Economic Dynamics and Integration in Eastern Europe and Asia

Transcription

1 Economic Dynamics and Integration in Eastern Europe and Asia Nan Yu Prof. Dr. Paul Welfens Chair for Macroeconomic Theory and Politics, University of Wuppertal Jean Monnet Chair for European Economic Integration European Institute for International Economic Relations(EIIW) Campus Freudenberg Rainer-Gruenter-Str. 21 Tel: (0) yu@wiwi-uniwuppertal.de

2 International DFG (Deutsche Forschungsgemeinschaft) Project: Sino-European Cirluar Economy and Resource Efficiency Coopertate with: Shanghai Jiaotong University (SJTU), Shanghai, China University College London, Institute for Sustainable Resources (UCL ISR), London, UK Fraunhofer Institute for Systems and Innovation Research (ISI), Kalsruhe, Germany MINES ParisTech Centre for industrial economics (CERNA), Paris, France United Nations University Maastricht Economic and social Research institute on Innovation and Technology (UNU-MERIT), Maastricht, Netherland Key words: China, green growth, sustainability, resource/material efficiency, renewable energy, innovation of environmental technologies and policies Seite 2

3 China and its Economy Basic Economic Indicator Main factors determining China s economic growth Environmental Issues Future economic prospects Seite 3

4 China and it s Economy People's Republic of China 1 October 1949 Population billion 2015 GDP $20.85 trillion 2016 (estimated) GDP growth 6.9% 2015 Inflation 1.4% 2015 Currency Renminbi (yuan) ( ) (CNY) Seite 4

5 Administrative divisions of PRC Capital: Beijing Provinces: 22 Autonomous regions: 5 Municipalities: 4 (Beijing,Tianjin,Shanghai and Chongqing) Special administrative regions: 2 (Hong Kong and Macau) Seite 5

6 Source: Seite 6 1/13/2017 Nan Yu, University of Wuppertal / EIIW

7 GDP real total Seite 7

8 Consumer price index Seite 8

9 External trade balance of goods, total Seite 9

10 Gross national income Seite 10

11 Other Figures Sources: Haver Analytics, World Bank, International Monetary Fund.

12 Other Figures Sources: Haver Analytics, World Bank, International Monetary Fund.

13 Other Figures Sources: Haver Analytics, World Bank, International Monetary Fund.

14 Main factors determining China s economic growth (1) Gradual economic reforms (2) Constant opening-up (3) Continuously improved economic structures (4) High savings and investment Seite 14

15 Gradual economic reforms After the People's Republic of China (PRC) was founded in 1949, China adopted the mechanism of a centralized planned economy. What is a socialist market economy and how is it different from the market economy of capitalist countries? A planned economy is an economic system in which inputs are based on direct allocation. An economy based on economic planning appropriates its resources as needed, so that allocation comes in the form of internal transfers involving the purchasing of assets by one government agency or firm by another. In a traditional model of planning, decision-making would be carried out by workers and consumers on the enterprise-level. It overemphasized the role of planning while ignoring the market's role in allocating resources. Rigid economic planning and excessive centralization, to a large extent, hampered companies' management initiatives and lead to insufficient production of consumer goods and severe shortages of commodities. Seite 15

16 Gradual economic reforms 14th CPC (Communist Party of China) National Congress held in October 1992: Fiscal reforms. In the history of China, for the first time we introduce the de facto fiscal federalism (how competencies (expenditure side) and fiscal instruments (revenue side) are allocated across different (vertical) layers of the administration); Reforms in financial sector. Before 1978, the People s Bank of China (PBC) was playing two roles at the same time, the central bank and a business bank. From 1978 onwards, business banks, policy banks, investment banks, trust and insurance companies and so on appeared; Exchange rate reforms. In 1994, China started adopting a managed floating exchange rate system; A market-based macro prudential system has been established on the basis of the fiscal and financial reforms; Since the 1980s, private investment has been allowed, successively, in the consumption goods markets, capital goods markets, and in 1994, the financial sector; Transforming the functions of the government, and promoting the construction of legal system. Seite 16

17 Gradual economic reforms Capital has been the key driver of China s growth over the last three decades: Capital accumulation accounted for 6.9% of the 10.5% average annual increase in GDP in the last decade, 5.7% of the 10.1% average annual increase in GDP in 1990 to 2002, and 7.2% of the 9.7% annual increase in GDP in 1979 to Seite 17

18 Constant opening-up Space structure: the markets successively opened up from the special economic zones, economic and technological development zones, coastal economic development zones, riparian regions, inland regions, and finally the whole China; Industrial structure: from the advantaged manufacturing industry, to the less advantaged agriculture and service industries. Seite 18

19 Constant opening-up Sources of GDP Growth - PRC (% of GDP growth) Source: ADB calculations using data from Asian Development Outlook April 2015, ADB; and World Development Indicators, World Bank. Seite 19

20 Constant opening-up China s export structure Source: World Development Indicators, April 2013, World Bank. Seite 20

21 Constant opening-up International comparison: FDI net inflows (% of GDP) Source: World Development Indicators, April 2013, World Bank. Seite 21

22 Continuously improved economic structures 1, Since the 1970s onwards, China s industrialization process accelerates. Seite 22

23 Continuously improved economic structures 2, Urbanization. Seite 23

24 High savings and investment International comparison: Gross savings (% of GDP) Source: World Development Indicators, April 2013, World Bank. Seite 24

25 High savings and investment International comparison: Gross capital formation (% of GDP) Seite 25

26 International Trade Seite 26

27 International Trade Seite 27

28 FDI Value of China s ODI and FDI, Source: KPMG 2015 Seite 28

29 FDI China's FDI breakdown by industry, Source: Ministry of Commerce, 2015, KPMG analysis. Note: Others includes the sectors of agriculture, forestry, animal husbandry, fishery, etc.

30 FDI Seite 30

31 Science & Technology (S&T) Source: China Statistical Year Book 2014 Seite 31

32 Science & Technology (S&T) Total national patent applications for top selected innovative countries Data source: WIPO

33 Environmental Issues In economics, a Kuznets curve graphs the hypothesis that as an economy develops, market forces first increase and then decrease economic inequality. The hypothesis was first advanced by economist Simon Kuznets in the 1950s and '60s.

34 Environmental Issues The environmental Kuznets curve is a hypothesized relationship between environmental quality and economic development: various indicators of environmental degradation tend to get worse as modern economic growth occurs until average income reaches a certain point over the course of development.

35 Environmental Issues The Environmental Kuznets Curve:

36 Environmental Issues

37 Environmental Issues Total CO2 emissions of major emitters in Source: China s Carbon Emissions Report 2015 Seite 37

38 Environmental Issues China s emissions by fuels during Source: China s Carbon Emissions Report 2015 Seite 38

39 Environmental Issues Notes: CO2/GDP = carbon intensity of economy; TPES = total primary energy supply; TPES/GDP = energy intensity of economy; CO2/TPES = carbon intensity of primary energy supply; GDP = USD2012 purchasing power parity. Seite 39

40 Environmental Issues Domestic material consumption per capita, comparison between China, Asia and the Pacific, World, and Rest of World (i.e. World excluding Asia and the Pacific), from 1970 to Materials intensity, comparison between China, Asia and the Pacific, World, and Rest of World (i.e. World excluding Asia and the Pacific), from 1970 to 2008 Source: Resource Efficiency: Economics and Outlook for China Seite 40

41 Environmental Issues Total primary energy supply per capita. Primary data sources (IEA 2007b, IEA 2007a, World Bank 2012) Energy intensity of the Chinese economy compared to world and Asia and the Pacific averages. $US are constant year 2000, exchange rate based. Sources: (IEA 2007b, IEA 2007a, World Bank 2012) Source: Resource Efficiency: Economics and Outlook for China Seite 41

42 Environmental Issues Source: Panayotou (1997)

43 Environmental Issues Source: OECD Seite 43

44 Environmental Issues R&D Intensity in China and other economies Source: OECD Seite 44

45 Environmental Issues Figure 1: R&D intensity of provinces Source: Cai and Wang, 2014 Seite 45

46 Environmental Issues Seite 46

47 Environmental Issues Related Laws: The Environmental Preotection Law The Circular Economy Promotion Law The Energy Conservation Law The Renewable Energy Law National 12th FYP related to green growth: The Outline of the 12th FYP for National Economic & Social Development The National 12th FYP for Innovative-capacity Building The National 12th FYP for S&T Development The National 12th FYP of Environment Protection National action plans for green growth: National Climate Change Program of China China s S&T Initiative on Climate Change Renewable Energy and New Energy International S&T Cooperation Program Seite 47

48 Environmental Issues Cross-cutting national energy, climate and S&T policies in China Source:IEA, 2015 Seite 48

49 Environmental Issues Environmentally-Related Taxes in China (In percent of GDP, 2011) Carbon tax Tax on local air pollutants Fuel taxes Vehicle taxes Source: IMF Country Report No. 14/235 Seite 49

50 Environmental Issues Office of First Filing (OFF ) for Renewables Patent from Biofuels Solar Thermal Solar PV Wind Energy Source: WIPO Global Challenges Reports Seite 50

51 Future economic prospects Selected economic indicators (%) Source: ADB estimates Seite 51

52 Future economic prospects Investment will remain the main drag on growth, with real estate its weakest component. The government foresees sizeable infrastructure investment, some with private participation, but not a large stimulus. Consumption will remain relatively robust but not immune to slowdown in the rest of the economy. The current account surplus is forecast to widen in 2015, only to narrow again in 2016, mainly reflecting movement in commodity prices, which are forecast to languish in 2015 well below 2014 levels but rise again in Export growth will likely benefit from expanding global growth and trade even if the renminbi further appreciates against most of the PRC s trade partners. Policy challenge reforming local government finance Seite 52

53 Future economic prospects Impetus for sustained growth: First, the mere adoption of technologies already in use abroad is likely to be a powerful engine of growth for at least another decade, the potential for technological catch-up is still enormous. Second, China is being transformed into an innovation-oriented economy. Foreign direct investments have been a major driver of technology transfer. Third, China is making large human capital investments. The average years of education in the population over 25 is now twice as high as in 1980, this increase in educational attainment implies an increase in average labor productivity of 43% due to human capital accumulation alone. Human capital accumulation, investments in technology adoption and industrial policies (such as SEZ) have come hand in hand with an increasing technology intensity of industrial production. Finally, an important, yet largely unexploited potential source of future growth is the reduction of the pervasive financial frictions. Reforms aimed at reducing the market power of the large state banks, for instance by allowing banks to compete in offering deposit and lending rates, and at improving the legal system (contract enforcement, investor protection, etc.) can have large effects on productivity. The opening of the capital account and the convertibility of the RMB, currently under discussion, are an opportunity for such reforms.

54 Future economic prospects Obstacles and challenges to sustained growth: First, economic inequality and the aging of the population are perhaps the most acute challenges to social cohesion and the status quo in China. Fast growth has been accompanied by a rapid increase of income inequality. Second, the pension system is a key policy issue for China. China s pension system: how it should be changed with inequality and aging? Third, One of the big open questions for China is the bias of its growth process towards quantity relative to quality. Environmental degradation casts a shadow over China.

55 Many thanks for your attention! Seite 55