Publications

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This study examines the directional accuracy of Singapore’s macroeconomic forecasts by professional forecasters, government agencies (i.e., central bank and Ministry of Trade and Industry, MTI), and international organizations. The results show that government agencies provide the most directionally accurate forecasts, suggesting that the macroeconomic and monetary policies are effective. Current-year forecasts are generally directionally accurate, with disparities among forecasters for next-year forecasts. Regarding GDP growth, the MTI and International Monetary Fund (IMF) provide directionally accurate forecasts up to four quarters ahead, whereas other forecasters provide them for at most three quarters ahead. For Consumer Price Index inflation, except for the IMF, all others provide directionally accurate forecasts up to four quarters ahead.

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This paper examines asymmetry of the loss function of professional forecasters for output growth, inflation, and exchange rate forecasts, based on the survey of professional forecasts (SPF) data of three South Asian countries (India, Indonesia, and Singapore). Our results provide India’s unbiased output growth forecasts and under-predicted inflation and exchange rate forecasts; Indonesia’s broadly unbiased forecasts; and Singapore’s under-predicted output growth forecasts and unbiased inflation and exchange rate forecasts. Testing the rationality of all three countries’ SPF forecasts, we find that all are rational under an asymmetric loss function but not under a symmetric loss function.

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Most observed institutional arrangements, observed in governments, firms, and other organizations, acknowledge the effectiveness of imposing sanctioning institutions and monitoring policies to achieve particular goals. Nevertheless, less attention has been paid to the influences of the delegation mechanism of sanctioning power, particularly, the legitimacy of the authority/institution, in centralized institutional arrangements. We report laboratory-experimental results that compare the performance of exogenous delegation versus the endogenous delegation of sanctioning power. The endogenous power distribution, defined as Democracy, weakly dominates the exogenous arrangement, the Leviathan, in terms of contribution levels and economic efficiency. However, the observed differences are not statistically significant, regardless of the effectiveness of the sanctions imposed. Democratic schemes are weakly preferred in centralized power environments, and existing evidence contradicts the belief of a robust causal relationship between indirect democratic institutions, collective action, and economic outcomes.

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This paper investigates the contribution of liquidity risk to Chinese corporate bond spreads. We calculate corporate bond spreads based on the full treasury yield curve and establish a set of liquidity measures of the Chinese corporate bonds. Our empirical study shows that liquidity premium accounts for a relatively smaller portion of corporate bond spread in China, although the market liquidity is low and corporate bond issuers are strictly pre‐screened. These findings are interesting, as the developed markets have better liquidity and less pre‐issuance restriction, and liquidity premium still explains a relatively larger portion of corporate bond spread. Besides, we also explore the determinants of Chinese corporate bond liquidity and default premiums.

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This study estimates Chinese individuals' financial capability and analyzes the association between financial capability and household investment management. By applying a novel hybrid item response theory to data from the China Family Panel Studies, this study finds that more than 70% of Chinese individuals have financial capability around the average level, and less than 12% of individuals have financial capability far below the average. For two of the components of financial capability, desirable behaviors and perceived financial knowledge, however, more than half of Chinese individuals are below the average. The primary finding on whether financial capability predicts investment management is that individuals with higher financial capability are more likely to take control of household investment alone than to share investment decisions with spouses.

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The traditional theory of loss leader pricing strategy generally relies on assumptions such as high consumer search cost, product complementarities, and short‐sighted consumer rationality. We argue that with the rise of e‐commerce, consumer search cost is substantially reduced, and in many cases, loss leader goods have no obvious complements but many substitutes. In this paper, we set up a model with both base product and advance product where the latter's quality is observable only to a fraction of the consumers. It is shown that a firm may use loss leader pricing strategy to signal the quality of its advance product to the uninformed consumers. Therefore, as a signalling device, loss leader pricing strategy is conducive to correct the lemons problem.

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It has repeatedly been shown that properly constructed monetary aggregates based on index number theory (such as Divisia money) vastly outperform traditional measures of money (i.e. simple sum money) in empirical models. However, opponents of Divisia frequently claim that Divisia is "too complex" for little gain. And indeed, at first glance it looks as if simple sum and Divisia sum exhibit similar dynamics. In this paper, we want to build deeper understanding of how and when Divisia and simple sum differ empirically using monthly US data from 1990M1 to 2007M12. In particular, we look at how they respond differently to monetary policy shocks, which seems to be the most essential aspect of those differences from the perspective of the policy maker. We use a very rich, fairly agnostic setup that allows us to identify many potential nonlinearities, building on a smoothed local projections approach with automatic selection of the relevant interaction terms. We find, that - while the direction of change is often similar - the precise dynamics differ sharply. In particular in times of economic uncertainty - when the proper assessment of monetary policy is most relevant, those existing differences are drastically augmented.

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In this paper, we use local projections to investigate the impact of consolidation shocks on GDP growth, conditional on the fragility of government finances. Based on a database of fiscal plans in OECD countries, we show that spending shocks are less detrimental than tax-based consolidation. In times of fiscal fragility, our results indicate strongly that governments should consolidate through surprise policy changes rather than announcements of consolidation at a later horizon.

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Since the end of the Bretton Woods system, promoting capital ac-Since the end of the Bretton Woods system, promoting capital account liberalization has been one of the tenants of the IMF. Capital account liberalization was deemed one of the 10 pillars of what was often dubbed the "Washington Consensus". Yet things changed drastically with the Global Financial Crisis of 2008. From 2009 to 2012, comments from top IMF officials and staff reports displayed quite clearly that the IMF had revised its position where capital controls could be part of the toolkit. In this paper, we assess the role of the IMF in capital account liberalization from 1995 to 2015. We use a midpoint-inflated ordered probit model to estimate the effects of being under IMF conditionality on capital controls, allowing for different effects for pre- and post-Financial Crisis. We find that the IMF did indeed drive liberalization of capital inflows in the pre-crisis era, but stopped doing so in the post-crisis period.

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There are controversies on the trade promoting effect of the railroad in modern times in the existing literature. We estimate the impact of the railway on domestic trade through forward linkages using an Eaton-Kortum model with county-commodity level data in Shandong and Hunan provinces in 1933. We show that the railway significantly decreased the trade cost and improved bilateral trade in Hunan and Shandong provinces. In particular, for every 10% decrease in geographical distance, the value of bilateral trade increased by 8.98%. In addition, our results on the existence of provincial border effect in Hunan and the disappearance of it in Shandong, imply that the emergence of railway contributed to the removal of provincial border effect. Furthermore, we find that counties with railway connections had higher per capita output, especially for those with a larger manufacturing sector. Our results echo those found in Andrabi and Kuehlwein (2010) and Donaldson (2018) for British India and Pérez-Cervantes (2014) for the US.

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I present a model of repeated electoral competition between two parties. A part of the electorate votes retrospectively and considers the amount of rent-seeking by the incumbent party, while the prospective voters follow probabilistic party preferences when casting their votes. I show that it is possible to distinguish the effects of incumbency advantage and electoral punishment on the minimum level of rent-seeking consistent with equilibrium. As long as there is electoral punishment for excessive rent-seeking, a larger incumbency advantage increases accountability by decreasing the minimum amount of rent-seeking consistent with equilibrium. The reason for this is that the larger the incumbency advantage is, the more important the result of the next election for all future election outcomes is. Consequently, the incumbent party is willing to give up more rent-seeking opportunities to improve its electoral prospects. Increased accountability due to a larger share of retrospective voters hurts the political selection aspect of elections because it enables the incumbent party to win without the support of the majority of the prospective voters.

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We analyze a transboundary pollution control problem in a heterogeneous two-country differential game setting in which regulators care for the implications of environmental policies on the competitiveness. We characterize the noncooperative and the cooperative solutions, showing that under both scenarios, in the presence of competitiveness considerations, heterogeneous countries will generally set different carbon taxes. This suggests, while implementing a mitigation policy is necessary to combat climate change, a universally homogeneous policy may not be optimal. Moreover, when countries are symmetric, except for their degree of competitiveness concerns, under noncooperation introduction of such concerns lowers the abatement policies in both countries, however, the self-effect is stronger than the cross-effect. Nevertheless, under cooperation, an increase in country j’s competitiveness concerns leads to more stringent policies in country i, while, the self-effect could be either positive or negative. The latter result emphasizes the importance of cooperation to tackle pollution in the presence of competitiveness concerns.

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This paper reviewed the retail interest rate control deregulation in China over the period 1993–2015 to provide a preliminary assessment of the People's Bank of China's (PBC's) new operating framework. The interest rate controls triggered the development of deposit substitutes that banks used to circumvent the restrictions, which, in turn, drove deposits out of commercial banks. This gave rise to concerns about a deterioration of bank profits and a build‐up of financial fragility, which have pushed up the PBC's deregulation acceleration over the post‐2012 period. This study quantified the distortionary effects of these controls: disintermediation, a rising shadow banking system, and financial repression. Despite the official lifting of controls, retail interest rates are still subject to the PBC's window guidance and other pricing mechanism guidance. The preliminary assessment of the new interest rate corridor system is encouraging: Its bounds are effective most of the time.

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Capacity reduction has been a recurrent theme in China's economic policy. The central government takes various administrative measures to remove excess capacity, accumulated mainly due to underpriced production factors and distorted incentives. I evaluate the de-capacity policy in a series of models and prove that its effects depend critically on its persistence and monetary policy regime. Under an interest rate peg, a transient policy that changes markup temporarily is ineffective and even expansionary, whereas a persistent policy is effective due to a negative wealth effect. A permanent de-capacity policy can lead to over-reactions in macro variables because the interest rate peg adds positive feedback to the economy. Therefore, the de-capacity policy has greater uncertainty under the interest rate peg. As a policy tool, it easily deviates from its target and brings about excessive volatility. However, long-run price stability and a gradually advanced de-capacity policy are conducive to the achievement of policy targets.

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This article proves in a New Keynesian model that interest rate fixation can explain Chinas excessive business cycle fluctuations. The fixed nominal interest rate changes the propagation of external shocks, magnifies volatility of endogenous variables, and leads to economic instability. We then extend the model to a small open economy featuring capital controls, sterilized interventions and a managed exchange rate to capture the main characteristics of the Chinese economy. We prove that the magnifying effect of interest rate fixation holds in such an environment, but this effect diminishes with a more strictly managed exchange rate.

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Islamic banking has gleaned considerable attention recently owing to its quantum growth. This study examines the asymmetric association between Islamic banking development (IBD) and economic growth (EG) in Pakistan that spans 2007Q1 to 2017Q4. We apply the non-linear autoregressive distributed lag (NARDL) model of Shin et al., (2014). Our findings confirm co-integration between IBD and EG in Pakistan. The positive (negative) shocks of IBD have significant positive (negative) association with EG in the long-run; however, only positive shocks have significant positive relationship with EG in the short run. We observe that the interconnection between IBD-EG is asymmetric/non-linear in the long-run, whereas symmetric/linear in the short run. We conclude that unlike the linear models, the non-linear models provide realistic results by capturing hidden asymmetries, thereby assisting policymakers in useful decision making.

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Governments, central banks, and private companies make extensive use of expert and market-based forecasts in their decision-making processes. These forecasts can be affected by terrorism, a factor that should be considered by decision-makers. We focus on terrorism as a mostly endogenously driven form of political uncertainty and assess the forecasting performance of market-based and professional inflation and exchange rate forecasts in Israel. We show that expert forecasts are better than market-based forecasts, particularly during periods of terrorism. However, the performance of both market-based and expert forecasts is significantly worse during such periods. Thus, policymakers should be particularly attentive to terrorism when considering inflation and exchange rate forecasts.

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Income inequality is blamed for being the main driver of violent crime by the majority of the literature. However, earlier work on the topic largely neglects the role of poverty and income levels as opposed to income inequality. The current paper uses all court verdicts for homicide cases in China between 2014 and 2016, as well as various inequality measures calculated from 2005 mini census data together with a host of control variables to shed light on the relationship at the detailed Chinese prefecture-level. The results suggest that it is the poverty and low income level, rather than income inequality, that is positively related to homicide rates. We show that the internal rural-urban migration from more violent localities contributes to the destination cities’ homicide rates. The poverty-homicide association implies that instead of “relative deprivation”, “absolute deprivation” is mainly responsible for violent crime. Poverty is the mother of crime. —Marcus Aurelius (121-180AD), Emperor of the Roman Empire.

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Upon the outbreak of the Pacific War (December 1941), the United States expanded its military assistance to allied nations including China under the “Lend-Lease Act”. However, the US defaulted the payment for their staff dispatched to and stationed in China which forced China to make huge sums of advance payment. The total costs of American military presence in China, including China's Reverse Lend-Lease contribution as a return to US military aid, amounted 15% to 22% of China's total fiscal expenditures. Since the beginning of 1937, the price indices increased only 200% by 1941 but rocketed to 1600 times by 1945. We develop a dynamic Fiscal Theory of Price Level (FTPL) to capture the relationship between fiscal shocks and price level. Our DSGE model shows that seigniorage (fiscal demand) driven inflationary monetary policy can lead to some hyperinflation that can be predicted and quantified. We then empirically examine the relationship between fiscal expenditures and inflation levels using provincial panel data 1937–1945. The estimation results show that local price levels increased 1.6% to 3.7% for every 10% increases of China's advance payment to US troops.

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A multi-regional dynamic computable general equilibrium model is constructed in this paper to explore the macroeconomic effects of international oil price shocks and RMB exchange rate changes on China. The results show that (1) in terms of regional development differences, the decrease in international oil prices and depreciation of RMB are both conducive to economic growth, although the impact of RMB devaluation is more obvious. Increases in international oil prices will further widen the output gap between the rich and the poor regions, whereas oil price decreases and RMB devaluation will narrow the regional development differences. (2) In terms of employment, the depreciation of the exchange rate and the decline in international oil prices will help increase the employment rate in most regions, but oil price hikes will be most beneficial for improving oil industry employment in the northeast. (3) The impact of oil price volatility is asymmetric. Compared with rising oil prices, falling oil prices have significantly greater effects on GDP, industrial output, employment and other aspects. Furthermore, the impacts of exchange rate fluctuations and oil price changes on the regional economy exhibit a time lag.

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We test the Rajan hypothesis using data for Russian regions from 2000 (after the ruble crisis) to 2012 (before the introduction of international sanctions). The Rajan hypothesis predicts that rising income inequality leads politicians to expand credit for the poor, which in turn, fuels a consumer credit boom. Russia provides a unique research opportunity becaise it is a post-communist transition country with 75 diverse regions. We find that a rise in income inequality is positively correlated with personal loan growth in Russia. We also find a statistically weaker, albeit economically larger, relationship between economic inequality and corporate credit. Taken together, our results provide support for the Rajan hypothesis in a country with extreme regional differences and a long history of populist policies.

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We assess the role of silver price fluctuations in Chinese trade and GDP during the late Qing dynasty, when China still had a bimetallic (silver/copper) monetary system in which silver was mostly used for international trade. Using a structural VAR (SVAR) with blockwise recursive identification, we identify the impact of silver price shocks on the Chinese economy from 1867 - when trade data became available - to 1910, when the Qing dynasty collapsed. The series of negative silver price shocks during this period had sizable impact on both imports and exports, but only a very minor effect on the trade balance, and only marginal impact on growth. Stronger effects were mitigated by inelastic export quantities. Generally, while considerable on impact, the effect of silver price shocks is only short lived and has no persistent effects in either direction.

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In a recent influential paper, Ljungqvist and Sargent (2017) suggest that beneath the large responses of unemployment to movements in productivity in the various proposed reconfigurations of the standard Mortensen and Pissarides model is simply the small size of the fundamental surplus fraction. I show that the fundamental surplus fraction is small if and only if the per-vacancy posting cost is small.

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Not everybody is benefiting equally from rising mean incomes. We discuss the mean-income population share (MPS), the population percentage of earners below mean income, whose evolution can capture how representative rising mean values are for middle income households. Tracking MPS and its associated income share MIS over time indicates to what extent economic growth is inclusive of both the middle and the bottom of the income distribution. We characterize MPS and MIS analytically under different growth scenarios and compare their parametric estimation using micro-level and grouped income data. Our empirical application with panel data of 16 high- and middle-income countries shows that in the last decades rising mean incomes have mostly not favored middle income households in relative perspective, while the overall welfare effects of the changes in MPS and the correlation structure with the Gini coefficient are mixed.

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Our work provides a comprehensive investigation of the coupling between the efficiency of economic growth and the efficiency of carbon emissions reduction in China, and makes a distinction between the coupling over the long-run and the short-run. Our estimates suggested significant evidence of coupling between economic growth and efficiency in carbon emissions reduction in the long-run, but China’s economic growth still increased carbon emissions at the aggregate level. In the short-run, coupling effects were different across provinces that were at different stages of economic development. Provinces with low- and high-stages of development saw positive short-run coupling, but provinces at the intermediate stage of development saw the contrary, which resulted in an obvious “U" shaped relationship between short-run coupling effects and real GDP per capita. Finally, our findings provide an economic rationale for differentiated low-carbon policies.

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While considerable efforts have been made to address the relationship between urbanization and environmental issues, few of them focus on household emissions. Thus, this work aimed at evaluating the effect of urbanization on household wastewater emissions, and made a distinction between the efficient- and the inefficient-emissions. We compiled a China’s provincial dataset over the period 2005–2017, and estimates indicated that a 1% rise in the urbanization was correlated with a 0.581 increase of efficient emissions, while inefficient emissions decreased by 7.606. As of 2017, the sample period end year, the inefficient emissions accounted for 10.5% of the total emissions of China as a whole, which was relatively large and could not be overlooked. Meanwhile, a back-of-the-envelope estimate revealed that urbanization had a negative impact on China’s total emissions, with a marginal effect ranging from −0.226 to −1.354 over the sample period. The above findings, however, did not imply that urbanization would spontaneously reduce the inefficient- and total-emissions. Thus, the government in the process of urbanization should strengthen environmental education, municipal facilities, and others.

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This paper examines the daily responses of market interest rates to three monetary policy announcements in China using the event-study approach. I find that the interest rate responses to announced changes in the regulated retail interest rate and the required reserve ratio are positive and significant at all maturities of interest rates but smaller at the long end of the yield curve. By contrast, market interest rates barely respond to the qualitative MPC announcements about the monetary policy stance. These findings are robust to alternative econometric methods that correct for potential bias arising from violations of the identification assumption. These findings suggest that the PBC should formulate its policy communication in a quantitative way

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This paper aims to discover the mechanism behind the positive correlation between local fiscal expenditure and industrial land price in China, a stylized fact discovered by bivariate and regression analyses. The model shows that if the positive externality of government expenditure on growth is sufficiently high, the local government has an incentive to increase public spending in exchange for the reduced demand for industrial land by charging a higher markup and driving up the industrial land price. Therefore, we observe a positive correlation between the local fiscal expenditure and industrial land price.

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China has committed to the international community to achieve its carbon dioxide (CO₂) emissions peak around 2030. This article predicts CO₂ emissions based on energy consumption to examine the conditions that would lead to achieving China's goal. In order to better understand the relationship between the two, a simple decomposition model decomposes energy consumption into its quantity and structure. Possible trajectories of CO₂ emissions in China to the year 2050 depend on three scenario settings with differing total energy consumption and composition. The results indicate that CO₂ emissions will not peak in the business-as-usual scenario. CO₂ emissions will peak at 10.69 gigatonnes (Gt) in 2030 in the planned energy structure scenario. In the low-carbon energy structure scenario, the peak will occur in 2025 at the value of 10.37 Gt. Not only do slower energy consumption growth rates and the low carbon energy structure enable this peaking to occur earlier in time but also lower the peaking level. China's fossil energy consumption will also peak in 2030 and 2025 in the respective planned and low-carbon energy structure scenarios. The main policy implication is that China's commitment to a CO₂ emissions peak is credible and feasible if they slow energy consumption and shift towards lower-carbon fuels.

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As China takes great efforts to cap its total energy consumption, it is important to understand the future energy use in all sectors. This paper aims to present a long-term prediction of energy use in China’s construction and building sectors (CBS) up to the year 2100. A STIRPAT (Stochastic Impacts by Regression on Population, Affluence, and Technology) model is used to establish the relationship between six socioeconomic and technological factors and China’s CBS energy consumption. Based on the statistical data from 2000 to 2016, ridge regression is applied to derive the coefficients of the STIRPAT model to counter the impact of multicollinearity on regression results. The projections are performed for three scenarios: a benchmark scenario, an intensive scenario, and an extensive scenario. The results show that for all three scenarios, the overall trend of China’s CBS energy consumption is to continuously increase from the present, reach a peak in the range between 1155 and 1243 million tons of standard coal equivalent (Mtce) in 2050, and then decrease to 942–1116 Mtce in 2100. The above projection and the associated STIRPAT model are valuable for developing policies on construction and buildings to control the total energy use in China.

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The vast increase in China’s aid projects has raised mounting concerns about the effectiveness of Chinese aid. To assess Chinese development assistance in Africa from the perspective of local residents’ attitude toward Chinese projects, we geographically match Chinese aid projects in Africa from 2000 to 2012 to the respondents of the Afrobarometer survey. By comparing the attitudes toward China reported by individuals who live close to ongoing Chinese projects at the time of the interview to those of individuals who live near sites where Chinese projects will be implemented in the future, this study establishes that the presence of Chinese projects induces a positive view of Chinese aid within the local population. Our mechanism analysis shows that people from all statuses can benefit from economic infrastructure projects, while the advantaged tend to have a better view of Chinese aid. In contrast, social infrastructure aid inspires a more positive view among disadvantaged people. We thus demonstrate that aid can have a differential impact on local attitudes, depending on aid types and statuses of recipients.

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The fast growth and unique model of Chinese aid provide new perspectives and empirical evidence for the study of aid effectiveness. This paper employs GIS technology to match Chinese aid projects in Africa with satellite-measured nighttime lights – a proxy of economic development and converts them into 0.5° (longitude) x 0.5° (latitude) panel data. First, we find that Chinese aid projects are positively correlated to Africa’s economic development. Second, we gain a deep understanding of the mechanisms and find that the aid-growth relationship is mostly attributed to economic infrastructure aid rather than social welfare projects, direct aid as well as production and other types of projects. Spatial panel regression further validates the robustness of the empirical results and sheds light on the spillover effects of Chinese aid. Moreover, our results also suggest that Chinese aid brings some side effects on the recipient countries, as it may intensify the spatial economic inequalities.

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Urban household wastewater has surged with the urbanization in China, treatment of which demands attention. Utilizing China’s urban panel data from 2005 to 2015, this article evaluates whether governmental wastewater treatment service changes urban residents’ wastewater-discharging behaviors. The outcomes reveal that: (a) in the short-run when the local government treats more wastewater, the residents discharge more wastewater; (b) this short-run relationship is notably strengthened by household attributes, that is, income and education; (c) in the long-run, the increasing relationship between household wastewater discharge and wastewater treatment service also exists significantly, which calls for immediate attention of policy makers.

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This paper presents updated estimates for state-level capital and investment for 1950 to 2015. We improve upon the procedure of Garofalo and Yamarik (2002) and Yamarik (2013) by using quantity measures to apportion the mining capital stock and a geometric pattern of depreciation to derive investment data. In an empirical application we use our data to estimate the production function and a simple growth model. We find coefficient estimates that support constant returns to scale and a 1=3 out-put elasticity of capital. These results are consistent with past regional and cross-country papers, supporting the plausibility of our data.

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In this paper, we propose a simple approach to estimate impulse response function through smoothed local projections, thereby utilizing the flexibility of local projections, while creating smooth and economically plausible impulse response functions as provided by VARs. The approach allows to determine the appropriate degree of smoothing endogenously through a standard information criterion. This also avoids oversmoothing and provides an estimator that is generally more efficient than standard local projections.

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Using a dynamic national computable general equilibrium model, we investigate the impact of carbon tax and energy efficiency improvement on the economy and environment of China. The Chinese social account matrix is presented based upon the latest input-output table (2012 IO table) and other data. The business as usual (BAU) scenario is designed according to several forecasts about China by 2030, followed by six policy scenarios, including different levels of carbon tax and technological progress as well as their combinations. The results show that carbon tax will frustrate the overall economic growth slightly. The CO2 emission will be 13.81% lower in 2030 compared to BAU case if the carbon tax scheme is carried out at at rate of 200 RMB/ton of CO2. Technological progress will stimulate the economic growth, enrich the household and government income, increase total investment and make most sectors prosperous with the exception of energy industries.

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Despite the early success in mobilizing the people after seizing power in 1949, the Chinese Communist Party (CCP) soon faced difficult bottlenecks. After the disastrous Great Leap Forward, compounded by the Three Bitter Years of natural calamities, reformists instituted a series of changes moving towards more market oriented rewards. This was short lived as Mao Zedong mobilized the Little Reds Guards to launch the Cultural Revolution and regain power. China's economy stagnated till the death of Mao. When Deng Dehuai reemerged as the leader, he reinstituted the reforms he had initiated a decade and a half ago. There is, however, a difference. The first time was a tacit move, but the Comprehensive Economic Reform (CER) started in 1978 represented a change in paradigm and a shift in ideology. True to the historical and cultural traits of China, the early stages of the reform were experimental, limited, and somewhat timid. It started in the rural agricultural production with the Household Responsibility System. With its success, the reform was extended to urban industrial sectors, but the Tianmen student demonstration in 1989 brought the momentum to a halt. It was not until Deng's Southern Tour in 1992 did the CER formally become the fundamental directive that “cannot be altered for a hundred years”. The CER is true to its name, comprehensive. The reform encompassed many aspects, with few exceptions (e.g., the insistence of the CCP one-party rule). We discuss the reform actions in four facets: property rights, factor income, macro controls, and global integration. China's economic success is evident, as it has sustained an average of more than 8% growth for more than three decades, but what is the prognosis for the future? Bumpy, but promising.

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Based on the Environmental Kuznets Curve theory,the authors choose provincial panel data of China in 1990 2007 and adopt panel unit root and co-integration testing method to study whether there is Environmental Kuznets Curve for China's carbon emissions.The research results show that:carbon emissions per capita of the eastern region and the central region of China fit into Environmental Kuznets Curve,but that of the western region does not.On this basis,the authors carry out scenario analysis on the occurrence time of the inflection point of carbon emissions per capita of different regions,and describe a specific time path.