Xikang Chen

Structural decomposition analysis on China’s energy intensity change for 1987–2005

There has been considerable debate about the major factors responsible for the dramatic decline of China’s energy intensity in the 1980s and 1990s. However, few detailed analysis has been done to explain the fluctuation in energy intensity during 2002–2005. In this paper, we use the structural decomposition analysis (SDA) to decompose energy intensity into five determining factors: Energy input coefficient, technology coefficient (Leontief inverse coefficient), final demands structure by product, final demands by category and final energy consumption coefficient. We then further decompose two coefficients, energy input coefficient and technology coefficient, into structure and real coefficient. Empirical study is carried out based on the energy-input-output tables from 1987 to 2005 in 2000 constant price. The results show that between 1987 and 2002, energy input structure accounts for most of the decline in energy intensity. However, the input structure and final demands structure by product explain the increase of the energy intensity between 2002 and 2005.

PROCESSING TRADE BIASES THE MEASUREMENT OF VERTICAL SPECIALIZATION IN CHINA

Vertical specialization (VS) is often measured by the import contents of the exports, using an input–output (I–O) framework. Half of Chinas exports are processing exports, which largely depend on imported intermediate inputs and tie up upstream as well as downstream trade partners. Thus, one would expect to find strong VS for China. Using the ‘ordinary’ I–O tables, however, this is not the case. Because the production of processing exports is only a small part of total production, the average input structure in the I–O table hides the typical features of processing exports. Using adapted, tripartite I–O tables (for 2002 and 2007) in which the processing exports have been singled out, indeed reveals the expected strong VS in China.

An Extended Input–Output Model on Education and the Shortfall of Human Capital in China

Abstract This paper proposes an extended input–output model on education. Production is divided into two subsystems, the education sector and the non-education sector. The education sector is reflected by both ‘monetary flows’ and ‘student flows.’ Second, static and dynamic extended input–output models, including human capital production and allocation, are built. Third, the 1999 Chinese extended input–output table on education is compiled. Based on this table, the relation between human capital production and national economic development is analyzed. In particular, it is found that too few university graduates are ‘produced’, while a surplus of young people with only primary-school education go into industry.

A Method to Optimize Gross Fixed Capital Investments for Water Conservancy in China

Abstract A major concern of policymakers and researchers in China is finding an appropriate size of the gross fixed capital investments for water conservancy (GFCIWC). This paper determines the optimal proportion of GFCIWC to GDP. Unlike engineering economics, we investigate the benefits of GFCIWC at a macro-economic level, using the 1999 input–output table extended for water conservancy. Different kinds of impacts are induced by GFCIWC. These include forward benefits (flood control, water supply, irrigation, hydroelectric power, soil and water conservation, environmental protection) and backward benefits for GDP; negative social effects; and opportunity costs of GFCIWC. The results are put into a set of regression equations between total benefits of GFCIWC and the proportion of GFCIWC to GDP, from which the optimal proportion – or a desirable range – can be determined. The results may provide policymakers with guidelines for allocating investments.

A DYNAMIC APPROACH TO CALCULATE SHADOW PRICES OF WATER RESOURCES FOR NINE MAJOR RIVERS IN CHINA

China is experiencing from serious water issues. There are many differences among the Nine Major Rivers basins of China in the construction of dikes, reservoirs, floodgates, flood discharge projects, flood diversion projects, water ecological construction, water conservancy management, etc. The shadow prices of water resources for Nine Major Rivers can provide suggestions to the Chinese government. This article develops a dynamic shadow prices approach based on a multiperiod input–output optimizing model. Unlike previous approaches, the new model is based on the dynamic computable general equilibrium (DCGE) model to solve the problem of marginal long-term prices of water resources. First, definitions and algorithms of DCGE are elaborated. Second, the results of shadow prices of water resources for Nine Major Rivers in 1949–2050 in China using the National Water Conservancy input–holding–output table for Nine Major Rivers in 1999 are listed. A conclusion of this article is that the shadow prices of water resources for Nine Major Rivers are largely based on the extent of scarcity. Selling prices of water resources should be revised via the usage of parameters representing shadow prices.

Methods for Approximating the Shadow Price of Water in China

Abstract Using the input–output tables for water conservancy for the nine major river basins in China in combination with linear programming techniques, we calculate the shadow prices of industrial water and productive water in the nine river basins. After the results are subjected to factor analysis, the shadow prices of industrial water and productive water are obtained for each Chinese province in 1999. Then, nonlinear models for calculating the shadow price of water in specific counties are given. They appear to be valuable tools for setting reasonable water prices and establishing a market for water in China.

Yearly Grain Output Predictions in China 1980-2004

China has a population of 1.3 billion and grain accordingly plays a crucial role in the Chinese economy. In this paper we suggest predicting grain output mainly by factor inputs and asset holding, and present a Systematic Integrated Prediction Approach (SIPA). The key elements of SIPA are an extended input–output model with assets, nonlinear variable coefficient forecasting equations, and using the minimum sum of the absolute values. Since 1980 we have used the approach to predict the yearly national grain output of China. The prediction lead time is more than half a year. The bumper, average, and poor harvests are accurately predicted every year. The average error rate over the period 1980–2004 is 1.9%.

Why has China's vertical specialization declined?

ABSTRACT Vertical specialization (VS) is quantified by the VS share, which measures the average import content per dollar of exports. A characteristic of China’s export trade is its strong dependence on assembly and processing activities. To take proper account of this, China’s VS shares should explicitly distinguish processing export production from other production. We estimate China’s annual VS shares from 2000 to 2012—the latest year for which a special input–output table is available that makes such an explicit distinction. We find that VS shares increased from 2000 to 2004 and subsequently started to decrease. To explore why it has declined, we introduce a new structural decomposition approach. We find that the decrease of the VS share appears to have been driven mainly by the substitution of imported intermediates by domestic products. This occurred in particular in the production of exports, which implies an upgrading of China’s position in global value chains.

A Factor Decomposing Model of Water Use Efficiency at Sector Level and Its Application in Beijing

The paper explores the contribution of different factors affecting water use efficiency (WUE) of each sector and explores ways to improve WUE. A new Multi-Sector and Multi-Factors Logarithmic Mean Divisia Index (MLMDI) decomposition method was developed that enabled the identification of WUE by sector into 11 factors in terms of their order of importance. An application to Beijing at the 19 sector level was made for the period between 2002–2007. The water conservation effects of six measures proposed during the 12th-Five-Year-Plan of Beijing were assessed. It was found that, to decrease the transferred out and export of agriculture products and increasing water prices would be the top two most effective measures to promote water conservation. While the adjustment of direct water use structure would contribute in less significant way, the adjustment of industrial structure would have a negative effect.

A multiyear lags input-holding-output model on education with excluding idle capital

This paper develops a multi-year lag Input-Holding-Output (I-H-O) Model on education with exclusion of the idle capital to address the reasonable education structure in support of a sustainable development strategy in China. First, the model considers the multiyear lag of human capital because the lag time of human capital is even longer and more important than that of fixed capital. Second, it considers the idle capital resulting from the output decline in education, for example, student decrease in primary school. The new generalized Leonitief dynamic inverse is deduced to obtain a positive solution on education when output declines as well as expands. After compiling the 2000 I-H-O table on education, the authors adopt modifications-by-step method to treat nonlinear coefficients, and calculate education scale, the requirement of human capital, and education expenditure from 2005 to 2020. It is found that structural imbalance of human capital is a serious problem for Chinese economic development.