Slowing growth is inevitable; China should prepare for the coming reform

The Unirule Institute of Economics released its Macroeconomic Analysis Report for the 2nd Quarter of 2012 at a conference held on July. 20th, 2012. Prof. Zhuang Shuguang introduced the report. He analyzed China’s current macro-economy in detail, especially the macroeconomic conditions and its trends in the 2nd Quarter of 2012. Prof. Zhang also introduced and criticized the government's economic policies. He estimated that the decline of potential economic growth stems from the current bad economic situation and China's system and economic structure, which caused some reduction in corporate profits.

According to the report, it is still normal that China's GDP growth slows to 7.8% and closes to the government's target line . The steady growth strategy has become the main objective of macro-economic readjustment policy . In fact, monetary policy has been loosened from the beginning of this year. In addition, major progress has been achieved in adjusting the Asymmetric Interest Rate and widening the bands. However, the effects of monetary policy tool are not obvious. There are still some prominent issues and deep-rooted problems affecting economic performance, which cannot be solved through the policy adjustment. This means that we must quicken the pace of economic structural adjustment and system reform.

Zhang Shuguang
Head of Academic Committee, Unirule Institute of Economics

Highlights

Some inferences from Beijing officials’ speech about the rainstorm on July 21st.
By Prof. Sheng Hong

The officials from the Beijing Meteorological Bureau said they had predicted on July 19th that a rainstorm would emerge on July 21st in Beijing. The officials from the Beijing Flood Control and Drought Relief Headquarters claimed that the standards of Beijing’s drainage facilities were only built for a storm once every three years. So it can lead to a simple corollary that there must be large floodwater in the sinking sections of urban roads and low-lying sections of highways after the rainstorm. This deduction should be anticipated by the Beijing government. But unfortunately, four people drowned under the Guangqumen Bridge and on Beijing to Hong Kong and Macao high-speed road.

Mr. Niu Youcheng, CPC Beijing Municipal Committee, asserted that the rainstorm was forecasted accurately, and that proper precautions had been taken. The question now is: if Mr. Niu’s assertion of “in place”, it means that the government is under no obligation to Stop cars into the danger area by traffic police officers., immediately salvage as soon as an accident happens, there should not had been four dead people in contrary ways. So either the Beijing Government believed that it is not obliged to take such actions, or it did not rule out suchobligations .

Sheng Hong
Director, Unirule Institute of Economics

Current Events

The Forum on Breaking Administrative Monopoly—China’s Strategy of Breaking Administrative Monopoly Research Report Release Conference

Unirule held the Forum on Breaking Administrative Monopoly-- China's Strategy of Breaking Administrative Monopoly Research Report Release Conference from 9:00 a.m. to 4:00 p.m. on July 4th, 2012 in Beijing Jade Palace Hotel. This project had lasted 14 months. Sheng Hong acted as the leader of the research team, and Zhao Nong was the executive leader of the research team. Other members of the research group included Qian Pu, Yang Junfeng, Yang Xiaojing, and Zhao Xing. Many famous scholars attended the conference, including Prof. Jiang Ping, Prof. Liu Xiaoxuan, Prof. Yang Fan, Prof. Chen Yongjie and Prof. Mao Xiaofei. Yan Yun, a well-known lawyer, also joined the meeting. There were scores of reporters and other audience attending the meeting. The conference was moderated by Prof. Gao Yan and Prof. Zhao Nong.

this subject, he emphasized the results of the research, including the causes, distribution of the administrative monopoly formation, the influence on the efficiency and distribution of the national economy of monopoly and the harm to social justice. On the basis of these facts, the report put forward the strategies for breaking administrative monopoly, according to the reality of modern China. Experts attending the forum gave high regards to the results of the research. During the conference, Prof. Jiang Ping said that administrative monopoly had been set a clear demarcation in relevant laws, and its concept should be further regulated. Mr Chen Yongjie pointed out that the boundary and extent of administrative monopoly in China had been constantly expanded and strengthened from top to bottom. He gave the explanations at different levels, including laws, regulations, department of rules and regulations and enterprise behavior, and offered relevant measures to terminate it from bottom to top. Prof.Mao Xiaofei aimed at the seventh article of ”Anti-monopoly Law” and laid out her views on administrative monopoly in her speech. Yan Jun, the lawyer of Jun ZeJun Law Offices, gave a speech on administrative monopoly and the implementation of the Anti-monopoly Act. After finishing their speeches, experts also spoke with the audience and reporters.

The Unirule Summer Camp 2012

The Unirule Institute of Economics held the Unirule Summer Camp 2012 in Chengdu from 15th to 21st July 2012. Nearly forty 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 Unirule.

The Forum on the Unirule Study Tour ——“Development of Chengdu – Dialogues with Economists” and “The Financial Development of Chengdu Forum” were held in Jinzhuan Hall, on the first two days of the summer camp. During the forum, Prof. Mao Yushi delivered a wonderful lecture entitled “Seek Freedom and Escape from Poverty ” in the morning of July 16th . After the speech, he answered some questions about “Is a democratic and free-market the most optimal market?”, “What is the future of the democracy and the rule of law in China?”, “Influences of high house prices to nowadays economic progress”, “Problems of private-sector lending” and “Whether the China’s economy is growing from Keynesian to liberal-market approach or not?”. Mr.Tang Jiqiang, Director of Chengdu National Hi-tech Development Planning Bureau, had also made a speech entitled “Enterprise trapezoid financing mode”. Prof. Sheng Hong addressed the topic of Confucianism in Dujiangyan to all the students. Mr. Yao Zhongqiu, President of Unirule, spoke on “The Wit of Confucianism” Prof. Zhao Nong, gave a lecture entitled “The pattern of economic growth and Chinese dilemma”. Prof. Feng Xingyuan, shared the theory about “Private Finance and Private Enterprise”

All the experts and students established deep friendships during these days. Free thought and discussion reflected the ideas of Unirule – Liberty, Love and Comprehension.

For more details:
The Unirule Summer Camp 2012 Successfully Held in Chengdu Framework

Forum on Promoting Open Government Information – an Investigation in Beijing, Guiyang and Yinchuan Research Report Release Conference

The Unirule Institute of Economics released "Promoting Open Government Information – An Investigation in Beijing, Guiyang and Yinchuan” on July 12th, 2012 . Prof. Mao Yushi, honorary chairman of Unirule, Prof. Feng Xingyuan, Deputy Director of Unirule and researcher Mr. Zhang Lin of academic department participated in the conference.

In order to promote open government information, the Unirule Institute of Economics investigated Guiyang, Yinchuan and Beijing through expert questionnaire research on information disclosure status from Feb. to May 2012. The respondents were scholars, teachers, civil servants and businessmen. The survey questionnaire concluded a lot of no well-defined content of "Regulations on the Disclosure of Government Information”. The content was divided into seven sections: cadres’ information transparency, financial information transparency, administrative decision-making information transparency, public service information transparency, social security information transparency, government enterprise information transparencyand civil-rights information transparency. The research results were very similar in three different regions. Governments did well in the information transparency of social security and public service which was closely related to citizens' daily life, but not well in the disclosing of cadres information, civil-rights and administrative decision-making.

The conclusion of the research indicates that the existing information disclosure condition cannot meet the higher level needs of citizens' rights. The government also lacks the willingness to disclose public information. Unirule uses this report to appeal to greater attention on government information disclosure to civil, society and government, and gradually breakthrough the drawbacks of stability maintenance system, then actually guarantee the citizens' right to know, right to expression and right to participation.

News

Prof. Feng Xingyuan Delivered a Speech in German Entitled “China’s Economic System and its Trends”
Prof. Feng Xingyuan delivered a speech in German entitled " China's Economic System and its Trends" at the Chamber of Commerce in Brunswick, Germany on June 19th, 2012. There were roughly 100 people in attendance, including business professionals, bankers and academics. According to Prof. Feng, China's success is attributable to China's reform and opening-up, which forms a questionable but fruitful competition order spontaneously. No one can stop the rise of China, but only the Chinese people themselves can stop their own rise.

Mr. Zhao Xu Attended the EADN Annual Forum
East Asia Development Network (EADN) 2012 Annual Conference held in Manila, the Philippines from July 2-3.The East Asian Development Network (EADN), a network of research institutions in developing countries in East Asia, aims to promote the development of East Asia. The funded proposals of academic research and research by EADN were discussed at the annual forum. Zhao Xu, director of International Cooperation Dept at Unirule, attended the annual forum.

Mr. Yao was invited to Attend the 2012 China Urban Development Forum on 11th August 2012
Mr. Yao Zhongqiu, President of the Unirule Institute of Economics, was invited to attend the 2012 China Urban Development Forum, which was jointly organized by China Center for Urban Development (CCUD), National Development and Reform Commission (NDRC), (SEEC) Media Group Limited and the National School of Development, Peking University, on 11th August 2012, in Chongli, Hebei province. During the confernce, President Yao Zhongqiu delivered a speech. “It is the most reasonable and feasible of urbanization road to build dozens, hundreds of county and cities around a metropolis like Beijing,” Mr.Yao said.

China Urban Development Forum, with similar to the Davos World Economic Forum, selected Chongli, Hebei province as long-term site where is the famous ski resort in Asia and known as emerging Beijing summer garden, and are held for winter and summer seasons .The ultimate goal of the forum is to become a landmark and an international influential world forum. Unirule Institute of Economics was invited to become the director unit of the forum.

Current Researches/Consultings

The Research on the Efficiency of Resource Allocation by Administrative Departments in China
The management system of China’s administrative departments is basically still government-dominated, and the functions and powers of some administrative departments involve various aspects of economic activities, such as industry planning, administrative examination and approval, distribution of fiscal resources, manning quotas, etc. These administrative departments possess great power over the control and allocation of various resources and rely mainly on administrative means rather than market mechanism for resource allocation. To a large extent, this equals to the direct allocation of resources by administrative departments. Without sufficient constraints provided by a constitutional framework, officials at administrative departments are likely to abuse their power, thus leading to unreasonable allocation and waste of limited resources. With the establishment of the market economy, this sort of highly centralized mode of resource allocation and supply is unable meet the demand of social development any more.

This research aims at making a thorough analysis of what sort of resources administrative departments have monopolized, how these departments allocate these resources by making use of power in their hands, as well as the efficiency and results of this kind of allocation so as to give certain suggestions on institutional solutions and policy basis which will improve resource allocation in these fields.

The Research on Land Law Systems
The frequent occurrence of local governments encroaching on the land rights of farmers has now pushed Chinese society to the brink of social unrest. The causes not only lie in local governments’ fiscal problems but more importantly, in the major defects existing in China’s current legal system regarding land issues. One of the major problems is that China has not formulated any basic land laws except for the Land Administration Law, which is similar to regulations made by an administrative department. Aimed at pursuing benefits or convenience for administrative departments, the Land Administration Law has many problems. Moreover, the most recent Amendment Draft of the Land Administration Law proposed by the Ministry of Land and Resources actually further strengthens the power of land administration departments and other administrative organizations and further reduces the land rights of rural collectives and farmers.

Due to the drawbacks of "department legislation" and weak points of the People's Congress caused by China’s constitutional defects, a fair land law draft should be proposed by a neutral social organization rather than an administrative department. Since Unirule is qualified for this mission both in terms of motives and capacity, we’ve launched a research program aiming to provide a reference scheme of China’s land law system in order to fundamentally solve China’s land problems.

Research on Large Enterprises in the Marketization Reform
During the process of China’s transformation from a planned economy to a market economy, the interaction of various economic subjects exerted a significant impact on China’s economic and political system and policies. As one of the major economic subjects of huge scale, large enterprises possess a strategic industrial position. Large state-owned enterprises, in particular, have a historical relationship with the government and have exerted much influence on China’s social structure and developmental direction. This research aims at making a thorough investigation on various kinds of large enterprises, sorting out their position and influence on China’s economic operation and political activities, exploring the mechanism of this process and giving suggestions on better institutional plans and policy suggestions so that the government could work out better systems and policies which will benefit the adjustment and growth of large enterprises in the future.

Research on the Development of Social Organizations in Zhongguancun from the Perspective of Constructing World-class Scientific Innovation Centers
The State Council has approved the construction of the Zhongguancun National Innovation Demonstration Zone and requested that Zhongguancun should be built into a world-class scientific innovation center. Zhongguancun has the opportunity to enjoy a new round of leapfrog development. As an organic part of the innovation activities in Zhongguancun, social organizations play a positive role in promoting the formation of innovation clusters and the supply of public services. Under the new historical circumstances, it’s of great significance to make a thorough analysis of the current development status and direction of social organizations in Zhongguancun by learning from the development experiences of social organizations in Silicon Valley so as to make suggestions on the direction and relevant measures of governmental control. Entrusted by the Administrative Committee of Zhongguancun National Innovation Demonstration Zone, this research will analyze the current status of and existing problems with social organizations in Zhongguancun, propose certain targeted, prospective and operative ideas, institutions and procedures, and give answers to a series of questions.

Upcoming Events

The Forum on celebrating the 30th anniversary of the publication of Mathematical Foundation of Economics: Principle of Optimal Allocation by Mr. Mao Yushi
In order to celebrate the 30th anniversary of the publication of Mathematical Foundation of Economics: Principle of Optimal Allocation by Mr. Mao Yushi, the Unirule Institute of Economics plans to organize a seminar in Beijing on September 21st, 2012. Unirule is now soliciting papers from scholars and researchers in relevant fields as well as undergraduates and postgraduates from relevant colleges and universities. You may choose any option from the following three options as the theme of your contribution:
Option 1: Research, comments, application or completion of Mathematical Foundation of Economics: Principle of Optimal Allocation;
Option 2: Research or comments on other ideas or opinions of Mr. Mao Yushi;
Option 3: Research or comments on evolution and development of China’s economics in the past 30 years.

Contact Information
Contact Person: Zhang Lin ,Liu Qian
Tel: 010-82571544-8000
E-mail: Zhang Lin@unirule.org.cn , Liu Qian@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 p.m. every other Friday and are free and open to the public.

Schedule
Biweekly Symposium No.461 : September 14th, 2012
Biweekly Symposium No.462 :September 14th , 2012

Previous Biweekly Symposiums

Biweekly Symposium No. 456
Time:July 6th, 2012
Topic:Relations Between Demography and Economy
Lecturer:Mr. Liang Jianzhang

Bi-Weekly Symposium No.456 was held on July 6th 2012. The topic was "Relations Between Demography and Economy " and the keynote speaker was Mr. Liang Jianzhang, co-founder and chairman of Ctrip.com. In his mind, innovation and entrepreneurship have a relationship with age and the age structure. Young people will lose energy in an aging society. The only-child policy is absurd and ridiculous because such a policy distorts the age structure: the proportion of the population in the younger age groups decreases and proportion of the elderly increases, and it would also seriously weaken the vigor of innovation and entrepreneurial energies.

Biweekly Symposium No. 456
Time:July 20th, 2012
Topic:United Nations Convention on the Law of the Sea, 1982 and Delimiting China National Offshore
Lecturer:Mr. Li Linghua

Mr. Li Linghua pointed out that it is worthwhile to discuss the United Nations Convention on the Law of the Sea and how to delimit China National Offshore under the circumstance of South China Sea issue . In his speech, he discussed seven subjects, including the meaning of the United Nations Convention on the Law of the Sea1982 and the main status of delimiting China National Offshore, how to define the territorial sea baseline, key cases of the delimitation of international oceans, the serious problems that exist in China's ocean demarcation. In his mind, there is no specific 200 nautical mile exclusive economic zone and the Limits of the Continental Shelf and this will lead to an unstable situation in the South China Sea to continue. In order to resolve the South China Sea dispute, we should do the following: According to the spirit of United Nations convention on the Law of the Sea 1982, Coastal governments should line out a 200 nautical mile single maritime boundary through the open and friendly bilateral or multilateral negotiations. Only in this way can the conflicts among the countries over the South China Sea be eliminated .

Editor: Liu Qian
Revisor: Jude Blanchette