China's Rural Labor Migration and Its Economic Development. Xiaoguang Liu
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       II. Ideas of Analysis and Model Derivation

       1. Analysis of the ideas of the research

       2. Theoretical model derivation

       III. Analysis of the Generalized Okun Relationship in China

       1. Indicator and measurement of the variable of the transfer of agricultural labor in China

       2. Discussion on the indicator of China’s urban unemployment rate

       3. Estimation of the Okun relationship model in China

       IV. Test with Multinational Data

       1. General formula of the generalized Okun model

       2. Analysis of the subtype regression of sampling countries

       V. Conclusions

       Chapter 6 The Policy Implications of the Transfer of Agricultural Labor

       I. Conclusions and Policy Recommendations

       II. The Directions of Future Research

       Appendix A

       Appendix B

       Appendix C

       Bibliography

       Index

       Chapter 1

       Introduction

       I. Characteristics of China’s Economy

      Since the reform and opening-up in 1978, China’s economic development has achieved a remarkable feat, with a real GDP growth rate of nearly 10% on average in the past 36 years, and a 28-fold increase in the total GDP in 2014 from 1978 (see Figure 1.1). The total GDP measured in US dollars at a market exchange rate exceeded $10 trillion, and its share of the global economy rose from only 1.9% in 1980 to 13.4% in 2014, and if measured in purchasing power parity, that share rose from 2.3% in 1980 to 16.3% in 2014.1 In terms of all indicators, China’s economic development in the past nearly 40 years is a miracle in the history of world economic development.2 However, since the outbreak of the global financial crisis, China’s economic growth rate has gradually declined, from the peak of 14.2% in 2007 to 6.9% in 2015, with a decrease in the growth rate by half. Most forecasting agencies have lowered China’s growth forecast to about 6% in the coming years.3 Besides, the general concerns about China’s economy are the economic structure imbalance and the sustainability arising from high investment and high savings rate. Fortunately, China’s job market still seems to be in good shape without being significantly affected in the context of the economic downturn. How to understand China’s economic development, economic structural imbalance and recent labor market performance becomes a major concern for academics and policymakers.

      Figure 1.1. China’s GDP growth rate and GDP index (1978–2014).

      Source: China Statistical Yearbook prepared by the National Bureau of Statistics.

      

      A review of China’s economic developmental experience in recent decades reveals the following three basic characteristics. First, since the reform and opening-up, China has maintained an extremely high rate of investment, 39.4% per year on average, nearly 50% in recent years, which is almost twice the world average. For a long time, however, China’s return on capital has shown a sustained upward trend rather than a downward trend. Second, since the reform and opening-up, China’s national savings rate has been rising steadily; especially in recent years, it has risen faster from 37.6% in 2000 to 52.6% in 2010, and fallen to 49.5% in 2014. Third, no significant inverse relationship exists between China’s GDP growth rate and the existing data for the unemployment rate described by Okun’s law, which seems to indicate a lack of a necessary correlation between China’s macroeconomic cycle and the changes in the labor market. These three characteristics involve China’s investments, savings, economic growth and labor market, so that they are the key to an understanding of China’s model of economic development.

      Considering the key characteristics of China’s economic growth, it is apparent that the key to an understanding of China’s model of economic development is to understand China’s high amount of investments, high savings rate and its labor market, while the key to an understanding of China’s high amount of investments and high savings rate is to understand China’s high capital return and improvement in productivity, and then to understand China’s technological progress and continuous large-scale transfer of agricultural labor. The transfer of agricultural labor in turn forms a unique pattern of the relationship between China’s labor market and the macroeconomic cycle. To highlight their importance, this book summarizes the three basic characteristics as the riddle of China’s rising return on capital, the riddle of China’s rising savings rate and the riddle of Okun’s law that is not applicable to China. In the following sections, we will introduce the three basic characteristics or the riddles of development in detail to further present the research ideas of this book.

      The most striking thing is that China has maintained a high rate of investment in the context of the rapid growth of China’s economy. The calculation based on the data released by the National Bureau of Statistics showed that China’s investment rate was never lower than 30% from 1980 to 2014, averaging 39.4%. In the 21st century, China’s investment rate has risen further, close to 50% recently, far higher than that of other countries in the world and almost twice the world average (see Figure 1.2). China’s high amount of investments has not only supported the rapid economic growth but has also aroused widespread concerns about the economic structural imbalance and sustainability. Therefore, it is more worthwhile to further study and analyze why China can maintain such a high rate of investment for a long term. In the world, the problem facing most countries is always an insufficient amount of investments rather СКАЧАТЬ