Abstract：By applying and extending existing literature, this article proposes a framework to understand the development of China‘s trade in value added. Then we use data provided by OECD/WTO to conduct empirical studies. The results indicate that, the ratio of domestic value added in China’s export declined from 88% in 1995 to 64% in 2005. Afterwards, this ratio began to increase, and till the year of 2009, it arrived at 67%. Our decomposition shows that, the decrease of domestic value added within industries is the main reason why domestic value added in export declined. Cross country comparison points out that, low domestic value added within industries is the principal reason why domestic value added of export in China is less than those in U.S., Germany and Japan. The concentration of export in manufacturing sector is the leading reason why domestic value added of export in China is less than that in India. In addition, low direct domestic value added, or export industries-low capacity in creating direct value added, is an important contributor of the low domestic value added of China‘s export.
Key Words: Domestic Value Added; Direct Domestic Value Added; Within-industry Effect; Between-industry Effect

Abstract：Can domestic market size spur export diversification? According to trade theories based on domestic market，domestic market size is expected to promote export diversification. However，the theoretical and empirical result of this paper suggests that institutional condition determines the functional direction of domestic market size on export structure. When institutional condition reaches the threshold value，larger domestic market significantly promotes export diversification，while institutional environment lies below the threshold value，enlarging domestic market leads to a more concentrated export structure. Among various dimensions of institutional environment，the rule of law，the openness and transparency of financial system，investment restrictions and state intervention in business are more important factors to determine the functional direction of domestic market size.
Key Words: Domestic Market Size；Export Diversification；Institutional Environment；Threshold Effect

Abstract：As demographic dividend disappeared gradually，improving labor quality will have a significant impact on economic growth. Based on the OLG model，this paper builds a theoretical model of developing country to explain the interacted relationship among urban-rural income disparity，labor quality and economic growth. By empirically analyzing Chinese provincial panel data from 1995 to 2012，we find the estimation result of our model is well consistent with the conclusions from theoretical study：urban-rural income disparity has significantly negative relationships with the economic growth.
Key Words： Urban-Rural Income Disparity；Labor Quality；Economic Growth

Abstract：Based on a theoretical model which consists of multiple consumers(the city labors，the rural migrant workers and the farmers)and the city governments，this paper explains how urbanization affects Chinese household consumption rate. We also perform a regression analysis of the data from 2001 to 2010 in 176 cities. The results show that the growth of consumption rate is increased by urbanization，but decreased by the raise of urbanization speed. These relationships are different between regions according to the empirical analysis. Compared with the eastern cities，the central ones can enhance urban productivity and consumption rate growth much more by increasing their population. For eastern cities，the only way to promote the growth of consumption rate is to improve the social welfare of rural migrant workers. Our empirical works also estimate the output elasticity of urban agglomeration in China.
Key Words：Urbanization；Agglomeration Effect；Rural Migration Workers；Household Consumption Rate

Abstract：This paper indicates the formation of inflation expectations is likely to be related to the trust in government. Based on the China urban household survey data in 2005，2007 and 2009 and the possibility of the endogenous problem of trust in government，another important contribution of this paper is to select the satisfaction in local security as the instrument variable to analyze the relationship between trust in government and inflation expectation under the different macro economic environment and inflation target. Our empirical results show：if macro-economy is hot，trust in government is a significantly negative factor to predict the individual’s inflation expectation；on the opposite side，if macro-economy is cool，trust in government is a significantly positive factor；and if economic situation is normal，the trust in government has no significant effect. In addition，trust in government in high education group plays a dominant effect on inflation expectation in the overall sample. Therefore，policy makers would balance government objectives contingent on the economic circumstances of the time，and this kind of balancing would influence individuals-inflation expectations through their heterogeneity of trust in government.
Key Words：Inflation Expectation；Trust in Government；Endogeneity

Abstract：In the everyday business activities，commercial banks have to take some risks. Thus，comparing to the existing research that discussed monetary policy and bank risk-taking behavior，the core issue of this paper is the effect of monetary policy on bank excessive risk-taking behavior. On the basis of theoretical model，we use lending standards to measure bank risk-taking behavior，after empirically test we find that，in the loose monetary policy environment，banks will soften lending standards，and take excessive risks. We suggest that，the central bank，during the monetary policy adjustment process，should take counter-cyclical capital regulation policy to offset the effect of monetary policy on the excessive risk-taking behavior of banks. We also propose the frequency，pace and timing of the counter-cyclical capital regulation policy，as well as the counter-cyclical effect of the deposit reserve ratio for the central bank.
Key Words：Excessive Risk Taking；Monetary Policy；Counter-Cyclical Capital Regulation；Principal Component Analysis

Abstract：Credit resources is firstly distributed from formal financial institutions to enterprise with easy access to financing，then redistributed from these enterprises to others，that is redistribution of credit resources. The literature confirmed that trade credit plays an important role in the redistribution of credit resources. What are the principal factors for the occurrence of redistribution of trade credit? Based on China‘s unique financial environment，this paper tries to identify and verify how the financial repression has effect on the redistribution of trade credit. The empirical evidence shows that the function of trade credit redistribution gets stronger as the higher the degree of financial repression，becomes weaker with the passage of time，and more significant in the firm of both SOE and state supported industry. And this paper describes how the macro financial background affects enterprise microscopic financing behavior. The results are expected to benefit the current financial reform，and help to deep understand financing puzzle in China.
Key Words：Financial Repression；Redistribution；Trade Credit；Bank Credit

Abstract：This paper empirically tests on the effects of Semi-mandatory Dividend Rules(hereinafter referred to as “the Rules”)on Chinese listed firms-dividend behaviors. We show that(1)the Rules in general and their various stages significantly enhanced the propensity and magnitude of dividend payments of Chinese listed firms，although the 2006 and 2008 Rules which specified the “threshold dividend” have weaker effects on dividend payments than the 2001 and 2004 guiding Rules.(2)The Rules- regulatory pressure has promoted firms in non-competitive industries and with high profitability to increase dividend payouts，and also forced those firms with high growth opportunities and financing demand to pay dividends.(3)The Rules have neither forced those “stingy” firms to pay dividends，nor reduced the proportion of “stingy” firms.(4)Firms paying “threshold dividend” and “micro dividend” have increased significantly after the 2006 and 2008 Rules，the reason may be that the low level “threshold” triggered “negative incentive” for those high cash dividend payout companies. Overall，the Rules have significantly improved the dividend status of Chinese listed firms， but they also have distinctive limitations.
Key Words：Semi-mandatory Dividends Rules；Dividend Policy；Negative Incentive；Regulatory Paradox

Abstract：This paper examines the relationship between corporate governance and innovation by the categories of industry. Using 1344 firms listed on Shanghai and Shenzhen stock exchange from 2006 to 2010，we cluster them into labor，capital and technology-intensive. Empirical results show that ownership by largest 2 to 10， fund and executives have positive impact on R&D investment. In capital and technology intensive industries，salary incentive for executives is beneficial for R&D investment. For capital-intensive industries，the proportion of shares hold by the largest shareholder which has national background is positively related to R&D investment. For technology-intensive industries，option incentives to core technical staff have positive impact on innovation activities. Furthermore，better external market environment is beneficial for firm innovation. This paper develops new structural economics at micro-level by proposing the match between corporate governance and industries. The empirical results provide some policy implications for China’s economic transition.
Key Words： Corporate Governance；R&D Investment；Cluster Analysis；Factor Intensity；Industry Differences

Abstract：The political connection between local governments and ministries can significantly affect the fiscal transfer from the central government. Based on a natural experiment of ministers-reappointment in 2003， this paper studies the influence of ministers-political connection，to his birthplace，on the allocation of earmarked grants using Difference-in-difference identification. We find a newly appointed minister makes the earmarked grants of his prefecture increase 200 million. If it is an important ministry，this effect increases up to 940 million，equals to an increase of 130%. We also find the effect of political connection is nonlinear，which presents a reversed U-shape. The effect of increased and decreased political connection is unsymmetrical. The deputy ministers have little effect on the allocation of grants.
Key Words：Fiscal Transfer；Political Connection；Ministers

Abstract：Market distortions have become important factors in restraining technological progress and efficiency improvement and transformation development in the energy industry. Research in the field considers energy as a general element to study its distortion，ignoring the own characteristics as an important industry. This article conducts a systematic study on the market distortions of the Chinese energy industry from the perspectives of industry and enterprise. It also considers the dimensions of product and factor market. The empirical results show that how market distortions are related to both product and factor markets. Furthermore the main reasons for such distortions may be linked to the misallocation of factors and not to price distortion. There is significant heterogeneity among enterprises within the same industry and the change of enterprise-level market distortions has significant impact on industry-level market distortions. The simulation that corrects distortions shows that the total factor productivity of energy industry could realize a 43.51% growth in the sector. The correction of enterprise factor market distortions accounts for most of the total contribution to output growth. The pro-market reform will promote efficient and fair competition among enterprises. In order to achieve a stable supply of energy，speeding up the pro-market reform should be the focus of the next policy steps， in addition to increasing the input factors.
Key Words：Market Distortions；Marginal Revenue Product；Resource Misallocation；Total Factor Productivity

Abstract：Economic theory of socialism with Chinese characteristics is significant and crucial because of the historic ideal for socialist economy in the developing path of human beings，as well as the realistic exploration to Chinese road towards prosperity and strengthening. In accordance with the analytic approaches，policy implications and value choice with Chinese characteristics，this paper makes a review and summarization on economic theory for socialism with Chinese characteristics since the reform and opening up，from the aspects of fundamental economic institutions of socialism，macro-economic theory，micro theory of firm，and theories of urbanization and the integration of urban and rural areas. This paper argues that a theory can be regarded as economic theory for socialism with Chinese characteristics as long as it contains ‘Chinese characteristics’ in the research ideas，traditional Chinese cultural background and thought of socialism，and finds the operational mechanism of Chinese economy from international perspective，with whatever tools in utilization to analyze any kind of problems.
Key Words： Chinese Economy；Economics；Economic Theory for Socialism with Chinese Characteristics；Thought of Socialism