers who entered the cities have not achieved stable employment and equal rights and subsidies of education and medical treatment. He also found that the rural economy is resilient and better adapt to changes in the outside economic situation. Life satisfaction of farmers is higher than that of urban residents. Finally, he pointed out that Chinese economic development has already entered the transition period, people`s demands for high quality life gradually increased. The focus of future work will be closely related to the household registration system and the social welfare system reform and perfection. 

In the discussion section, Professor Dashu Wang made a more accurate explanation of socialism with Chinese Characteristics which was mentioned by Professor Seung-Youn Oh in her speech. Migrant workers, household registration and other issues were discussed between Professor Zhao Pengjun and Professor Seung-Youn Oh. Professor Zhao believes that it becomes the new trend that people educated in Beijing would like to back to their hometown to set up enterprises. At the end, Mr. Byrne answered the question of TTP completion. He stated that it was not the end of history that China was not invited to join the TTP. The United States will not give up its leading role, but it will also need some countries coming in to fill the gap of setting up more international insitutions, for example, China.
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