Efficient Market Hypothesis and Economic Reforms in China

The main purpose of this work is to assess whether the Chinese market efficiency has changed over the years. The first chapter will provide a brief overview of the Chinese political and economic history, with a focus on the development of exchange markets. It is essential to understand the history and the crucial steps in the evolution of Chinese political thought and socio-economic reforms to fully grasp the reasons for its ability to replace well-known old-world superpowers. The analysis of available literature, presented in chapter two, explores several topics such as market efficiency, the relations between Asiatic markets, and the impact of regulatory changes. More specifically, the literature review will focus on the most relevant journal articles related to Chinese market efficiency because market efficiency is the prompt for economic expansion. A careful reading of the sampled articles will allow an assessment of the EMT theory by Eugene Fama (1970), when used to understand the market reaction to information. The hypothesis of market efficiency is closely related to market players’ rational behaviour, as all players are subject to the information they receive. An efficient financial structure attracts investors from all over the world, but, if the market is not as predictable and stable as possible, there is a risk of discouraging investments. The third chapter will explore the macroeconomic data and China’s foreign relations, with a glance at evolving policies and strategies implemented towards foreign powers and investors, which have fostered its staggering economic growth. The economic, social, political changes and reforms, which have affected the entire Chinese apparatus, will be examined through an analysis of relevant literature. Tables with a summary of the method, goals and results of the studies reviewed in the chapter will come in handy. The aim of this work was to analyse some relevant literature to find evidence of the existence of a Chinese market weak form. This topic has been selected due to the Chinese great economic growth and its different political and economic structure. The literature review focuses on ten papers written from 1999 to 2019. Their research was complex because of the scarcity of relevant documents and the dissemination of unclear information. The major difficulty in finding accurate data was encountered at the beginning of this study, when the initial research question was to test the Efficient Market Theory. Because of insufficient scientific information and available documents to conduct this kind of analysis, academic journal articles, which stress the EMT, have been chosen in their place. All the scholarly works reviewed in this brief discussion draw the same conclusions: the Chinese market appears inefficient. When Fama’s hypothesis is applied, analysis results demonstrate that weak form efficiency holds in the Chinese market; therefore, the available information on past experience cannot be useful to predict future yields. The empirical results show that China is not influenced by seasons; in particular, it does not suffer from the January effect, which can help to predict future trends. This study has also revealed the problem of the scarcity of useful information for investment purposes, which can be easily overcome by making State and institutional transformation transparent. The results of the papers do not change during the years: in 1999 the inefficiency of Chinese market depended especially on the excessive volatility caused by the policy changes and the scarcity of information, and the same results were also obtained in 2019. This study also aimed at analysing the correlation between the policies implemented and the market. The Chinese “open attitude”, adopted in the last years, is pointing in the right direction. Fostering cooperation and cultural exchanges can help solve the problem of data transparency. This characteristic is essential to raise information efficiency, which is the base of EMT. The negative effect of continuous reforms for the Western countries is that Chinese policy-makers’ decisions strongly influence the market, and they make it unpredictable for us due to our lack of knowledge of Eastern philosophies, a condition which China is trying to fix by opening as many communication channels as possible with the West. Hence, the Belt and Road initiative is paramount to cooperation with Europe and to rise to global superpower status. China is trying to engage in this initiative a lot of European and Asian countries to increase its global influence and make its culture and history known. Italy has always wanted to cooperate with the Chinese government being an enthusiastic supporter of the Belt and Road Initiative. The linearity that the Chinese government was aiming at was halted by the Covid-19 global pandemic. It was the first time that the Chinese economy slowed down since 1992. However, this period did not stop the expansionist impulse in the market, which initially reacted negatively but then recovered, proving that operators continue to trust China’s promises. Between July and September 2020, the Chinese economy showed an increase compared to the same quarter of 2019. China was one of the first countries which had economic recovery, and it is expected to be the only G20 economy to grow in 2020. Cooperation, inclusion, and transparency should be the three key elements on which the reconstruction and economic and social resurgence of the (near) future should be based in order to make the market more efficient and to attract investors.

Demystifying the Belt and Road Initiative: China’s domestic and non-strategic policy?

Asian Journal of Comparative Politics ◽

10.1177/20578911211038876 ◽

2021 ◽

pp. 205789112110388

Author(s):

Yuan Jiang

Keyword(s):

Global Strategy ◽

Chinese Economy ◽

Chinese Government ◽

Xi Jinping ◽

One Belt One Road ◽

Belt And Road ◽

Strategic Policy ◽

The Difference ◽

The Belt and Road Initiative (BRI) is a central policy of the Chinese government. The initiative is directly associated with President Xi Jinping, who first put forward the BRI in Kazakhstan and Indonesia in 2013, initially as One Belt One Road. Different from repetitive literature that concludes the BRI as China's global strategy, this article makes a contribution to argue that the BRI is China's domestic and non-strategic policy. To justify this argument, this article analyses how the BRI has been embedded into aspects of Chinese domestic policy by revealing its nexuses with Chinese domestic economy, politics and ideology. To deepen the understanding of the BRI's connection with the Chinese economy, this article explores the link between the BRI and China's supply-side structural reform. Meanwhile, this research demystifies the BRI as a global strategy and the difference between joining and rejecting the BRI to prove the BRI's non-strategic essence. In the end, this article discusses the BRI's far-reaching geopolitical influence.

Belt and Road Initiative (BRI): New Forms of International and Cross-Industry Collaboration for Sustainable Growth and Development

Sustainability ◽

10.3390/su12010193 ◽

2019 ◽

Vol 12 (1) ◽

pp. 193 ◽

Cited By ~ 1

Author(s):

Anna Visvizi ◽

Miltiadis D. Lytras ◽

Peiquan Jin

Keyword(s):

International Business ◽

Public Procurement ◽

Chinese Economy ◽

Sustainable Growth ◽

Chinese Government ◽

Industry Collaboration ◽

Belt And Road ◽

Business To Business ◽

Building on the tradition, promises, and advances brought by the historical Silk Road, the Belt and Road Initiative (BRI), launched by the Chinese government in 2013, has a profound impact on international business and the established forms of international collaboration. Exploiting the advantages of liberalization of trade in goods, services, capital, and public procurement, BRI will benefit the Chinese economy. At the same time, it will prompt substantial changes in the field of international business, e.g., by means of fostering business to business (B2B) and peer to peer (P2P) collaboration. It will also influence patterns of Outward Foreign Direct Investment (OFDI). Geography plays a role in BRI; geopolitics is also in the cards. Given the profound implications BRI is likely to generate in the fields of businesses, economy, society, and politics, it is imperative to frame and streamline the discussion to identify the key mechanisms and causal relationships that it induces. This is precisely what this Special Issue sought to do.

RESEARCH ON CHINA MONGOLIA ECONOMIC AND TRADE COOPERATION

International Journal of Innovative Technologies in Economy ◽

10.31435/rsglobal_ijite/30092020/7157 ◽

2020 ◽

Author(s):

Mavidkhaan Baasandulam

Keyword(s):

Economic Growth ◽

Industrial Structure ◽

Mining Industry ◽

Chinese Economy ◽

Chinese Government ◽

Mutual Trust ◽

Main Research ◽

Belt And Road ◽

Since 1978, China's economy has opened to the world. Over the past 40 years, China’s capital stock has grown at an annual rate of 6.9%. China began to implement the “Going out” policy in 2002, mainly to promote its overseas investment activities. The Chinese government launched a rescue plan of 4 trillion yuan in 2008, hoping to shift from export led growth to promote the expansion of the internal market. In this paper, China imports to Mongolia have increased year by year, accounting for 33.5% of its imports in 2018. China has pledged to invest globally by 1.25 trillion USD in 2025, and has increased investment in Mongolian mineral deposits. When the Chinese economy was in the “New Normal”, it proposed the “Belt and Road” initiative. To strengthen the connection between the “Belt and Road” and the “Steppe Silk Road” initiative, 32 projects will be implement in Mongolia. After reform and opening up, China has made great achievements. But, the upgrading of industrial structure and technological progress are still slow, economic growth continues to slow down, the aging population is becoming more serious, and the production capacity is seriously surplus. From Mongolia, there are abundant natural resources, and the mining industry is driving economic growth. The economic growth rate is relatively fast, but the industrial structure is single, the evolution of the industrial technology system is stagnation, and the human resources are insufficient, resulting in excessive dependence on foreign trade. The economic situation depends on the neighboring countries, the inflation is serious, and the unemployment rate remains high. Therefore, under such circumstances, China and Mongolia should make good use of the geographical advantages of their neighbors, enhance mutual trust, strengthen economic trade cooperation, maintain the unity of their countries and maintain the strategic balance of international power and jointly create political mutual trust and economic cooperation. This paper takes China Mongolian cooperation as the main research line, and explores new ways for economic and trade cooperation to promote the upgrading of industrial structure and sustained economic growth of the two countries. In addition, as the main component of the “Belt and Road” initiative, Mongolia strengthens economic and trade cooperation with China and promotes the improvement of the level of cooperation between the two countries, and can also achieve long term common development.

We Should Push Countries along “Belt and Road Initiative” to Build Green Supply Chain

China and the World ◽

10.1142/s2591729318500062 ◽

2018 ◽

Vol 01 (01) ◽

pp. 1850006

Author(s):

Jingyan Fu

Keyword(s):

Supply Chain ◽

International Cooperation ◽

Green Supply Chain ◽

Chinese Government ◽

Ecological Benefits ◽

The People ◽

Belt And Road ◽

Building a green supply chain in the countries along the “Belt and Road Initiative” (BRI) route will not only generate huge economic and ecological benefits, it will also profit people in these countries and encourage the people in these countries to identify with the BRI as well as advance the development of this Initiative. Therefore, this research suggests the Chinese government taking the lead in jointly building a green supply chain with countries along BRI after the “Belt and Road Forum for International Cooperation” in July 2017.

The Effects of China’s “Belt and Road Initiative” and “31 Measures to Benefit Taiwan” on the Development of Taiwanese Enterprises

International Business Research ◽

10.5539/ibr.v11n12p53 ◽

2018 ◽

Vol 11 (12) ◽

pp. 53

Author(s):

Hsiung-Shen Jung ◽

Jui-Lung Chen

Keyword(s):

Rural Areas ◽

Urban Areas ◽

Labor Cost ◽

Chinese Government ◽

Rapid Economic Growth ◽

The People ◽

Belt And Road ◽

Reform And Opening Up ◽

The Belt And Road ◽

Opening Up

China has achieved rapid economic growth and become involved in the economic globalization through its policy of reform and opening-up and modernization. It has attracted much investment from lots of Taiwanese enterprises, including some small and medium-sized enterprises featuring a high labor cost and facing difficult operation in the traditional industries. Thanks to the policy, many Taiwanese enterprises have got a chance to rebirth by transforming their crises into opportunities. With the implementation of the policy of urbanization, the people from rural areas in China have been moving to urban areas, and the enterprises of the second and third industries have been concentrating in cities. This has not only fueled the livelihood-oriented consumption in China but also expanded the domestic demand market of the Taiwanese medium and large-sized livelihood enterprises in China. The Belt and Road trade foundation construction program, which aims to link Europe, Asia and Africa and was proposed in 2013, is an extension of the Great Development of Western Part of China and offers Taiwanese enterprises a chance to get fully involved in the development of the international market. The 31 Measures to Benefit Taiwan announced by the Chinese government in February 2018 has significant influence on the future development of the Taiwanese enterprises in China. Therefore, this paper will elaborate on the effects of the Belt and Road and the 31 Measures to Benefit Taiwan on the Taiwanese enterprises.

Sustainable Green Finance towards a Green Belt and Road

Asian Journal of International Law ◽

10.1017/s2044251321000370 ◽

2021 ◽

pp. 1-8

Author(s):

Allison GOH

Keyword(s):

Environmental Harm ◽

Chinese Government ◽

Negative Externalities ◽

Green Belt ◽

Green Finance ◽

Critical Issues ◽

Belt And Road ◽

Avoidance Measures ◽

Sustainability Standards ◽

Abstract At the second Belt and Road forum in 2019, the Chinese government set out its intentions to develop a “Green Belt and Road”. This paper will examine critical issues arising from green-financed projects under the Belt and Road. In particular, the root issue of the lack of harmonized sustainability standards for green bonds globally. While there are positive regulatory developments, there is still a big gap between companies’ reporting metrics and investors’ growing expectations of what constitutes “green”—constituting “green washing”. This issue compounds as green projects under the Belt and Road are often complex infrastructure projects, where unexpected (and negative) externalities may sometimes occur on the ground. In this regard, this paper advocates for robust risk management, where accurate forecasting of environmental harm and stakeholder engagement are implemented actively throughout the project's life cycle. Finally, adequate dispute resolution and avoidance measures should be adopted to protect stakeholders.

Repositioning China in the Global Education Hierarchy Through the Sino–Foreign Educational Partnerships in the Belt and Road Initiative

China and Europe on the New Silk Road ◽

10.1093/oso/9780198853022.003.0009 ◽

2020 ◽

pp. 162-179

Author(s):

Jie Gao

Keyword(s):

Global Education ◽

Educational Programs ◽

Chinese Government ◽

Educational Partnerships ◽

Ministry Of Education ◽

History Of ◽

Belt And Road ◽

Foreign Education ◽

Chapter 9 explores the roles of Sino–foreign education partnerships (SFEP) within China’s Belt and Road Initiative (BRI), in particular, how it has been shifted from a strategic tool to reform and upgrade China’s domestic higher education sector, to becoming a diplomatic instrument for building connections between China and the regions and countries along the BRI routes. The history of the development of SFEP reveals how policy and regulation have evolved. The shifting paradigm of the Chinese government, through its MOE (Ministry of Education), in regulating SFEP provides a window into the grand transformation of China’s narrative towards its position in the global education hierarchy. China is shifting from the follower/importer of “advanced foreign educational programs,” to a proactive player that builds a platform and framework for educational collaboration in the world. Now, China is becoming an initiator/exporter of its own educational programs and culture along the belt and road.

Economic Complexity Based Recommendation Enhance the Efficiency of the Belt and Road Initiative

Entropy ◽

10.3390/e20090718 ◽

2018 ◽

Vol 20 (9) ◽

pp. 718 ◽

Cited By ~ 2

Author(s):

Hao Liao ◽

Xiao-Min Huang ◽

Alexandre Vidmer ◽

Yi-Cheng Zhang ◽

Ming-Yang Zhou

Keyword(s):

Geographical Location ◽

Geographic Location ◽

Chinese Government ◽

Recommendation Algorithm ◽

Development Direction ◽

Belt And Road ◽

The Impact ◽

The Belt And Road ◽

The Ideal

The Belt and Road initiative (BRI) was announced in 2013 by the Chinese government. Its goal is to promote the cooperation between European and Asian countries, as well as enhancing the trust between members and unifying the market. Since its creation, more and more developing countries are joining the initiative. Based on the geographical location characteristics of the countries in this initiative, we propose an improvement of a popular recommendation algorithm that includes geographic location information. This recommendation algorithm is able to make suitable recommendations of products for countries in the BRI. Then, Fitness and Complexity metrics are used to evaluate the impact of the recommendation results and measure the country’s competitiveness. The aim of this work is to provide countries’ insights on the ideal development direction. By following the recommendations, the countries can quickly increase their international competitiveness.

China in Global Capital Markets

World Economy and International Relations ◽

10.20542/0131-2227-2021-65-8-81-89 ◽

2021 ◽

Vol 65 (8) ◽

pp. 81-89

Author(s):

M. Potapov ◽

N. Kotlyarov

Keyword(s):

Capital Markets ◽

Direct Investment ◽

The United States ◽

Chinese Economy ◽

Global Capital ◽

Cross Border ◽

Belt And Road ◽

The Belt And Road ◽

Portfolio Investments

The article is analyzing the positions of China in global capital markets, and the factors that determine them. It shows the trends and features of attracting foreign direct investment in China, exporting Chinese capital abroad, attracting portfolio investments to China. The investment aspects of the Chinese Belt and Road Initiative and the role of Hong Kong as an international financial center are also considered. The evolution of the currency market regulation in China and the dynamics of the Yuan exchange rate, as well as the internationalizing of the Chinese currency and its use in cross-border operations are also discussed. The authors believe that the prospects for strengthening China’s position in the global capital markets will be determined by a number of circumstances, including the dynamics of the world economy, the growth rate of the Chinese economy, and the consistent liberalization of conditions for cross-border capital movement in China. The maintaining of higher growth rates of the Chinese economy in the context of the global recession and the coronavirus pandemic, as well as the ongoing liberalization of the domestic capital markets, suggest that the Chinese economy will remain attractive for foreign investors. The export of Chinese direct investment abroad will be largely determined by the dynamics of the country’s foreign trade, national restrictions on the export of capital, the implementing the Belt and Road Initiative and the position of China’s leading economic partners, primarily the United States, towards Chinese investment. At the same time, increased geopolitical and country risks will affect the geographical structure of China’s investment abroad in the direction of enhancing cooperation with Asian countries and participants of the Belt and Road Project. In the context of aggravated relations with the United States, China will make efforts to reduce dependence on the US dollar in settlements. Further steps will also be taken to internationalize the Chinese national currency and to achieve an increase in the use of RMB in payments. The lifting of restrictions on cross-border portfolio investments in the PRC is predetermined by ensuring the domestic macroeconomic stability, strengthening the financial system, low inflation, affordable credit, a stable balance of payments, and sufficient foreign exchange reserves. China’s real entry into the world’s leaders, both in the global commodity and capital markets, requires the creation of its own technological base, the transition to a new energy-saving, environmental-friendly national economic structure based on knowledge and new technologies, balancing the development levels of the country’s regions, and increasing the average per capita income of people.

Sustainable Green Growth in Developing Economies

Journal of Global Information Management ◽

10.4018/jgim.20221101.oa1 ◽

2022 ◽

Vol 30 (6) ◽

pp. 1-15

Author(s):

Ruoyu He ◽

Tomas Baležentis ◽

Dalia Štreimikienė ◽

Zhiyang Shen

Keyword(s):

Total Factor Productivity ◽

Environmental Performance ◽

Developing Economies ◽

Chinese Government ◽

Factor Productivity ◽

Green Growth ◽

Average Growth ◽

Belt And Road ◽

Desirable And Undesirable Outputs ◽

The Belt and Road Initiative (BRI) initiated by Chinese government could be regarded as a systematic framework for promoting economic cooperation and development among the countries along the Belt and Road and China. This paper attempts to analyze economic and environmental performance in 61 developing countries along Belt and Road. An additive total factor productivity growth measure allows aggregating contributions of individual countries along the BRI to construct a reasonable measure. Both desirable and undesirable outputs are considered. The growth in the total factor productivity is decomposed with respect to the economic and environmental contributions. The annual average growth rate of green productivity is 3.1% and the disparity of economic and environmental performance could be observed among countries. Some countries show robust economic growths while environmental performance slows down green growth. This indicates that developing economies should pay attention to environmental impacts and promote sustainable development by sharing emission reduction technologies.