Defining Cities by Water: Addressing Capital Misallocation in a Race to Conserve Resources

As part of its efforts to promote a sustainable and high-quality development,China has pledged to reduce water consumption and create a water-efficient society.On the basis of identifying the institutional root causes of excessive capital allocation and excessive water consumption in China’s water-intensive industrial sectors,this study elaborates how the national water-efficient cities assessment contributes to optimized capital allocation.Our research shows that national water-efficient cities assessment has motivated local governments to compete for water efficiency.To conserve water,local governments regulated the entry and exit of water-intensive enterprises,discouraged excessive investments in water-intensive sectors,and phased out obsolete water-intensive capacities within their jurisdictions.This approach has resulted in mutually beneficial outcomes,including improved allocation of capital,enhanced water efficiency,and reduced emissions.This paper offers policy recommendations for establishing a water-efficient society throughout the 14^(th) Five-Year Plan(2021-2025)period by presenting empirical evidence on the policy effects of resource efficiency evaluation.

Super Efficiency and Misallocation: Evidence from Vietnamese Electric-Computer Industry

Misallocation means that the source is not distributed efficiently. This leads to an important question of how the relationship between misallocation and efficiency is (see [1]). The purpose of this study is to address the empirical relationship between misallocation and efficiency in the electric and computer industry in Vietnam during the 2005-2015 periods. To do this, we built a model that allowed us to evaluate the impact of misallocation and other factors on efficiency. The slack-based measured efficiency (SBM) model (Tone [2]), and the super-efficient model (Tone [3]) are used to estimate the firms’ efficiency. The approach of Hsieh and Klenow [4] is used to measure misallocation in the study area. Estimated results of the model about the relationship between misallocation and efficiency show that the variable representing the misallocation has a negative sign and statistical significance in all models. In other words, the misallocation negatively affects efficiency. The bigger the misallocation, the lower the efficiency.

Business Environment and Resource Allocation Based on the Perspective of the National Value Chain

China is actively upgrading its industrial structure through industries transferring between developed and undeveloped areas;however,the overall level of the national value chain is still not high,and the asymmetric competition pattern between the upstream and the downstream has not been broken.Therefore,this paper establishes a competitive equilibrium model for the production of manufacturing enterprises,with factor price distortion,under the condition of constant returns to scale.The authors derive the relative distortion coefficients of each factor price,calculate the misallocation indices of capital and labor,and construct an industry resource misallocation measure.Furthermore,this paper applies the regional value-added decomposition model to calculate the national value chain index and matches the market index of the China Market Index Database with the Chinese Industrial Enterprises Database and the Inter-Regional Input-Output Tables through quantitative analysis.From the perspective of the national value chain,the authors study the improvement effect and mechanism of the business environment on the resource allocation in industry.The study shows that industry resource allocation will be improved by 17.89%if the business environment level is improved by one standard deviation.This effect is most prevalent in the eastern and central regions,not so much in the west;the effect of downstream industries in the national value chain is higher than that of upstream industries;the improvement effect on capital allocation is higher in downstream industries than in the upstream industries;and the improvement effect on labor misallocation is basically the same in both the upstream and the downstream.Compared with labor intensive industries,capital intensive industries are more influenced by the national value chain,while the effect of upstream industries is weaker.At the same time,it is well documented that participation in the global value chain can improve the efficiency of regional resource allocation,and the construction of high-tech zones can improve resource allocation for both upstream and downstream industries.Based on the results of study,the authors propose suggestions for optimizing business environments,suiting the national value chain construction,and improving resource allocation in the future.

Local Government Debt,Sectoral Linkage and Resource Allocation Efficiency

Increasing the efficiency of resource allocation is the basis and guarantee for boosting high-quality economic development.Based on the panel data of Chinese industrial enterprises and cities from 2008 to 2013,this paper studies the influence of infrastructure construction demand shocks represented by local government debt expansion on the efficiency of sectoral resource allocation from the perspective of sectoral linkage.According to the empirical findings,local government debt significantly reduces the resource allocation efficiency of manufacturing sector that is highly related to infrastructure construction.This conclusion is still tenable after the robustness test using the simulated local government debt as an instrumental variable.Further mechanism tests show that there are two reasons for the decline of the efficiency of resource allocation in manufacturing sector that is highly related to infrastructure construction.First,more product demands and investments brought by the expansion of local government debt flow to less productive enterprises in the sector.Second,resource misallocation reduces the probability of high-productivity enterprises entering the market and low-productivity enterprises exiting the market,and the effect is more prominent in cities with high dependence on state-owned enterprises and high pressure on officials to be promoted.According to this study,the performance management of local government debt should be further strengthened,and particular attention should be paid to the influence of local government debt on enterprise investment and financing crowding out and resource misallocation.

Tackle China's Economic Complexities by Deepening Reform and Opening Up: Macroeconomic Outlook, Policy Simulations, and Reform Implementation—A Summary of the Annual SUFE Macroeconomic Report (2018-2019)

Faced with complicated external and internal challenges, China's economy continues to see sluggish growth in 2018. Rapid accumulation of household debts, exacerbation in income inequality, tightened real sector liquidity, escalated trade tensions with the US, and weakened external demand pose key problems in China's macroeconomic landscape. The status quo is exacerbated by soaring uncertainty and weakening confidence in the face of persistent resource misallocations and institutional distortions, which cast more shadow on the already dampened consumer sentiment, sluggish private investment growth, and fallen foreign reserves. This summary report highlights the urgency of deeper structural reforms for tackling the various internal and external problems. Based on the IAR-CMM model, with both cyclical and secular factors taken into consideration, our baseline forecast of real GDP growth rate is 6.4%(6.1% using more reliable instead of the official data) in 2019. Alternative scenario analyses and policy simulations are conducted to assess the consequences of possible downside risks and the corresponding policy options needed to ensure the assumed growth targets. These analyses lead us to conclude that comprehensively deepening reform and opening up, which should be both rule-of-law based and market-oriented, with well-designed and well-conceived strategies that properly weigh short-, medium-, and long-term benefits and costs, should continue to be set as the guidance for China's transformation into a phase with sustainable and high-quality growth.

Local Government Debt, Factor Misallocation and Regional Economic Performance in China

This paper examines total factor efficiency and productivity performance by taking into account local government debt （LGD） in 31 Chinese provincial regions for the period 2000-2013. The results show that neglecting LGD may overstate economic performance in Chinese provinces. The eastern region shows better performance in single jactor efficiency and total factor efficiency than the non-eastern regions. The western region shows the worst total factor performance. The north-eastern region is the only region that has experienced a decline in total factor performance. The state-dominated, investment- driven development model may help technological progress across Chinese regions but could lead to significant factor misallocation. We argue that biases towards more state- dominated investment and land supply in less productive western, central and north- eastern regions, at the expense of investment and land supply in more productive eastern regions, have contributed to the recent slowdown in economic growth in China. Therefore, .further market-oriented reforms in factor markets should be considered in the future.

Balance through Agglomeration： A Race between Geography and Policy in China＇s Regional Development

Changes in regional income gaps in China reflect the role of both the market and the government in the Chinese economy. Since 2003, government policies have aimed to distribute more resources to less developed areas. Although this process is accompanied by a narrowing interregional income gap, it does not represent real ＂convergence＂ between regions. From the perspective of spatial-political economics, the free movement of people is helpful to realize regional economic balance through agglomeration, while investment policies that deviate from the comparative advantage of less developed regions may lead to spatial misallocation of resources and unsustainable economic growth. In order to achieve further integration and development in the Chinese economy in the future, restrictions to the flow of production factors must be alleviated so that the market can truly become a decisive force for the allocation of resources.

Determinants of Factor Misallocation in Agricultural Production and Implications for Agricultural Supply-side Reform in China

Alloeative inefficiency in agriculture is an issue puzzling researchers and poliey-makers in China. Based on household data from the China Family Panel Studies of 2012, the present paper quantifies the potential distortions in China ＇s agricultural production and examines their underlying determinants across regions. The results reveal that there are different levels of distortions across regions. The Middle region is facing the greatest distortion. Increases in machinery input, the proportion of non-farm income and effective labor input will reduce distortions. Household saving, farmland rent and farmland size are significantly positively related to distortions. There is a complementary effect between labor and farmland in alleviating production inefficiency, but substitution effects exist between capital and farmland and also capital and labor. The increase in farmland size will aggravate the impact of capital on distortions. Given the constraint of super small-scale farmland, facilitating land transfer is a necessary precondition for improving, allocative efficiency.

Lessons Learned from Optimizing the Sunway Storage System for Higher Application I/O Performance

It is hard for applications to make full utilization of the peak bandwidth of the storage system in highperformance computers because of I/O interferences,storage resource misallocations and complex long I/O paths.We performed several studies to bridge this gap in the Sunway storage system,which serves the supercomputer Sunway TaihuLight.To locate these issues and connections between them,an end-to-end performance monitoring and diagnosis tool was developed to understand I/O behaviors of applications and the system.With the help of the tool,we were about to find out the root causes of such performance barriers at the I/O forwarding layer and the parallel file system layer.An application-aware I/O forwarding allocation framework was used to address the I/O interferences and resource misallocations at the I/O forwarding layer.A performance-aware data placement mechanism was proposed to mitigate the impact of I/O interferences and performance variations of storage devices in the PFS.Together,applications obtained much better I/O performance.During the process,we also proposed a lightweight storage stack to shorten the I/O path of applications with N-N I/O pattern.This paper summarizes these studies and presents the lessons learned from the process.

Growth and Cycles in China's Unbalanced Development: Resource Misallocation, Debt Overha ng, Economic Inequality, and the Importance of Structural Reforms

The recent China's growth slowdown is both cyclical and secular, driven by external and internal factors. In this article, I highlight several key internal factors that have hindered China's growth in recent years. These include worsening misallocation of resources and declining growth of total factor productivity, plus rising household income inequality and debt overhang in the face of tightened liquidity constraint. All of these show the urgency for deepening reforms in China's key macroeconomic landscapes in order to remove institutional barriers and distortions deep-rooted in the nation's economic and financial structure, and to correct fundamental imperfections of its socialeconomic system. 1 argue that such refonns are of critical importance for China's pursuit of healthy and sustainable growth and of balanced and adequate development going forward.

Misallocation in Chinese Manufacturing and Services: A Variable Markup Approach

Cross-country comparison reveals an unusually small service sector in China. Using firm-level data from Chinas 2008 economic census, we find two facts that speak to a novel mechanism of misallocation within service and between manufacturing and service sectors. First, compared with the manufacturing sector, there are more stateowned enterprises and fewer entrants in the service sector. Second, markups increase with firm size, and the increase is more dramatic among service firms. We interpret these facts through the lens of a monopolistic competition model with heterogeneous firms and variable markups. A multisector model shows a new channel that translates asymmetric barriers to entry across sectors into sectoral markup differences, which in turn cause sectoral misallocation. Quantitative analysis shows that when reducing entry barriers to service firms to the extent observed for manufacturing firms, the model predicts a 12-percentage-point increase in the service employment share.

Promote Competitive Neutrality to Facilitate China’s Economic Development:Outlook,Policy Simulations,and Reform Implementation-A Summary of the Annual SUFE Macroeconomic Report(2019-2020)

Twenty nineteen(2019)marked another year of lethargic growth in the Chinese economy amidst escalated internal and external complexities.Internally,the country's macroeconomic landscape was overcast continuously by fallen consumption growth,plunged growth in manufacturing investment,rapid accumulation of household debt,risen income inequality,and the overhang of local government debt.The nation's external conditions did not fare any better,with drastically declined growth in imports and exports,continued trade tensions with the US,and weakened external demand.Based on the IAR-CMM model,which takes account of both cyclical and secular factors,the baseline real GDP growth rate is projected to be 6.0%in 2020(5.9%using more reliable rather than the official data),with a downside risk.Alternative scenario analyses and policy simulations are conducted,in addition to the benchmark forecast,to reflect the influences of various internal and external uncertainties.The findings emanated from these analyses lead us to stress the importance and urgency of deepening reform to achieve competitive neutrality for China’s transformation into a phase with sustainable and high-quality development.

Resources Allocation and Utilization Effi ciency in China’s Healthcare Sector

The reasonable allocation of healthcare resources across different levels of healthcare facilities is the key to promoting the tiered diagnosis and treatment approach.The sudden outbreak of COVID−19 underscores the shortage of resources and service capability of China’s primary healthcare facilities.From the perspective of the vertical division of labor in the healthcare service system and based on the quality adjustment and quantitative correction of healthcare workers,this paper comprehensively calculates and analyzes the evenness of resources allocation between hospitals and primary healthcare facilities;and then,combining the theoretical model derivation with China’s empirical data test,this paper demonstrates how the misallocation of healthcare resources affects their utilization efficiency.The results are as below.(1)There are varying degrees of quantity and quality imbalance in various healthcare resources between hospitals and primary healthcare facilities.(2)When other conditions remain unchanged,the more misallocated healthcare resources are,the lower the“actual”utilization efficiency after quality adjustment is.(3)Compared with the absence of price regulation,government price regulation has led to a relative“overtreatment equilibrium”in the healthcare service market.Therefore,measures should be taken to optimize the structure of healthcare resources allocation and improve the efficiency of resources utilization,such as strengthening the government’s healthcare financing function,formulating policies that favor primary healthcare facilities,and encouraging social capital to invest at the community level.

Government Subsidies,Resource Misallocation and Manufacturing Productivity

Government subsidies for some firms will have effects on the market entry,exit and scale of firms,result in misallocation of resource between firms,and reduce manufacturing productivity.Using data of Chinese industrial enterprises from 1998 to 2007,this paper studies the effect and micro-mechanism of misallocation caused by government subsidy on manufacturing productivity.Decomposition of manufacturing productivity indicates there is resource misallocation between firms and decreasing of manufacturing productivity.Empirical study shows that government subsidies constitute an important factor inducing this resource misallocation.Subsidies change extensive and intensive margins of market,distort resource allocation between firms and reduce manufacturing productivity,and the resource misallocation is more serious in industries with higher proportion of state-owned assets.Specifically,subsidies hinder entry and exit of firms in extensive margins,with subsidized firms having lower propability of market entry and exit compared with unsubsidized firms;subsidies promote scale of subsidized firms and crowds out market share of unsubsidized firms in intensive margins.The implication of this paper is that when providing subsidies government should take into consideration their effect on the firms’dynamic and resource allocation in the frame of general equilibrium.