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AbstractChina adopted a new model of growth from 2011, requiring substantial structural change. This introductory article presents statistical evidence on progress so far. Change generally is in the required direction, but slow. There has been early but slow progress on re‐orienting domestic demand towards consumption; substantial re‐orientation from reliance on exports towards domestic demand; and rapid change at the margin in the energy mix towards low‐emissions sources. Investment in human capital is proceeding rapidly along lines required by the new model. So far, productivity growth has been slow, raising questions about future progress.

ABSTRACTThis study investigates the effects of foreign direct investment (FDI) on emissions of five pollutants in China using a panel data set of 29 provinces over the period 1992–2004. The study applies a simultaneous equations estimation technique to estimate the scale, technique and composition effects of FDI on China's overall and regional pollution emissions. The estimation results show that FDI in general helps reduce pollution emissions in China, contributing largely to its technique effect. Capturing both the direct and indirect technique effects improves the accuracy in assessing the environmental impact of the FDI. The study also finds that the environmental impacts of FDI vary significantly among different regions and for different pollutants in China.

Based on an enterprise survey conducted in 11 cities in 2002, this paper reviews the trends of privatization in China, discusses the forms of gaizhi (restructuring), analyzes the issues emerging in the process of gaizhi, especially the handling of state assets and land-use rights and re-employment, and compares the performance of firms before and after gaizhi. The study found that restructuring has become more oriented towards privatization over recent years. The so-called "loss of state assets" has occurred mainly in the form of price discounts when selling state assets. Restructured or gaizhi firms did sack more workers in the year the gaizhi took place, but subsequently they maintained a slower rate of employment reduction than pure SOEs. Gaizhi, especially restructuring with privatization, has hardened firms' budget constraint with banks, but has not been effective in hardening firms' budget constraint with the government. Gaizhi and privatization have significantly improved firms' profitability, but have not raised investment rates or labor productivity. (China J/DÜI)

The world and China's place in it have been transformed over the past year. The pressures for change have come from the most severe global financial crisis ever. The crisis has accelerated China's emergence as a great power. But China and its global partners have yet to think or work through the consequences of its new position for the governance of world affairs. China's New Place in a World in Crisis discusses and provides in-depth analysis of the following questions. How have China's growth prospects been affected by the global crisis? How will the crisis and China's response to it impact China's major domestic issues, such as industrialisation, urbanisation and the reform of the state-owned sector of the economy? How will the crisis and the international community's response to it affect the rapidly emerging new international order? What will be China's, and other major developing countries', new role? Can China and the world find a way of breaking the nexus between economic growth and environmental sustainability — especially on the issue of climate change?

China's efforts in searching for new sources of growth are increasingly pressing given the persistence of the growth slowdown in recent years. This year's book elucidates key present macroeconomic challenges facing China's economy in 2017, and the impacts and readiness of human capital, innovation and technological change in affecting the development of China's economy. The book explores the development of human capital as the foundations of China's push into more advanced growth frontiers. It also explores the progress of productivity improvement in becoming the primary mechanism by which China can sustain economic growth, and explains the importance of China's human capital investments to success on this front. The book demonstrates that technical change is a major contributor to productivity growth; and that invention and innovation are increasingly driving technical change but so far lumpily across regions, sectors and invention motivations. Included are chapters providing an update on reform and macroeconomic development, educational inequality, the role of intangibles in determining China's economic growth, and China's progress in transitioning towards being an innovative country. The book also covers the regional dimension of innovation and technological progress by sector: in agricultural productivity, renewable energy and financial markets. Chapters on trade, investment, regional cooperation and foreign aid explore further the mechanisms through which technological change and innovative activities are emerging locally and internationally.

China's change to a new model of growth, now called the 'new normal', was always going to be hard. Events over the past year show how hard it is. The attempts to moderate the extremes of high investment and low consumption, the correction of overcapacity in the heavy industries that were the mainstays of the old model of growth, the hauling in of the immense debt hangover from the fiscal and monetary expansion that pulled China out of the Great Crash of 2008 would all have been hard at any time. They are harder when changes in economic policy and structure coincide with stagnation in global trade and rising protectionist sentiment in developed countries, extraordinarily rapid demographic change and recognition of the urgency of easing the environmental damage from the old model. China's economy has slowed and there are worries that the authorities will not be able to contain the slowdown within preferred limits. This year's Update explores the challenge of the slowdown in growth and the change in economic structure. Leading experts on China's economy and environment review change within China's new model of growth, and its interaction with ageing, environmental pressure, new patterns of urbanisation, and debt problems at different levels of government. It illuminates some new developments in China's economy, including the transformational potential of internet banking, and the dynamics of financial market instability. China's economic development since 1978 is full of exciting change, and this year's China Update is again the way to know it as it is happening