Rapid Growth Accompanied by High Inflation, Institutional Distortion Superimposed with Dull Policies

The Unirule Institute of Economics announced the release of the Macroeconomic Analysis Report for the 2nd Quarter of the year at a conference held on July 19th, 2011. Prof. Zhuang Shuguang introduced the report.

According to the report, China's GDP rose by 9.6% and its CPI increased 5.4% year-on-year in the first half of 2011. China's CPI was up 6.4% over the same period last year. In general, China's economic situation shows a trend of rapid growth and high inflation. Judging from current conditions, inflation is very likely to become a long-term trend. China's monetary policy has fallen into a passive position and its fiscal policy also failed to exert its due functions, which can be exemplified by the revision of the Individual Income Tax Law, the debt risk of local governments, and the unsuccessful disclosure of so-called "three public consumptions." Due to the long-term interaction and superimposition of institutional distortion and dull policies with economic operation and structural changes, China's economy has fallen into a trap of imbalance.

Zhang Shuguang
Head of Academic Committee, Unirule Institute of Economics

Highlights

China Should Coordinate the Gradual Fall of the U.S.
By Prof. Sheng Hong

When a giant is about to fall, you should give him certain support to help him to fall down slowly instead of his falling down rapidly, or you would be the one who suffers. That's why I said "China should coordinate the gradual decline of the U.S." instead of allowing her to collapse all at once.

Sohu Business: After S&P downgraded the credit rating of U.S. treasury bonds, the more than $1 trillion U.S. treasury bonds held by China became the prime concern of our people. Will the U.S.-Teasury-Bond Crisis affect the security of China's foreign exchange reserve?

Sheng Hong: Surely it will, but not seriously. The effects would be in the form of so-called "assets depreciation." Through raising the debt ceiling, the U.S. actually meant to fulfill its obligation of paying debts in the manner of "rolling over old debts with new borrowing," which was in fact an act of bankruptcy from a business perspective. It's only because the U.S. is a special country that it can use this manner. In reality, the credit of U.S. treasury bonds has already been seriously damaged.

For more details:
http://english.unirule.org.cn/Html/UniruleIdeas/20110910140335836.html

Current Events

The Unirule Summer Camp 2011

The Unirule Institute of Economics held the Unirule Summer Camp 2011 in Yunnan Province from 20th to 25th August 2011. Nearly fifty people participated in the event. Among the participants were university students, young professionals working in the investment field, and other young individuals greatly interested in economics and Unirule and eager to have face-to-face communication with experts from the Unirule.

The Forum on the Unirule Study Tour-Dialogues with Economists was held in Kunming Tailong Hongrui Hotel on the first day of the summer camp. On the forum, Prof. Mao Yushi delivered a lecture entitled "How to Understand Resource Allocation by Market & Production and Distribution of Wealth?;" Prof. Sheng Hong gave a lecture entitled "To Be a Gentleman;" Prof. Ma Yong, Vice Director of the Institute of Economics, Yunnan Academy of Social Sciences, gave a lecture entitled "ASEAN Free Trade Area and the Strategic Positioning of Regional Development of Yunnan Province." Mr. Zhao Xu, Mr. Zhao Nong, and Mr. Gao Yan delivered keynote lectures during the summer camp.

For more details:
http://english.unirule.org.cn/Html/Unirule-News/2011091014112171.html

News Release of 2010 Report on Public Governance in China's Provincial Capital Cities

"2010 Report on Public Governance in China's Provincial Capital Cities" news release conference was held by the Unirule Institution of Economics in Beijing in the afternoon of July 31, 2011. Dr. Feng Xingyuan, Vice President of Unirule chaired the conference. Professor Mao Yushi, Chairman of Unirule Institution of Economics, and Dr. Wu Yin, Vice President of Horizon Research Consultancy Group, attended and addressed the conference. Then, Professor Zhou Yean from Renmin University of China, and Song Houze from Unirule Institution of Economic Research introduced the theoretical framework and research findings of this project.

"2010 Report on Public Governance in China's Provincial Capital Cities" summarizes all the research findings of the study of Public Governance by the Unirule Institute of Economics. This research is entirely based on first-handed data, which came from the household surveys jointly conducted by Unirule Institute of Economics and Horizon Research Consultancy Group in 2007, 2008 and 2010. The sample size of 2010 survey is 6,449.

For more details:
http://english.unirule.org.cn/Html/Unirule-News/20110803205551702.html

Seminar on Local Governance and State Transformation

The Unirule Institute of Economics held the Seminar on Local Governance and State Transformation in Beijing Fragrant Hill Hotel on July 30th, 2011. Several scholars and political observers were invited to discuss and make a rational analysis of the meaning, significance and prospect of Guangdong Model and Chongqing Model so as to explore a feasible path for China's state transformation. Prof. Mao Yushi, President of the Unirule, and Qiu Feng, Vice Chairman of the Academic Committee of the Unirule, moderated the seminar. Prof. Yangfan from China University of Political Science and Law and Prof. Xiao Bin from Sun Yat-Sen University gave thorough analysis and description of the current situation and reform framework of Guangdong and Chongqing respectively. Then Qiu Feng, Zhang Shuguang, Gao Quanxi, Xu Dianqing, Cai Xia and Wang Zhanyang made comments on the reform spirit and actions of the two regions. Shi Xiaoming, Zhang Musheng, Xiao Shu also expressed their opinions on relevant issues.

News

Zhao Xu Attended the Seminar on "Change Management"
Zhao Xu, director of International Cooperation Department of the Unirule, attended the seminar "Change Management" held by International Academy of Leadership, from July 9-17 in Germany.

Current Researches/Consultings

Research on Water Affairs Business Development Strategy for Shanxi International Electricity Group Co., Ltd.
As the only wholly-owned power industry group set up by Shanxi Provincial Government, Shanxi International Electricity Group Co., Ltd has strong comprehensive strength in funds, investment, and project operation and management. In order to expand its investment fields, the group has decided to seize the opportunity to enter the water market and has planned for long-term cooperation with the Shanxi provincial water resources department. However, due to its long history in the power industry, the group is lacking in deep understanding of the water industry. In addition, the water industry requires enormous prophase financing and sunk capital, and is weak in short-term return ability though it has consistent long-term returns. This lack of understanding makes it hard for the group to make long-term goals with regards to the water industry.

This research will conduct analysis and offer suggestions on the following issues:
1)The water affairs market prospects for the country and Shanxi province;
2)Feasibility of Shanxi International Electricity Group Co., Ltd entering the water affairs industry;
3) Development strategy for the water affairs business of Shanxi International Electricity Group Co., Ltd.

Research on China's Strategy of Breaking Administrative Monopoly
State-owned enterprises have been severely criticized in recent years for their tendency to gradually expand in an existing field rather than to retreat. State-owned enterprises not only solidly occupy the non-competitive fields, but also continue to exist in the field of private goods. China's state-owned enterprise reform has now reached a new turning point after thirty years. More importantly, the problem of administrative monopoly is rather severe in China and requires urgent reform. Until this problem is fixed, there can be no fair competition between state-owned enterprises and the private sector. Unfortunately, China's administrative monopoly reform still has a long way to go.

This research aims to provide a feasible plan for administrative monopoly reform and to help create a fair market environment with deepening economic reform. This research will last for roughly half a year.

Research on the Property Market in China
The Center for International Private Enterprise (CIPE) and the Unirule Institute of Economics will work together to evaluate barriers faced by small enterprises in China's property market. Unirule, with support from a WCC consultant, will gather information on the legal and regulatory barriers to strengthening property rights for small businesses in order to measure the implementation gap - the difference between regulations on paper and their implementation - and develop an advocacy platform to strengthen relevant institutions.

The goal of this project is to identify legal and implementation gaps regarding property markets as relevant to small enterprises, formulate reform recommendations, and develop advocacy plans.

Public Governance
Unirule's "China Public Governance Observation Research Project" was launched in March 2009, aiming at recording and assessing public governance status in different areas of China through the perspective of news reporting. The research team held a Public Governance Index Press Conference at the Beijing Friendship Hotel on April 30, 2009, to promote the rankings of its public governance index (PGI). The press conference generated extensive media coverage, including the at Sina, Phoenix Weekly, China News, Cajing economic newspaper, etc. The initial research achievement "China's Governance in Media Recording" was released in 2010.

The Nature, Performance and Reform of State-owned Enterprises: Research on Reform of State-owned Enterprises Under the "Guo Jin Min Tui" Background
The phenomenon of "Guo Jin Min Tui" (the expansion of state-owned enterprises at the expense of the private sector) has become a topic of wide debate recently, especially with in the steel and coal sectors. This phenomenon has sparked a heated debate in academic circles and throughout society. The purpose of this research is to clarify the normative nature of state-owned enterprises; secondly, to give a description of the performance of current state-owned enterprises through data and case studies, and to judge their impact on society and government. Finally, this research will offer suggestions on ways to reform existing state-owned enterprises. This research project was completed in March 2011, and the press release conference and academic seminar was successfully held in Beijing Jade Palace Hotel on Mar. 2nd, 2011.
Revised Research Report

Upcoming Events

Education Reform Forum 2011
Since the promulgation of the Law of the People's Republic of China on the Promotion of Privately-run Education in 2002, investment and financing in China's privately-run education field has gradually increased. At present, privately-run education is just beginning in China, and the capital market plays a vital role in promoting economic development. How to understand correctly and make good use of the capital market will become a crucial problem for privately-run education as will how to promote the healthy and sustainable development of privately-run education with the capital market as the base. Through the Education Reform Forum 2011, we hope to help the investment bodies to have a clearer understanding of the prospect of the future of privately-run education and to promote standardized management in terms of finance, legal affairs, operational mechanisms and business procedures in privately-run educational organizations.
Topics
A. Introduce the present situation of privately-run education financing;
B. Introduce effective channels for privately-run education financing;
C. Discuss what sort of supervision role the government should play in privately-run education;
D. Introduce certain cases of and share the experiences of listed privately-run educational organizations;
E. Discuss how to standardize the structure of internal management and the school-running pattern of privately-run educational organizations.
Time and Venue
Time: October, 2011
Venue: Huangyuan Hotel, Beijing
Contact Information:
Contact Person: Yang Hua
Tel: 010-82571544-8000
E-mail: yanghua@unirule.org.cn

Unirule Biweekly Symposiums
Unirule’s Biweekly Symposiums are known in China and throughout the world for their long history of open and in-depth discussions and exchanges of ideas in economics and other social sciences. Over 380 sessions have been held and over 15,000 scholars, policy makers, and students, as well as countless readers on the web, have directly and indirectly, and participated in the Biweekly Symposium for close to 20 years.

Biweekly Symposiums begin at 2 pm every other Friday and are free and open to the public.

Schedule
Biweekly Symposium No. 438: Sep. 16th, 2011
Biweekly Symposium No. 439: Oct. 14th, 2011
Biweekly Symposium No. 440: Oct. 28th, 2011

Previous Biweekly Symposiums

Biweekly Symposium No. 435
Time: Aug. 5th, 2011
Topic: An Outline of Confucian Constitutionalism
Lecturer: Prof. Kang Xiaoguang

According to Prof. Kang Xiaoguang, certain defects exist in the theory of People's Sovereignty. Firstly, this theory severed the historical continuity of time. Secondly, without historical and cultural foundations, this core concept can not enter the state theory. Therefore, he proposed the replacement of the theory of People's Sovereignty with the theory of National Sovereignty. As the concept of nationality takes the historical and cultural dimensions into account, the state will can be reflected in terms of time, and history and culture can be included in the state theory. Finally, Prof. Kang put forward his political philosophy which has the Confucian traditions as the body and democratic constitution as the implementation instrument.

Biweekly Symposium No. 433
Time: July 18th, 2011
Topic: Marginalized People's Problem Consciousness and the Demand for Political Universality-A Case Study of Joseph de Maistre's Conservatism
Lecturer: Prof. Shi Zhan

In his lecture, Prof. Shi Zhan firstly introduced the life story of Maistre. Then Prof. Shi analyzed the influence of Maistre's identity as a marginalized person on his ideas. Finally, he summarized the marginalized people and the central people's orientation and assertions in terms of political geography and political psychology.

Editor: Jiang Hong
Revisor: Jude Blanchette