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  • Research Article
    WU Wenfeng, HU Yue
    Frontiers of Economics in China, 2023, 18(2): 145-170. https://doi.org/10.3868/s060-017-023-0008-1

    Theories based on fiscal guarantees cannot explain either the fact that the continuously decline in local fiscal resources has not significantly increased local government financing costs, or the fact that local government debt has been rising at a time of strict central government regulation. The theoretical and empirical analyses provided in this study show that it is the financial resources under local government control that provide the implicit guarantee for local government debt. Such financial resources lower local governments’ financing costs but have the potential to lead to the contagion of financial risk through local government to the financial sector. Therefore, to look at the question solely in terms of either fiscal or financial sector guarantees will not be sufficient to resolve the problem of local government debt. The central government needs to coordinate fiscal and financial policies under a joint management framework in a way that rationally disperses and resolves the risks attached to local government debt and avoids the assumption of excessive risk by either sector. At the same time, close attention should be paid to local financial institutions’ asset quality and their money market reputation to avoid the risk of contagion from local financial institutions to local public finance.

  • Research Article
    JIANG Hai, ZHANG Xiaolin, TANG Shenfeng, CHEN Chuanglian
    Frontiers of Economics in China, 2023, 18(2): 171-197. https://doi.org/10.3868/s060-017-023-0009-8

    The great impact of monetary policy on bank risk-taking, facilitated by a liquidity mechanism, significantly complicates the macro-prudential supervision process. Surprisingly, limited scholarly research has delved into this particular issue. Hence, in this paper, the liquidity variable is introduced into the dynamic linear model to depict the liquidity mechanism by which monetary policy affects bank risk-taking. Based on micro-data from 133 commercial banks in China, this paper empirically tests using systematic Gaussian mixture models estimation and a panel smooth transition regression model. The findings reveal that while monetary policy does not exhibit a significant risk-shifting effect. A marked liquidity transmission effect, however, is observed, whereby easy monetary policy noticeably exacerbates bank risk-taking. This impact becomes more pronounced as liquidity levels improve. The most significant negative impact of monetary policy on bank risk-taking occurs when bank liquidity reaches approximately 43%. Moreover, when banks maintain high levels of liquidity, the statutory deposit reserve ratio exerts a greater regulatory effect than other monetary policy tools. Contractionary monetary policy imposes noticeably weaker restraints than expansionary monetary policy, particularly in banks with higher liquidity levels. Moreover, the interplay between monetary policy and bank risk-taking is contingent upon not just the liquidity level of banks, but also their asset size and capital adequacy.

  • Research Article
    SHI Jianxun, YANG Luliuting
    Frontiers of Economics in China, 2023, 18(2): 268-287. https://doi.org/10.3868/s060-017-023-0012-6

    The Report to the 20th National Congress of the Communist Party of China (CPC) decides to “comprehensively promote the great rejuvenation of the Chinese nation through Chinese modernization” as a central task, listing nine essential requirements for Chinese modernization with the creation of a new form of human civilization as its goal. This paper analyzes the evolution of Chinese modernization led by the CPC and the pursuit of civilization, and reveals the inner connection and unity between Chinese modernization and the new form of human civilization. It is helpful to deeply understand the historical logic, realistic logic, and future logic of Chinese modernization, enabling better study and implementation of the spirit of the Report to the 20th National Congress of the CPC. Also, this paper boosts confidence in the path, theory, system, culture, and history of building a modern socialist country in an all-round way and promoting the great rejuvenation of the Chinese nation.

  • Research Article
    FANG Fuqian
    Frontiers of Economics in China, 2023, 18(3): 309-323. https://doi.org/10.3868/s060-017-023-0018-8

    In essence, understanding the relationship between supply-side structural reform and demand-side management requires grasping the interplay between supply and demand. Supply and demand are interdependent and interactive, and their equilibrium determines the equilibrium values of micro and macroeconomic variables. Focusing solely on either supply or demand, regardless of the time length, is one-sided. To promote supply-side structural reform, China should depend on demand and take a measured approach to its expansion. In the absence of demand, the supply-side structural reform would lose its direction and purpose. Enhancing demand-side management involves delving deeper into supply-side structural reform because the scale and growth of demand, alongside changes in demand structure, are fundamentally influenced by institutional factors. Hence, further reforming the systems and mechanisms that hinder the optimization of demand structure and the growth of demand is precisely what supply-side structural reform should entail.

  • Research Article
    ZHONG Ying
    Frontiers of Economics in China, 2023, 18(3): 391-424. https://doi.org/10.3868/s060-017-023-0022-3

    Comprehensively implementing supply-side structural reform is a major adjustment of ideas and focus of China’s economic development, made by the Communist Party of China (CPC) Central Committee on the basis of a comprehensive analysis of the world’s long-term economic cycle and the new normal of China’s economic development. As a major innovation to adapt to and lead the new normal of economic development, it has become a strategic deployment that concerns the overall long-term development of China’s economy and society. Before the 19th CPC National Congress, the main tasks of supply-side structural reform were cutting overcapacity, destocking, deleveraging, reducing corporate costs and shoring up weak links. After the 19th CPC National Congress, while continuing to do the tasks, the CPC Central Committee stuck to the main direction of improving the quality of the supply system, enriching the connotation of deepening supply-side structural reform. Since 2016, China’s supply-side structural reform has achieved remarkable results, and has been widely recognized and positively evaluated both internationally and domestically. The reform provides not only a solid foundation and valuable experience for China’s subsequent reforms, but also a useful reference for developing countries.

  • Research Article
    FANG Yi, JING Zhongbo
    Frontiers of Economics in China, 2023, 18(2): 198-243. https://doi.org/10.3868/s060-017-023-0010-2

    By incorporating both the fire sales contagion mechanism and the bankruptcy contagion mechanism into a bank network model, this paper examines how risks are generated under dynamic shocks. In particular, this paper constructs systemic risk indicators suitable for analyzing multiple rounds of contagion under different shocks (time dimension) and from institutions and assets (spatial dimension). Indicators that measure the indirect relevance between institutions and between assets are also innovatively built. It is found that due to deleveraging or bankruptcy among a large number of banks, the systemic risk exhibits an upward trend marked by intermittent jumps under varying intensities of shocks. Risks are generated mainly through the fire sales contagion mechanism of deleveraging under small shocks, and through the bankruptcy contagion mechanism under large shocks. In terms of influencing factors, a stronger indirect relevance, a lower leverage skewness and a higher leverage level in the banking system lead to higher risks. In particular, the influence of leverage skewness on systemic risk is stronger than that of leverage level.

  • Research Article
    SONG Pei, LI Lin, BAI Xuejie
    Frontiers of Economics in China, 2023, 18(4): 467-503. https://doi.org/10.3868/s060-017-023-0028-5

    Industry interaction is becoming an important approach to promoting high-quality economic development. In this paper, the multi-sector general equilibrium model is developed to clarify the theoretical mechanism among industry interaction, structure transformation, and high-quality economic development; the empirical tests are carried out based on the provincial panel data from 2000 to 2017; and the empowerment paths for digital technologies are explored to drive high-quality economic development. The findings are as follows. (1) The industry interaction can promote high-quality economic development in China on the whole, but it shows a significant imbalance and a healthy two-way promotion mode have not been formed. (2) The impact of industry interaction on high-quality economic development is significantly heterogeneous at the sector and regional levels. (3) The current unhealthy industry interaction may widen the productivity gap between manufacturing and service sectors, and transform China’s economic into service-oriented structure, thus leading the economic development to a vicious circle of “low efficiency to low-end servitization and further to lower efficiency,” and hindering the sustainability of high-quality economic development. (4) Digital technologies can break the development dilemma and achieve high-quality economic development by alleviating structural contradictions, boosting healthy industry interaction, and narrowing the productivity gap among sectors. The conclusions provide empirical evidence for the government to promote the integration of advanced manufacturing and modern service sectors and achieve high-quality economic development.

  • Research Article
    LIU Zhibiao
    Frontiers of Economics in China, 2023, 18(3): 324-335. https://doi.org/10.3868/s060-017-023-0019-5

    Beginning with increasing effective demand, the demand-side reform advocates for the strategy to expand domestic demand, rectifies distortions in the demand structure, and further aligns demand and supply by reforming the mechanisms for demand formation and regulation, matching supply and demand structures, and easing restrictions on demand. This will enhance economic growth potential and operational efficiency. The demand-side reform contributes to developing a super-large-scale market and optimize market functions to form a unified national market. It also helps address significant structural distortions within domestic circulation and move faster to form a new development pattern of dual circulation. As demand-side reform inevitably deals with the vested interests of stakeholders, it presents challenges on par with supply-side structural reform. Therefore, due attention must be given in terms of priority and weight by increasing operational and property household income, transforming government functions, rectifying any excessive market-oriented reforms in certain public service sectors, among others.

  • Bibliography
    LUO Jian et al.
    Frontiers of Economics in China, 2023, 18(3): 451-460. https://doi.org/10.3868/s060-017-023-0024-7

    Bibliography

  • Research Article
    ZHU Taihui, ZHANG Yutong
    Frontiers of Economics in China, 2023, 18(2): 244-267. https://doi.org/10.3868/s060-017-023-0011-9

    How small and medium-sized (SMS) rural banks, as the main banks offering rural financial services, serve all-round rural revitalization is a vital realistic and policy issue for the time being. Now, SMS rural banks are confronted with many shortcomings in serving rural revitalization due to dull financial service supply chain circulation and lack of coordination with the rural industry supply chain. The research based on survey data and typical cases shows that the key to solving these problems is to realize a double chain linkage of the financial service supply chain and the rural industry supply chain: The financial service supply chain and the rural industry supply chain should make use of their common infrastructure, share the digital technology capacity and data handling capacity and promote the linkage of customers, channels and scenarios in all links of the two supply chains in a bid to realize mutual promotion and improve the quality and efficiency of the two chains and hence fuel the all-round rural revitalization through industrial revitalization. Double chain linkage can be achieved through five major effective means: in terms of data, collaborating with digital rural governance and strengthening data collection and utilization; in terms of industry, collaborating with core entity enterprises and strengthening the supply chain financial service capacity; in terms of ecology, collaborating with internet technology companies and enhancing ecological, scenario and technological enabling; in terms of channels, collaborating with rural service and focusing on channel linkage, offline network, mobile services and village financial officers, etc.; and in terms of cooperation, constructing the common infrastructure of SMS rural banks and boosting the efficiency of digital enabling innovation.

  • Research Article
    YANG Tian, ZHU Huaxiong
    Frontiers of Economics in China, 2023, 18(3): 363-390. https://doi.org/10.3868/s060-017-023-0021-6

    In recent years, the changes in the external environment and domestic development conditions have promoted the transformation of China’s economy to one dominated by domestic circulation. In December 2020, the Communist Party of China Central Committee put forward the demand-side reform for the first time in order to prepare China for the new development stage of the 14th Five-Year Plan (2021–2025) and to promote the new strategic deployment of China’s high-quality development. Based on the paths and direction of the current 14th Five-Year Plan (2021–2015) to build a new development pattern, this paper elaborates on the theoretical connotations of the demand-side reform, points out the bottlenecks such as the unreasonable demand structure in China, the mismatch between the industrial system and the high-level demand, the resulting demand spillovers, the poor demand channels, and puts forward the current approaches to the demand-side reform in China.

  • Academic News
    Academic News
    Frontiers of Economics in China, 2023, 18(2): 303-303. https://doi.org/10.3868/s060-017-023-0015-7

    Academic News

  • Academic News
    Academic News
    Frontiers of Economics in China, 2023, 18(3): 461-462. https://doi.org/10.3868/s060-017-023-0025-4

    Academic News

  • Abstracts
    WANG Changhai et al.
    Frontiers of Economics in China, 2023, 18(3): 425-450. https://doi.org/10.3868/s060-017-023-0023-0

    Abstracts

  • Book Excerpt
    CHEN Zhiguo et al.
    Frontiers of Economics in China, 2023, 18(3): 463-465. https://doi.org/10.3868/s060-017-023-0026-1

    Book Excerpt

  • Book Discription
    CHEN Zhiguo et al.
    Frontiers of Economics in China, 2023, 18(3): 466-466. https://doi.org/10.3868/s060-017-023-0027-8

    Book Discription

  • Research Article
    GONG Liutang
    Frontiers of Economics in China, 2023, 18(4): 549-562. https://doi.org/10.3868/s060-017-023-0031-3

    Modernizing the industrial system is an integral and strategic priority within the broader scope of modernizing the economic system. It demands a focus on boosting China’s labor productivity and self-sufficiency rate of key technology products, with the aim to advance industrial upgrading and optimize the industrial structure. Hence, China must promote the strategy to expand domestic demand and accelerate the creation of a new development pattern from the supply side, coordinate economic development across regions, establish a national unified market, and create a more open industrial system. Specifically, China should increase funding in scientific research and experimental development, enhance the innovation capacity of core technologies in key fields, optimize the digital economy structure, strengthen the modern service industry, raise the labor productivity of the service industry, maximize the market’s decisive role and the government’s function in resource allocation, and build a talent system tailored to the modern industrial system.

  • Research Article
    PAN Min, ZHANG Xinping
    Frontiers of Economics in China, 2023, 18(3): 336-362. https://doi.org/10.3868/s060-017-023-0020-9

    By constructing a New Keynesian dynamic stochastic general equilibrium (DSGE) model that embeds structural fiscal policy and contains two types of households, labor intermediaries, manufacturers, the central bank, and fiscal departments, and based on China’s macroeconomic controls that combine proactive fiscal policy with prudent monetary policy in the context of supply-side structural reform, this paper compares and analyzes the macroeconomic effects of the various types of proactive fiscal policy instruments, and measures the impact of the choice of anchors for monetary policy on the long-term welfare loss caused by the various fiscal policy instruments. This study finds that the consumption-oriented fiscal expenditure increase and labor income tax reduction policies have the most significant macroeconomic stimulus effects in the short term, but attention should be paid to the disadvantage that they may lead to the rise of government debt risks; and in the long term, the role of production-oriented fiscal expenditure policies in guaranteeing the stable operations of China’s economy should be brought into play. In addition, once the implementation of proactive fiscal policy lasts for too long, their long-term effects may be weakened, with negative macroeconomic impacts. In order to mitigate the resulting long-term economic fluctuations and welfare loss, prudent monetary policy should be fine-tuned with price stability as the anchor.

  • Book Excerpt
    LAN Rong
    Frontiers of Economics in China, 2023, 18(2): 304-307. https://doi.org/10.3868/s060-017-023-0016-4

    Book Excerpt

  • Abstracts
    YANG Zihui
    Frontiers of Economics in China, 2023, 18(2): 288-300. https://doi.org/10.3868/s060-017-023-0013-3

    Abstracts

  • Bibliography
    WANG Jiahua
    Frontiers of Economics in China, 2023, 18(2): 301-302. https://doi.org/10.3868/s060-017-023-0014-0

    Bibliography

  • Book Description
    LAN Rong
    Frontiers of Economics in China, 2023, 18(2): 0-0. https://doi.org/10.3868/s060-017-023-0017-1

    Book Description

  • Research Article
    YANG Weizhong, YU Jian, LI Kang
    Frontiers of Economics in China, 2023, 18(4): 504-530. https://doi.org/10.3868/s060-017-023-0029-2

    Along with the changes in China’s development stage and internal and external conditions, sci-tech innovation has become the core driving force for China’s high-quality economic development in the new era. From the perspective of finance-driven technological progress, this paper constructs an endogenous growth DSGE model to analyze the relationship between financial resource allocation, technological progress, and economic growth. This study proves the counter-cyclicality of technological innovation in China, and finds that the allocation of financial resources between enterprises’ productive investment and innovation investment can affect economic growth by changing the scale of factor inputs and technological progress rate, and that there is a see-saw relationship between these two effects, with the latter dominant. On that basis, this paper explains the dynamic transmission mechanism among finance, technology and economy. During the economic expansion period, enterprises expand their production scale, financial resources provide more support to productive investment, with less support to innovation investment, thus the technological progress rate goes down; and during the economic contraction period, enterprises reduce their production scale, financial resources cut support to productive investment and turn to innovation investment, so technological progress rate goes up. The implications of this study on policy are as follows: when faced with new contradictions and challenges in the current development stage, China should get a grip on the new development pattern, seize new opportunities, further deepen financial reforms, optimize the financial resource allocation mechanism, encourage innovation investment, and give full play to the role of equity markets in supporting corporate R&D and innovation. Meanwhile, coupling with prudent and moderate macro-control policies, China should provide a positive macro-environment for corporate innovation, stimulate corporate on innovation demand, promote technological progress, and boost high-quality economic development.

  • Research Article
    ZHANG Peili
    Frontiers of Economics in China, 2023, 18(4): 531-548. https://doi.org/10.3868/s060-017-023-0030-6

    The fifth plenary session of the 19th Central Committee of the Communist Party of China (CPC) puts forward the organic combination of the implementation of the domestic demand expansion strategy with the deepening of supply-side structural reform, and scientifically reveals the internal logic of this organic combination and the realization paths, which is of great significance to the implementation of the new development concept and the construction of a new development pattern. First, this paper provides a theoretical explanation for the organic combination of the domestic demand expansion strategy with the supply-side structural reform by analyzing why the traditional policies for expanding domestic demand are ineffective in the new development stage of China. Second, this paper elaborates the internal logic of this organic combination from two aspects. (1) The base point of the domestic demand expansion strategy must be placed under the main line of the supply-side structural reform. (2) The two should be interconnected and are mutually reinforcing, so as to form a higher level of dynamic equilibrium in which the demand leads the supply and the supply creates the demand. Third, this paper analyzes the huge space for the organic combination of the domestic demand expansion strategy with the supply-side structural reform from the perspective of releasing consumption potential and creating new demand, and on that basis proposes the realization paths of their organic combination.

  • Research Article
    CHEN Yanbin
    Frontiers of Economics in China, 2023, 18(4): 563-574. https://doi.org/10.3868/s060-017-023-0032-0

    As an important strategic direction of China’s 14th Five-Year Plan, strengthening demand-side management aims to build an effective system to boost domestic demand, establish a complete demand system, and develop a robust domestic market, thereby promoting the realization of the growth goals by 2035 and the second centenary goal by the mid-21st century. Different from traditional aggregate demand management, demand-side management introduces a host of new attributes pertaining to its regulatory scope, regulatory goal, regulatory strategy, regulatory target, and regulatory instrument. Demand-side management does not seek to replace aggregate demand management; rather, both assume pivotal roles in macro-control and their coordination are of utmost importance. In real scenarios, demand-side management should synergize with supply-side structural reform, which is helpful to foster a new development pattern with domestic circulation as the mainstay and domestic and international circulations reinforcing each other. To effectively implement demand-side management, it is imperative not to replicate the approach used in aggregate demand management. Only by further innovating and improving the macro-control system with Chinese characteristics and coordinating the stability policy, growth policy and structural policy can the demand-side management be truly implemented under the new framework of “Macro-policy Trinity.”

  • Bibliography
    Bibliography
    Frontiers of Economics in China, 2023, 18(4): 594-596. https://doi.org/10.3868/s060-017-023-0034-4

    Bibliography

  • Book description
    SONG Donglin et al.
    Frontiers of Economics in China, 2023, 18(4): 604-604. https://doi.org/10.3868/s060-017-023-0037-5

    Book description

  • Academic News
    Academic News
    Frontiers of Economics in China, 2023, 18(4): 597-597. https://doi.org/10.3868/s060-017-023-0035-1

    Academic News

  • Abstracts
    DONG Feng et al.
    Frontiers of Economics in China, 2023, 18(4): 575-593. https://doi.org/10.3868/s060-017-023-0033-7

    Abstracts

  • Book Excerpt
    SONG Donglin et al.
    Frontiers of Economics in China, 2023, 18(4): 598-601. https://doi.org/10.3868/s060-017-023-0036-8

    Book Excerpt