Journal of Chinese Economic and Foreign Trade Studies

A causality analysis of the FDI-wages-productivity nexus in China : Table of Contents

Bala Ramasamy, Matthew Yeung — Sat Jan 30 08:00:17 GMT 2010

Abstract:
Purpose – The purpose of this paper is to examine the relationships between foreign direct investment (FDI), wages and productivity in China. The direction of causality among these variables is also to be emphasized. Design/methodology/approach – The authors develop a system of equations and test the relationships based on a vector autoregressive regression (VAR) model and two-step generalized method of moments (GMM)-type estimation approach. They use a panel data set of China's provinces for a 20-year time period, 1988-2007, and also distinguish between the coastal and inland provinces. Findings – The result confirms the cheap labor argument for China, although this particularly true for inland provinces. In the coastal provinces, FDI inflow influences the wage rates upwards. FDI also has a positive effect on productivity, particularly in the coastal provinces, but does not act as a significant determinant of FDI. Research limitations/implications – Factors other than wage rates and labor productivity are also important determinants of FDI. This paper focuses on the interplay of these three variables, while assuming other factors constant. Practical implications – Cheap labor as an attraction of FDI is a short term policy. Improvements in productivity should be the focus both in the coastal and the inland provinces. A conducive business environment, a suitable education policy and incentives for greater R&D contribute toward improving labor productivity, which in turn attracts greater FDI inflow. Originality/value – The paper provides empirical evidence on the direction of causality between FDI inflow, wages rates and labor productivity in one system of equations.

Export capacity impact factors on Chinese SMEs: A survey analysis of Fujian Province : Table of Contents

Liping Su, John Adams — Sat Jan 30 08:00:17 GMT 2010

Abstract:
Purpose – The purpose of this paper is to identify the main impact factors on the export capacity of small and medium-sized enterprises (SMEs) in Fujian Province, China. Design/methodology/approach – A model containing internal and external impact factors on the export capacity of SMEs was developed. Data were collected by e-mail questionnaire surveys from random samples of SMEs in Fujian Province and 47 usable responses were statistically analyzed by SPSS14.0 using frequencies, t-tests, correlation and linear regression. Findings – The analysis shows that the government and home and export markets constitute the external impact factors while resource availability has an important internal impact on the export capacity of SMEs in Fujian. Firm scale, cultural differences and business networks do not influence the export capacity of SMEs; however, management, products, experience and geographical location have an indirect effect. Practical implications – The findings of this study suggest that SMEs in Fujian need to seek more support from government and explore more international markets. It is suggested that an SME export support system should be established by local government in order to better promote the acquisition of resources, product innovation and business network development. Originality/value – This study offers a first insight into the understanding of Fujian SMEs' export context and explores the relationships between (theorized) impact factors on SME export capacity at the micro level.

Nominal level and actual strength of China's intellectual property protection under TRIPS agreement : Table of Contents

Guobing Shen — Sat Jan 30 08:00:17 GMT 2010

Abstract:
Purpose – The purpose of this paper is to improve the measurement of nominal level and actual strength of China's intellectual property protection (IPP), and examine whether the increase of actual protection strength (APS) is positive or negative impact on China's provincial economic growth. Design/methodology/approach – A modified approach, based on Ginarte-Park's (GP's) and HL's approaches, is used to measure nominal level and APS of China's intellectual property rights (IPR) from 1995 to 2007. The pooled EGLS method (cross-section fixed effect) is used to estimate the effect of China's IPP and other variables on provincial economic growth. Findings – The paper proves that China's APS appears an increase with a phase. China's IPP level by GP approach is on the high side, whereas China's IPP level by HL approach is slightly on the low side. Nominal level of China's IPP is largely influenced by the legislation level, whereas APS mostly embodies the effect of implementing law level. The increase of China's APS has significant positive impact on provincial economic growth. However, at the outset of building an independent innovation country, too strong IPP is bad for the development of innovation capability, and bad for provincial economic growth. Research limitations/implications – Because the APS is unknown, it is impossible to use APS as the dependent variable to estimate the weights of the main influencing factors. The method that the paper assumes three main factors the same weights is second best choice. Thus, several different weights are supplemented to measure the distribution values of China's APS. Practical implications – China's APS quantified by a modified approach and strong evidences can be used to estimate the effect on economic growth. Policy effectiveness could be maximized at seeking the endogenous benefit balance between strengthening IPP and promoting economic development. Originality/value – The paper proposes a modified approach to measure the APS of China's IPR, and proves that the reinforcement of China's APS is beneficial to promoting provincial economic growth. However, at the outset, too strong IPP is harmful.

The impact of political behaviours on internationalisation: The case of Australian companies internationalising to China : Table of Contents

Jane L. Menzies, Stuart Orr — Sat Jan 30 08:00:17 GMT 2010

Abstract:
Purpose – The purpose of this paper is to test a model of cooperation between internationalising businesses and local and host country governments in the context of Australian companies internationalising to China. Design/methodology/approach – The paper presents a model for the political dimensions of internationalising based on corporate political theory and the cooperative view of management. Data were collected from personal interviews with representatives from 40 Australian organisations with businesses or operations in China. The data were analysed using NVivo. Findings – Assistance provided by the Australian government was often sought and was perceived to be beneficial. Most participants experienced policies and regulations which affected their entry modes. In ten cases they acted as barriers and significantly influenced entry mode choice. The majority of participants viewed the development of relationships with the Chinese government as important and employed a variety of relationship behaviours. Over half of the participants identified the need to understand and deal with the psychically distant government structures of the Chinese government, namely government intervention in business. Practical implications – The model links the organisational objectives of businesses internationalising to China, understanding the political/regulatory environment, selecting an entry mode and developing/maintaining a successful business. To achieve these objectives corporate political behaviour must reflect the sovereign powers in place at the time. Originality/value – The paper presents a model which develops the literature for the political dimensions of internationalisation. It also presents empirical data on the political dimensions of internationalising into China. These findings will assist businesses in understanding political factors when internationalising to China.

Are the forces that cause China's trade surplus with the USA good? : Table of Contents

Jonathan E. Leightner — Sat Jan 30 08:00:17 GMT 2010

Abstract:
Purpose – This paper aims to conceptually argue that China's trade surplus with the USA is not good. Design/methodology/approach – Net exporters (like China) give up current consumption in order to gain claims against future production. This paper argues that the reasons why China is trading current consumption for claims on future production are not good. Findings – There are strong reasons to believe that China's trade surplus with the USA is not healthy for either China or the USA. Originality/value – Other scholars have discussed the trading of the present for the future that is involved in trade surpluses, but no one (to the author's knowledge) has discussed when such a trade is good or bad.