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China’s annual economic growth has slowed since the global financial crisis, dropping from 14.2% in 2007 to 6.9% in 2017. The question as to whether China would fall into the middle-income trap (MIT) has attracted plenty of discussions. However, China is a diverse country with uneven economic development. Some provinces are far more advanced than others. Therefore, it might be inaccurate to look at China as one single entity to make a judgment on the MIT issue. Instead, looking into each province and comparing provincial-level differences would be more insightful. This case is essentially about economic growth and development in general, and that of China in particular. It makes the topic of growth more interesting by discussing the triggering factors of the MIT through comparing the differences between a “trapped” and an “escaped” province, i.e., Shaanxi and Jiangsu. To alleviate the regional development gap, Shaanxi and Jiangsu became paired poverty alleviation partners in 1996 under the guidance of the Chinese central government. However, more than 20 years have passed, yet there is still a huge gap between the two provinces in many fields. Jiangsu’s GDP per capita has surpassed the range of MIT, while Shaanxi’s has not and is very likely to be trapped with the continuing slowdown of its economic growth. The key difference between the two provinces is not their resources, but their development policies.

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the Middle Income Trap ;  China ;  provincial comparision ;  Shaanxi ;  Jiangsu

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Purpose Chinese investments abroad are being scrutinized more stringently because host governments fear that Chinese companies would steal domestically grown technology and know-how or be duped into a debt trap. The purpose of this paper is to provide a narrative of Chinese investments in a region that is neither developed nor underdeveloped – Central and Eastern Europe. The authors aim to provide an alternative view of Chinese investments abroad. Design/methodology/approach The authors base their narrative on face-to-face semi-structured interviews with eight Chinese firms that carried out mergers and acquisition activities in the region. Findings The respondents claim that they saved companies and jobs in the aftermath of the global financial crisis. Access to the China market and elsewhere has increased as a result of these investments. Transfer of technology has gone both ways depending on which partner had superior technology. Research limitations/implications It is important that Chinese investors emphasize the positive spillover effects from their investments, such as jobs saved, potential technology transfer and increased exports, when applying for FDI approval from host governments. Host governments, on the other hand, should evaluate each Chinese investment on its individual merits. Originality/value There is little that has been researched on the contributions of FDI from developing countries to host economies. This paper is an early attempt in this direction.

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The One Belt One Road (OBOR) project is perhaps China's most significant international relations initiative in recent times. It is based on openness, harmony, inclusivity, mutual benefit and market operations and aims to connect the economically vibrant East Asia and the developed Europe by land and by sea, and in the process, it brings growth and development to tens of countries along the modern Silk routes. In this paper, we compare the impact of the main initiatives of OBOR, namely enhancements in physical infrastructure and improvements in border administration, on the trade of countries that have signed on to this project, especially countries along the six economic corridors. We find overwhelming evidence that shows improvements in border administration has the greatest impact on exports of corridor countries. Although physical infrastructure is important for trade, the Chinese government should place equal attention to improvements in trade facilitation to ensure trade routes operate seamlessly across the various corridors.

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border administration ;  infrastructure ;  one belt one road ;  trade

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https://www.chinadaily.com.cn/a/201910/14/WS5da3d354a310cf3e35570468_2.html

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Ethnic diversity ;  values diversity ;  innovation ;  creativity

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Most discussions about China’s massive Belt & Road Initiative (BRI) tend to focus on infrastructural projects that must be completed in order to connect an economically vibrant East Asia and developed Europe by land and sea and, in the process, bring growth and development to tens of countries along the modern Silk Roads. Professor Bala Ramasamy explains why improvements in the soft infrastructure are just as vital to ensure that trade routes operate seamlessly across the various corridors of the BRI.

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We draw on the knowledge from the fields of international economics and international marketing to improve our insights on the determinants of bilateral trade, in particular trade in Parts and Components (P&C). While trade economists have confirmed the importance of trade agreements, infrastructure and institutional quality among others, as important determinants of trade, international marketers have pointed to the critical role of trust and commitment among partners as antecedents to cross border relationships. In this paper, we introduce macro level variables to represent the antecedents of trust and commitment between dyads in a trade gravity model. We base our findings on 17,030 bilateral relationships involving 291 SITC 5 digit products that we classify as P&C. Our findings confirm the importance of cultural distance, business ethics and transaction specific investments in a bilateral trade relationship. In particular, we find that trust and commitment among partners are more important in P&C trade.

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business ethics ;  commitment ;  cultural distance ;  gravity model ;  parts and components trade ;  trade relationships ;  transaction specific investments ;  trust

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Although the effect of culture on national innovation levels is well-established, previous literature assumes cultural homogeneity within a nation. In this article we analyse two aspects of diversity – ethnic and values – and their impact on national innovation output. We show that ethnic diversity or fractionalization and values diversity are distinct and while the former has a negative effect on innovation, the latter contributes positively. However, countries are bound to have both types of diversity. We find that countries that are ethnically homogenous but diverse in values orientation are the best innovators.

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Ethnic diversity ;  fractionalization ;  innovation ;  values diversity

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If it eventuates the Trans-Pacific Partnership agreement (TPP) will include major economic powerhouses like the US and Japan, but China – the elephant in the room – has been excluded. Our evaluation of how China might fare in the TPP finds that the agreement would be a poor fit at the current stage of China’s economic development. Although China would gain both in terms of trade and a reform timetable, some features of this 21st-century agreement – the assistance given to state-owned enterprises, the standards for labour rights, protection of multinationals against the state and competition laws – would be stumbling blocks in the negotiation process. Thus, being left out of the TPP is no big loss for China.

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