Table of Content

20 April 2014, Volume 34 Issue 4

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THE DECISIVE ROLE OF MARKET AND THE BASIC ECONOMIC SYSTEM
——Reading on the Spirit of the Third Plenary Session of the Eighteenth Central Committee

SHEN Yue

2014, 34(4):  5-12. 

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Since the Third Plenary Session of the Eleventh Central Committee of the Party, there were fourth committees played important roles in Chinese economic reform, and the Third Plenary Session of the Eighteenth Central Committee is the most significant one after the other three. Based on the selfexamination on paying more attention on development and policy adjustment, but attaching less importance on reform and system innovation, this paper explains the new idea of economic reform on the Third Plenary Session of the Eighteenth Central Committee. This paper also elucidates the relationship between the decisive role of market and the basic economic system in the document. This paper concludes that the decisive role of market comes from the experience and theories of market reform in twenty years of China, which clearly defines the different functions of market and government in resource allocation and clarifies the relationships between market economy and the basic economic system.

THE DISEQUILIBRIUM OF FUNCTIONAL
DISTRIBUTION IN CHINA AND ITS SOLUTIONS

YUAN Hui

2014, 34(4):  13-22. 

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This paper examined the situation of functional distribution and reasons for its disequilibrium. The separation of material conditions and physical conditions, the labor confrontation and various forms of market and institutional barriers lead to the cumulative disequilibrium of functional distribution. According to the Third Plenary Session of the 18th Central Committee of CPC, further reforms should be made to obtain a reasonable structure of functional distribution which enables the masses to benefit from the reform and development.

ESTIMATE OF CHINESE RURAL SURPLUS
 LABORS STRUCTURE CHANGE IN 2002—2010

GUO Jin-Xing, WANG Qing-Fang

2014, 34(4):  23-33. 

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This paper is about the long term structure change of surplus labor in rural China. We find that the surplus labor in agriculture has dramatically declined 90% during 2002 and 2010, while the open unemployment has risen 70% and becomes the major part of surplus labor. In 2010, the proportions of surplus labor over 40 years old, primary educational level or below and female are 723%, 481% and 5699% respectively. Those sharp changes can explain the paradox of coexistence of surplus labor with rising wage and short of migrant labor. The structure change of surplus labor means the Lewis turning of Chinese economy has been coming.

THE CORRELATION OF BUSINESS CYCLE WITH
 REAL ESTATE AND FIXED ASSETS CYCLE ——An Analysis Based on the Perspective of Monetary Policy

LI Xiang-Fa, FENG Zong-Xian

2014, 34(4):  34-44. 

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In this paper, the TVSTAR methods is applied to analyze the linkage between the business cycle with the real estate and fixed assets investment cycle, as well as the effect of amount of money supply M0, M1 and interest rate on the linkage are empirical studied. We find that the fluctuations of economic growth cycle have significant impact on real estate cycle in different regime. In shrink regime, the fluctuations of real estate has a significant impact on the CPI cycle, the cycle of the fixed asset investment has a significant adverse economic fluctuation characteristics. In the expansion cycle, the increase of money supply M0 and M1 have a positive effect on stable economic growth, increase investment and extension the boom cycle of the real estate, but persistent and excessive loose monetary policy could lead to inflation and real estate bubble. In shrink regime, the above monetary policy tools ineffective.

THE INFLUENCE OF ASSET PRICE ON CPI UNDER
THE PERSPECTIVE OF CONSUMER CONDUCTION

LIU Lin-Chuan

2014, 34(4):  45-55. 

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Based on the LCPIH model, this paper analyzed the influence of asset price on households consumption and CPI. It is found that asset price volatility could affect households consumption behavior and the price level in four channels, which are budget constraint effect, actual income effect, expected income effect and substitution effect. On this basis, the paper applied ARDLUECM model to analyze the impacts of asset prices on CPI. The empirical results showed that there was correlation between stock price, real estate price and CPI. The real estate price was an important factor in promoting the CPI, but the stock price has no significant and unstable effects on CPI.

GOVERNMENT SIZE AND MACROECONOMIC STABILITY
——Evidence from Emerging Markets and Analysis of RBC

DENG Xiang,ZHU Zi-xiang

2014, 34(4):  56-67. 

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This paper studies the influence of government spending and revenue scale on the macroeconomic stability. Empirical evidence about emerging markets shows that the size of government consumption has a destabilizing impact on the output volatility, while the relationship between general government expenditure size and output volatility is not clear. The real business cycle model is constructed which contains a progressive type of taxes system and government spending disturbance. The model fits the destabilizing effect of government spending size as well as stabilizing effect of tax system. If government spending is regarded as productive expenditure, the stabilizing effect of government spending size will take up, although the stabilizing effect will disappears if government spending size expands further.

RESEARCH ON TAX RATE SETTING IN THE REFORM
OF EXPANDING TAX BASE OF VAT IN CHINA

LI Qing,FANG Jian-chao

2014, 34(4):  68-75. 

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Tax rate setting is a key problem to the implementation of reform of expanding tax base of VAT in China. It plays an important role in achieving the goal of structural tax cut. This paper estimates that a reasonable range of standard tax rate of VAT covering all industries is 9% to 13% based on the data of inputoutput under the requirement of structural tax reduction policy. Considering keeping the fiscal stability and international tax competitiveness, this paper puts forward that the standard rate should be 13% or a little lower than 13% and the grades of tax rate should be decreased.

WILL NONINTEREST INCOME REDUCE
 THE RISK OF COMMERCIAL BANKS
——The Evidence from 53 Commercial Banks in China

ZHOU Ye, ZHENG Jun-Li

2014, 34(4):  76-87. 

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Based on data of 53 Chinas commercial banks from 2003 to 2012, this empirical study finds that the risk of diversification is highly correlated with bank assets. The smaller scale of commercial bank assets, the greater risk expanding noninterest income will take accordingly. Furthermore, noninterest income is decomposed into investments trading item and commission item.It is shown that commission item is the main source of the noninterest risk and the risk of investment trading income is not significant.

THE INSURANCE BEHAVIOR UNDER THE CATASTROPHIC RISK ——From the Perspectives of Experimental Theories

LIU Yi-Dian, DU Shuai-Na

2014, 34(4):  88-99. 

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Catastrophe insurance market has not been established in China yetHence research on insurance behavior under catastrophic risks has important policy implications to the foundation and development of the nations future catastrophe insurance market. This paper takes earthquake risk as an example, experimentally examines individuals insurance behavior under catastrophic risks, and discusses some experimental theories. The result shows that both informing subjects about the risk probability information and introducing induced information in experiment could decrease the insurance rate. Prior risk experience has a significant positive impact on peoples following insurance rate. This kind of experience does not have to be got by personal, but observing others suffering a loss has the same effect. By extending the traditional experimental theories, the laboratory experiment could be applied to such field where has few research as it is difficult to control variables.

THE STUDY OF DEUTSCHE MARK INTERNATIONALIZATION

FU Min-1, WU Ruo-Yi-2

2014, 34(4):  100-112. 

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The rapid growth of Chinas economics has aroused people to rethink the structure of global economics and monetary. One of the important topics is the issue of RMB internationalization. Before the establishment of euro, Deutsche Mark is the secondlargest international currency in the world. However, its internationalization has been limited by the monetary authorities for a long time. This paper will show a systematic analysis of German historical events and related policies, in order to find the underlying causes of the limitation of Deutsche Mark internationalization. The factors include the protection of monetary policy objectives of internal stability using money value, the protection of exporters international competitiveness, the longestablished capital control and the special industrial structure of German. The limitation of Deutsche Mark internationalization has some inspiration to the development model and conditions, as well as the timing of RMB internationalization.