Agriculture Reference
In-Depth Information
effects assocated wth the WTO accesson reforms and nter-sectoral
worker transformability, simulated worker relocation demands from these
reforms alone exceed the average of Chna's recent experence.
While we are confident about our conclusion that China's macroeconomic
polcy regme has reduced economc performance relatve to ts theoretcal
potential, it does not follow that we advocate the immediate elimination
of capital controls and the adoption of a floating exchange rate. The latter
has been advocated recently by government representatves n Japan and
the US, including such significant players as the Chairman of the US Federal
Reserve.
14
We are more nclned to cauton on the ssue of the exchange
rate, recognising that a float would be premature considering China's
underdeveloped financial sector, its partially reformed banking industry
and ts stll vulnerable state-owned enterprses.
15
The fact that more
flexibility would enhance China's growth should be taken as advocating the
acceleration of the reform processes needed before a floating rate regime
can be mplemented.
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Notes
1 The contractionary effects of deflation do not end there (Bordo and Redish 2003).
2 See Hertel (1997) for the original specification.
3 Ianchovichina and Martin (2001, 2002b) also examine the effects of WTO accession on
labour relocation demand and they offer an explicit analysis of the HRS. Their analysis is
strictly long run, however, ignoring the short run contractionary effects of macroeconomic
polcy emphassed here.
4 See Banister and Taylor (1989); Chai and Chai (1997); Hui (1989); Seeborg, Jin and Zhu
(2000); and Multinational Monitor.
5 See Banister and Taylor (1989); Hui (1989); Seeborg, Jin and Zhu (2000).
6 See Banister and Taylor (1989); Hong Kong Liaison Office (IHLO). China's unemployment
statstcs measure only the urban unemployed.
7 In 1984, it was estimated that about 40 per cent of workers in the countryside were
redundant. See Cha and Cha (1997).
8 The effect of these restrictions was to tend to leave marginal urban residents
underqualified for their jobs while migrants from rural areas tend to be overqualified.
Meng and Zhang (2001) estimate these rates of under and over qualification at 22 per
cent for urban resdents and 6 per cent for mgrants from rural areas.
