Abstracts：Based on literature review and field studies, this paper points out that the dual economic structure, together with the retirement arrangements for civil servants and employees of public undertakings as a legacy of the planned economy have led to a multi-track retirement system. As a result, disparities among individuals with different social status in terms of premium payment obligations and pension benefits have become increasingly prominent. This has not only undermined the financial sustainability of pension funds by eliciting a welfare race among different occupational groups, but also brought about growing social disintegration. The essential solution lies in unifying the multiple “tracks” and promoting further pension system reforms adapted to the market economy and an aging population. Taking the current old-age social insurance scheme as a starting point, the following measures should be taken: first, unify the Urban and Rural Old-age Insurance Schemes and extend its coverage to all citizens as a universal non-contributory public pension program. Second, improve the management of the Basic Old-age Insurance Scheme for Employees of Urban Enterprises by keeping the existing pooling fund as an earnings-related pension program for employees in the formal sector nationwide, while transforming the pension fund of the present individual accounts to savings and investment accounts managed by authorized professional companies for employees from both the formal and informal sectors. Third, incorporate civil servants and employees of public undertakings into the old-age social insurance system for employees in the formal sector alike.
Key Words：Old-age Security; Multi-pension System; Integration and Reform

Abstract：Owing to the rapid industrialization, China has made remarkable achievements in economic development; however, this also led to shocking environmental cost and health problems. This paper develops a determination model to measure the environmental cost and health cost. Our results show that environmental cost accounted for about 8% to 10% of China’s GDP and for rich regions this figure is even higher. While the longterm elasticity of health expenditure to income growth reaches 1.66, significantly larger than 1, the substitution effect of income growth becomes far more powerful than its income effect, thus lowers the overall welfare. It should be noted after 2008, social and environmental factors (such as social consciousness, legal knowledge, etc.) exert a much weaker effect on pollution, therefore, environmental awareness and appropriate legal measures grow ever more urgent.
Key Words：Economic Growth; Environmental Cost; Health Cost; Social Factors; Regional Differences

Abstract：To strengthen environmental management and reduce the influence of pollution damage on environment is the important guarantee for the environment to support sustainable economic growth. In this article, the environment is considered as a special production factor which processes certain regeneration ability and can be managed well. It is introduced into Romer model and Romer model is expanded to a five-department endogenous growth model considering the pollution damage and environmental management. In order to study the influence of effective environment management on the modern economic growth, this article analyzes the optimized growth path of the five-department model to describe the influences of environmental consumption, regeneration and management, capital accumulation, R&D, and human capital exploitation in the process of sustainable development. Moreover, this article establishes the simultaneous equations model including the pollution damage equation and economic growth equation simultaneously based on the panel data of 30 provinces (excluding Tibet) of China in the period of 2003—2011. Then it makes the empirical analysis of the relationships among environment pollution, environment management and sustainable economic growth based on the simultaneous equations model.
Key Words：Environmental Management; Simultaneous Equations Model; Economic Growth

Abstract：The key issue of evaluating the outcome of environmental regulation is the endogenous problem of regulation policy. Taking 84 cases of passing of local regulation law among 31 provinces in China as a program study, this paper adopts the difference-in-difference method to investigate how provincial environmental legislation affects the local pollution emission in China. It finds that environmental law helps to decrease the local pollution emission only for those provinces that have stricter enforcement of laws. On the contrary, there is no significant pollution abatement effect if only an environmental law is passed. Such results remain robust while considering the time lag effect, different types of pollutants and the choice of different comparison groups. Our study shows the importance of the enforcement of law for environmental regulation in China.
Key Words：Local Environmental Law; Enforcement of Law; Difference-in-Difference

Abstract：According to the classic  conclusion of the public finance theory, the distortion of capital income taxation is larger than that of the labor income taxation, and the optimal capital income taxation rate is zero. Government should levy labor income taxation, rather than capital income taxation. However, the capital income tax rate in reality is positive, and larger than the labor income tax rate. Based on an innovation-driven growth model, this paper explores the impact of capital income taxation and labor income taxation on economic growth and social welfare. It is found that the distortion of labor income taxation may be larger than that of capital income taxation. The reason is that in the innovation-driven growth model, labor input in the R&D sector is the fundamental reason for long-run growth. In comparison with capital income taxation, labor income taxation has larger impact on R&D labor input. This paper gives an explanation for the high capital income tax rate in reality.
Key Words：Capital Income Taxation; Labor Income Taxation; Innovation; Economic Growth

Abstract：China has undergone a spectacular economic growth, and it is important to learn the job flow patterns accompanied with this growth path. This paper aims to answer this question by utilizing a firm level data (Annual Surveys of Industrial Enterprises) between 1998 and 2007. We find that 1) China had experienced simultaneous and significant job creation and destruction over the period 1998—2007; the net employment growth is positive, reaching a average rate of 3%—7% after 2002. 2) There are considerable variations across industries: job creations take place mostly in the consumer-goods industries, while job destruction is mostly severe in traditional industries. 3) There are substantial heterogeneities on job reallocation rates across different ownership types, firm sizes, ages and locations. 4) Different from the patterns found in transition economies, between-ownership employment shift explains a higher fraction of excess job reallocation in China.
Key Words：Job Creation; Job Destruction; China’s Manufacturing Industry

Abstract：Central bank intervention is controversial. On one hand, central bank intervention striking at the irrational noise trade could help exchange rate approach its equilibrium level, on the other hand, central bank intervention may be doubted as currency manipulation, which aims at attaining the competition advantage of the exported commodities by means of currency underestimation on purpose. It's pretty interesting that, has the central bank intervention conducted by People Bank of China driven RMB exchange rate more equilibrium ever since the RMB exchange rate formation reform in 2005, or not? Based on the fact the formation mechanism of RMB exchange rate is more and more market-oriented, this paper theoretically studies the effect of central bank intervention on the RMB's misalignment under the assumption of trader heterogeneity, which is found characterized as U shape, and then build up the corresponding empirical framework. It’s lastly showed that central bank intervention is contributable effectively to RMB exchange rate’s approaching its equilibrium level during the most period from 2005 year.
Key Words：Central Bank Intervention; RMB Equilibrium Exchange Rate; Threshold Effect

Abstract：VAR has to exploit not only a limited amount of information, but cause estimation bias. However, dynamic factor model can overcome VAR’s shortcoming, which combines large-dimensional factor model with VAR. We attempt to decompose -uctuations in sectoral prices into common and idiosyncratic components using a dynamic factor model in order to shed light on sectoral and aggregate in-ation dynamics in China. Our main findings support the basic facts in the related literature. Furthermore, we find some China-specific characteristics: (1) the common component share in sectoral inflation is larger than that of US and Euro area; (2) comparing with consumer’s goods, macro shocks account for more of variance in sectoral price of producer’s goods and material of production; (3) even in aggregate level, idiosyncratic shocks contribute more to variance of consumer’s goods prices.
Key Words：Price Stickiness; Structural Dynamic Factor Models; Sectoral Prices; Aggregate Prices

Abstract：Financial liberalization has heterogeneous effects on economic development. On the one hand, financial liberalization is helpful for the economic development according to the financial deepening theory. On the other hand, financial liberalization raise the fragility of the economy which will lead to the financial crisis. The optimal financial condition hypothesis is proposed to explain this heterogeneity of financial liberalization. The impact of financial liberalization depends on the optimal financial condition of the country. The deviation of the actual financial liberalization to the optimal financial condition has negative influence on the economic development. This hypothesis is verified by the evidence from 63 countries data from 1981 to 2005. Furthermore, the Chinese financial reform is investigated based on this hypothesis. The financial repression in China has two impacts. Firstly, the negative influence of the deviation to economy become larger as economy grows. Secondly, the optimal financial repression steps into a downtrend, which implies the deviation become greater. There are two-fold economic costs of financial repression policies.
Key Words：Financial Repression; Financial Liberalization; Optimal Financial Condition; Quantile Regression

Abstract：The core policy of a country’s financial openness is to dynamically arrange a suitable openness order and scale, maximize the comprehensive benefits of financial openness. Using threshold regression model to analyze the data of developed and developing country from 1980 to 2005, and through examining the effect of initial conditions affecting the open growth and risk, we establish the maturity assessment system and analyze the China’s current maturity of open conditions. The empirical studies have shown that the initial conditions including financial development, institutional quality, trade openness and macroeconomic policies have remarkable threshold effect on financial openness’s economic growth effects and currency crisis effects. From the evaluated results of financial openness initial conditions after 2005 in China, Chinese financial openness, FDI inflow openness, equity securities investments outflow openness and debt capital outflow openness have strong effects on promoting economic growth and controlling financial risks. But restrained by the inadequacy of financial development, institution quality and foreign exchange reserves, it is not the suitable time to release the equity securities outflow, debt capital inflows and FDI outflow now.
Key Words：Financial Openness; Initial Conditions; Economic Growth; Currency Crisis; Threshold Regression

Abstract：The Greenfield Investment and Crossborder M&A are the two main ways in which the FDI investors entry the host countries. Former researches show that the two FDI entry modes lead to totally different affects to hosts countries; hence it’s practicably useful to figure out what factors affect the FDI investors’ choices between the two entry modes. By composing a three-stage real option model, we find out that these affecting factors are construction speed, economic growth, demand uncertainty, what’s more, we also find that the target firms of Cross-border M&A have larger scales than those of Greenfield Investments. Also, by the model, we theoretically confirmed that host countries’ policies can significantly affect the FDI investors’ choices between the two entry modes. And all the above conclusions are confirmed by empirical tests.
Key Words：FDI; Cross-border M&A; Greenfield Investment; Real Optio