Table of Content

16 October 2024, Volume 44 Issue 10

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The Multi-level Synergy of Institutions，Technology，and Culture Collaboratively Builds a High-standard Socialist Market Economic System

HONG Yinxing1, GENG Zhi2

2024, 44(10):  1-11. 

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Chinese modernization requires the construction of a highstandard socialist market economic system The basic requirement is that the market mechanism should be “Lift restrictions on the market while ensuring effective regulation” as required by the Third Plenary Session of the 20th CPC Central Committee “Lift restrictions on the market” reflects the markets decisive role in resource allocation；“ensuring effective regulation” reflects the governments better performance，which is the criterion for a highstandard socialist market economy From the perspective of the basic institutions of market economy，“lift restrictions on the market” is reflected in the improvement of property rights protection and market access，which requires the allocation of resources according to market rules，market prices，and market competition，and is reflected in consumer sovereignty，equal opportunities，free competition，enterprise autonomy，and the free flow of resources；“ensuring effective regulation” is reflected in the improvement of market order and social credit，involving the effective management of the market，with the goal of being dynamic without chaos and regulated without stagnation To let the market be dynamic and to regulate effectively，it is not only necessary to deepen reforms at the institutional level but also to promote the deep integration of the market economy and the digital economy，providing modern technological means and platforms for “lift restrictions on the market” and “ensuring effective regulation” In addition to the synergy of institutions and technology，it is also necessary to improve the level of market civilization through the construction of market culture，which is to establish informal institutional arrangements consistent with formal institutional rules，and the effective implementation of formal institutions depends on informal institutional rules to reduce institutional costs It can basically be summarized as the level of market civilization reflected by market cultureThis market civilization can automatically ensure the smooth progress of market transactions，reduce the costs of contract negotiation，execution，and supervision，overcome commercial risks caused by incomplete information and incomplete contracts，and avoid opportunistic behavior In summary，institutions，technology，and culture form a synergistic force at multiple levels to promote the construction of a highstandard socialist market economy system，reflecting the modernization level of the national governance system and governance capacity





Digital Technology，Supply Chain Spillover Effects and Enterprise Growth

FANG Fuqian1, YANG Hong, 1CHEN Guangxing2

2024, 44(10):  12-31. 

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Digital technology profoundly changes the real economy，which is worth further studying whether there is a supply chain spillover effect when local governments and other economic entities promote the digital economy development This article constructs a twosector general equilibrium model with inputoutput relationships to explore the impact and mechanism of promoting digital technology development of regions where customers and suppliers are located on enterprises outputs Based on this，we propose theoretical models and hypothetical mechanisms used for empirical testing 
The results show that：（1） Promoting the digital economy in customer or supplier regions significantly boosts enterprise growth，with supply chain spillover effects contributing about 20% The mechanism lies in that digital economic development in customer regions mainly improves enterprise total factor productivity and alleviates financing constraints，thereby driving enterprise output growth，while the level of digital economic development in supplier regions only improves enterprise total factor productivity and drives output growth （2） Heterogeneity analysis shows that the supply chain spillover effect of digital technology is more evident in nonstateowned enterprises，midwestern enterprises，and enterprises with uncertain external environments （3） Further research finds that digital technology shortens the spatial distance，and the further away the geographical distance between upstream and downstream enterprises，the more significant the role of digital technology 
This study provides policy references for how to improve the supply chain construction in the digital economy era and promote highquality economic developmentOn one hand，it is imperative to encourage suppliers to advance digital technological innovation and application，facilitating the structural upgrade of intermediate products and precisely uncovering market demands On the other hand，it is crucial to guide customers in overcoming information barriers at various stages，ensuring timely feedback on input demand fluctuations，thereby achieving resource sharing among enterprises along the supply chain





Government Digital Transformation，Social Welfare and Common Prosperity

HUANG Xianhai, ZHU Haojie, YUAN Yiming, SUN Yongming, SONG Xueyin

2024, 44(10):  32-48. 

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The emergence of the idea of digital governance and government empowerment in the context of the digital era is crucial for enhancing social welfare and firmly advancing common prosperity It is an inevitable choice for the government to carry out digital reform to adapt to the digital era environment，and the degree to which digital government is constructed has a direct bearing on the viability and efficacy of the modernization of the national governance system and governance capability Better and more inclusive public service delivery as well as more accurate and effective social governance are both achievable with digital transformation This is a key element in enhancing social welfare and a solid base for advancing common prosperity Based on Chinas urban panel data and local government procurement announcement data from 2017 to 2021，this paper measures the digital transformation investment level of local government digital procurement，and studies the impact and mechanism of government digital transformation on regional social welfare
The empirical findings demonstrate that local governments investments in digital transformation can greatly boost the expansion of their social welfare，and the results hold up well to a number of robustness tests On the one hand，government digitalization has the potential to increase local social welfare by transforming government activities，creating a more serviceoriented government，raising the standard of fundamental public services，and creating a more transparent and clean government On the other hand，the development of Internetbased government affairs platforms has an impact on the beneficial outcomes of government digital investments in advancing social welfare The welfare enhancement effect of government digital investment is amplified by higher platform service levels，more engaged government affairs interaction，and quicker demand response Further analysis shows that the digital transformation carried out by the government stimulates the vitality of local economic development，enhances the vitality of urban innovation and entrepreneurship，and thus contributes to the improvement of social welfare Furthermore，the welfare effect of the governments digital transformation is also hampered by the digital divide，and this is most noticeable in places with high rates of aging and low levels of human capital
The policy implications are as follows：First，we should expedite the construction of an enabling digital government，improve the capacity of modern governance，and attain ongoing enhancements to the welfare of the populace Second，we should encourage data transparency and resource integration，and fortify the platforms enabling mechanism through multiparty coconstruction and sharing Third，the local governments should strike a balance between distinctive and coordinated development，solve structural problems and unleash the growth potential of social welfare





Tax Administration，Tax Revenue and the Debt of Local Government Financing Vehicles

LING Chen1, 2, LYU Meimeng1

2024, 44(10):  49-65. 

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In recent years，local government debt has rapidly increased in response to economic downturns，while fiscal revenue growth has remained weak，causing debt risks in certain regions to become more pronounced and threatening highquality economic development According to statistical data，by the end of 2015，the national local government debt ratio was only 236%，with a comprehensive debt ratio of 892% By 2023，these figures had risen to 323% and 1219%，respectively The average annual growth of local government debt exceeded the growth of GDP during the same period by 24 times On the other hand，from 2016 to 2023，national tax cuts and fee reductions exceeded 14 trillion yuan，while the average annual growth rate of tax revenue during the same period was only 489% Therefore，it is critical to establish a longterm mechanism that stabilizes local fiscal revenue while controlling excessive debt accumulation，ultimately supporting debt risk mitigation alongside stable economic development 
This paper thus utilizes data from local government financing vehicles （LGFVs） spanning 2006 to 2021 and，through a quasinatural experiment involving the implementation of the Golden Tax Project III，to empirically examine the impact of tax administration on tax revenue and LGFV debt The study explores the important role tax administration plays in balancing debt and fiscal revenue The results indicate that the Golden Tax Project III increased tax revenue and curbed the excessive growth of LGFV debt through a taxdebt substitution effect Meanwhile，it further suppressed debt expansion by alleviating information asymmetry between banks and enterprises and improving the internal governance of nonplatform companies，thereby crowding out credit to financing platforms This paper also compares the roles of tax administration and tax rate adjustments in LGFV debt，revealing a possible asymmetric relationship between tax revenue and debt
Based on these findings，this paper proposes the following policy recommendations First，the next phase of fiscal and tax reforms should prioritize deepen tax administration improvements，with a focus on accelerating digital and intelligent upgrades to tax management This will help stabilize expectations，reduce risks，and support sustainable development Second，to effectively prevent and address local debt risks，efforts should be made to strengthen financial services for the real economy，correct structural imbalances in credit allocation within financial markets，and increase the share of direct financing for enterprises Finally，risk prevention and mitigation strategies should account for regional variations in institutional capacity and governance，with initiatives aimed at improving the local institutional environment and enhancing government governance





Do Land Subsidies Improve the Quality of Innovation in Industrial Enterprises

LU Jianxin, LEI Zichen

2024, 44(10):  66-87. 

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The coexistence of rapid growth of land price subsidies and slow improvement of innovation quality presents the “innovation dilemma” faced by Chinese industrial enterprises （CIE）. To promote highquality innovation，the Chinese government has intensified its incentives for technological innovation Consequently，there has been an explosive increase in the number of innovations produced by Chinese firms However，the quality of these innovations remains unsatisfactory This raises the question：why is there such a disparity between the quantity and quality of innovation?
In addition to explicit policy incentives for corporate technological innovation，a plethora of implicit subsidies，such as land price subsidies，exist Between 2007 and 2022，CIE experienced a 35fold increase in land subsidy values，correlating with higher innovation quality compared to nonsubsidized firms However，this quality of innovation did not increase proportionally with the rising subsidies and even decreased during the period from 2010 to 2012 This paper investigates whether land subsidies truly enhance industrial innovation quality and explores the mechanism involved，while considering the role of industrial agglomeration spurred by these subsidies
This paper constructs a production function with patent quality as the output，and utilizes matched data from CIE，micro land transactions，and patents from 2007 to 2013 to empirically examine the impact of land price subsidies on the quality of industrial innovation and the underlying mechanisms The results indicate that land price subsidies act as a doubleedged sword for innovation On one hand，they enhance both the quantity and quality of innovation；on the other hand，increasing subsidies can inhibit improvements in innovation quality Moreover，the innovation quality evaluation system that focuses solely on quantity is inadequate for accurately assessing corporate innovation levels Lastly，the “landforinvestment” effect of land price subsidies encourages the clustering of industrial enterprises，which enhances innovation quality in areas with higher levels of agglomeration
To improve the innovation quality of CIE，we recommend：implementing highquality development concepts in innovation practices；controlling land price subsidies within a moderate range while improving innovation incentive policies；and establishing a qualityfocused evaluation system to reform innovation assessment The shift from a quantityoriented to a qualityoriented evaluation system，is essential for a more accurate assessment of corporate innovation





Trade Costs，Internal Migration and Income Inequality

ZOU Wei, HUANG Renhao, CAI Nuoxuan, FANG Yingfeng

2024, 44(10):  88-107. 

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Given that China possesses a large and potential domestic market，we present a heterogeneousagent model examining trade and migration patterns among Chinese regions，and analyze the change in income inequality We quantify the internal and international trade costs，total factor productivity （TFP） and internal migration costs using National Census data and Interprovincial Inputoutput data from 2000 to 2015 Our findings indicate that both internal and international trade costs，as well as internal migration costs，have decreased TFP has shown a trend of first increasing and then decreasing，with regional variations
We quantify the impact of these exogenous shocks on national and provincial economic growth and income distribution in China The results show that the decrease in internal and international trade costs and the change in provincial TFP can promote the growth of real GDP However，these shocks may also exacerbate national income inequality，increasing the Gini coefficient by 0020，0010，and 0109，respectively，between 2000 and 2015 Based on Dagums decomposition，interprovincial income inequality is significantly higher，serving as the primary contributor to national income inequality Furthermore，lower migration costs can reduce interprovincial income inequality，with the Gini coefficient decreasing more substantially when interacting with shocks in trade costs and TFP
We further decompose income into labor and capital income，revealing that under exogenous shocks from trade costs and TFP，both labor and capital income inequality tend to widen across provinces，leading to a general rightward shift in income distribution Simultaneous migration cost shocks can reduce interprovincial inequality Additionally，we classify the provinces into four regions—Eastern，Central，Western，and Northeastern—and find regional heterogeneity We also evaluate the heterogeneous effects at the provincial level
The conclusion suggests that it is important to fully recognize the bidirectional role of internal and international trade shocks，along with TFP shocks，in promoting economic growth while also intensifying income inequality It is essential to leverage the potential of Chinas vast domestic market and continuously promote the construction of a unified national market Concurrently，managing the relationship between economic growth and common prosperity is crucial We offer policy insights with the goal of mitigating income inequality and achieving common prosperity through reducing barriers to migration across regions





The Sudden Stop of International Capital Flows and the Leverage Ratio of Nonfinancial Listed Companies

CHEN Fengxian1, ZHU Meiling1, FENG Wenhua2

2024, 44(10):  108-125. 

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Stabilizing the leverage ratio of enterprises is an important equilibrium point for achieving macroeconomic stable growth and preventing risks Based on the quarterly data of 3，154 listed companies of Ashare markets from 2004 to 2019，this paper investigates the impact and mechanism of the sudden stop of international capital flows on of the leverage ratio of listed Companies
This paper finds that：（1） The sudden stop of international capital flows will cause a 9956% decline in the growth rate of the leverage ratio of listed companies Both the sudden stop of debt capital and equity capital flows have a negative effect on the leverage ratio（2） The negative impact of the sudden stop on the leverage ratio of companies is more obvious in nonstateowned，high foreign trade regions，and companies with high investment payback periods（3） The sudden stop of debt capital mainly reduces the growth rate of the leverage ratio by reducing credit The sudden stop of equity capital flows can affect the leverage ratio by：reducing credit and depressing asset prices（4） Strengthening capital account control，implementing classified and targeted macroprudential supervision，and countercyclical foreign exchange market intervention can effectively alleviate the impact of the sudden stop on the leverage ratio of enterprises risks
The marginal contributions of this paper are reflected in the following aspects：Firstly，using the data of listed companies in A share stock markets，regarding the sudden stop as a macro shock，this paper specifically examines the relationship between the sudden stop，and the leverage ratio of companies，enriching the related research on the factors influencing the leverage ratio Secondly，it expands the research on the financial risks derived from international capital flows Currently，most of the literature on capital flows is based on perspectives such as the probability of financial crises and the international contagion of financial risks，lacking microlevel evidence Thirdly，this paper divides international capital and examines more meticulously the impact of the sudden stop of equity capital and debt capital flows on the leverage ratio，as well as the channel differences of domestic and foreignfunded enterprises encountering the sudden stop shock and the differences in shortterm and longterm leverage adjustments in response to the sudden stops Finally，this paper further studies the effect of capital control policies，countercyclical policies of foreign exchange market intervention，and macroprudential supervision in responding to the sudden stops and stabilizing the leverage ratio of listed companies，providing policy references for the prevention and control of financial risks 





The Impact of US Monetary Policy on the Effectiveness of China's Monetary Policy

FAN Zhiyong1LI Renjun1, ZHANG Dongying2, ZHANG Yonghui1

2024, 44(10):  126-147. 

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After 2022，the global economy faces huge challenges of recovery and monetary policy divergence In the increasingly open international economic environment，the divergence of monetary policy with European and American countries will inevitably have an impact on the effectiveness of Chinas monetary policy Based on the data from January，2005 to December，2022，this paper combines the doubly robust inverse probability weighting (AIPW) with machine learning to quantitatively study the influence of US monetary policy on the effect of Chinas monetary policy Compared with the traditional econometrics method，the biggest advantage of this method is that it can estimate the difference of the influence of different monetary policy combinations of China and the US on the effect of Chinas monetary policy This paper finds that，first，the US monetary policy has spillover effects on Chinas economy，but its impact is generally lower than that of Chinas monetary policy; there is asymmetry in monetary policy effects，with both the US and Chinas monetary policies having a greater effect when tightened individually than when loosened individually Second，the US monetary policy has a significant impact on the effectiveness of Chinese monetary policy，especially on external variables，such as PPI，exchange rate，import，export，direct investment，foreign exchange reserves However，it has a small impact on internal variables，such as industrial added value and total retail sales of consumer goods Third，From the perspective of transmission channels，under different combinations of US and Chinese monetary policies，the main channels through which US monetary policy spillovers occur vary，necessitating targeted measures to enhance the effectiveness of our countrys monetary policy





The Technology of Conflict and Endogenous Authority：The Problem of the Origin of the State

HAN Zhongyuan

2024, 44(10):  148-164. 

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The state did not exist from the beginning From a temporal perspective，the state emerged after humans entered agricultural society From a spatial perspective，the states that independently emerged throughout the world were often located in areas restricted by geographical environment The question arises： under what conditions does the state emerge? This paper attempts to preliminarily explore the conditions for the origin of the state through the analysis of anarchy 
This paper constructs a model of endogenous authority in a state of lawlessness，focusing on the impact of technology of conflict on social order，proving the conjecture Proposed Hirshleifer (1995) that the anarchy may break down into hierarchy，which offers a necessary condition to the origin of the state Specifically，by using the technology of conflict to depict how the fighting efforts to affect the probability of winning，and the elasticity of technology of conflict to depict the sensitivity of winning probability to the fighting effort，the model proves that when the elasticity of technology of conflict is less than a certain critical value，the anarchy without authority would result in a social order of equilibrium；when the elasticity of conflict technology is greater than this critical value，the hierarchy with authority would result in a social order of equilibrium This paper believes that the primary nature of the state is a hierarchy based on violence or the threat of violence Without hierarchy，there can be no state Therefore，the conditions for the emergence of hierarchy are also the necessary conditions for the origin of the state In this sense，this paper presents a necessary condition for the origin of the state，namely that the elasticity of the technology of conflict is sufficiently large This is consistent with Carneiros （1970） theory of environmental constraints 
This paper may contribute in two ways On the one hand，it provides a foundation for theoretical research on the origin of the state，that is，the necessary conditions for state formation；on the other hand，it offers insights for empirical research on the origin of the state，such as archaeological studies，that is，more systematic attention should be paid to the impact of changes in the technology of conflict on the origin of the state