Abstract： Market economy requires an enterprise to be responsible for its own management decisions, profits and losses and clearly establish its ownership. Public owned enterprises including SOEs have transformed their operational mechanism and established their modern enterprise system to meet the requirements of market economy. Therefore public ownership is able to be combined with market economy. Market economy is not established only on private ownership so it is false to say that China needs private ownership in market economy. The precondition for China’s primary socialism stage economy to be commodity economy or market economy is the existence of social division of labor and different kinds of ownership. Against the background, different public owned enterprises or units occupy resource different in quantity, quality and type and employ staff different in effort. So it is natural that different public owned enterprises are different in outputs and resource utilization efficiency. In order to encourage higher outputs and resource use efficiency, public owned enterprise own relatively independent economic revenue must be permitted (i.e. higher revenue for higher outputs), society occupy or transfer the outputs of the public owned enterprise without pay must be prohibited, the system of exchange with equal values between different public owned enterprises must be established. Otherwise the enthusiasm of the staff would be dampened and resource would be use inefficiently or even be wasted. So the production and exchange of public owned enterprises are the production and exchange of commodity, public ownership economy is commodity economy or market economy. The theory of socialism market economy doesn’t violate the theory of commodity economy and economic characteristic of socialism economy in Marxist political economy, doesn’t go against the trend that when socialism economy develop to an advance stage and the ownership evolve to pure public ownership, the socialism economy will not be commodity economy or market economy.
Key Words： Market Economy; Public Ownership; Socialism; Enterprise System

Abstract： This paper investigates how domestic currency appreciation affects markup dispersion, a potential index of resources misallocation. We find that firm’s markup elasticity to exchange rate are increasing with its export market share, so firms with higher market share reduce more of their markup in face of appreciation and thereafter reduce markup dispersion. We find robust evidence for our theoretical predictions using Chinese firm-level data, our empirical identifications treat 2005 Chinese exchange rate reform as a qusi-natural experiment and find that Renminbi appreciation can significantly reduce markup dispersion within narrow defined industry. Appreciation forces higher markup firms to reduce more of their markup, therefore markup dispersion within that industry is directly reduced. In addition, it forced low productivity firms in high monopoly industry to abandon X-inefficiencies, which indirectly reduce misallocation.
Key Words： Renminbi Exchange Rate; Pricing to Market; Resources Misallocation; Markup Dispersion; Exchange Rate Pass-through

Abstract： China’s real investment shows an obvious decline in recent years, even when stimulus policies are conducted.This article constructs an investment choice model including financialization variables, and explains the downward puzzle with the direct and indirect effect of financialization.The empirical results demonstrate that, financialization level significantly depresses the fixed investment ratio and weakens the effect of positive monetary policy. Meanwhile, the mismatch of return and risk on financial assets also shows a significantly negative effect which strengthens with higher financialization level.
Key Words： Real Investment; Financialization; Finance Constraints; Monetary Policy

Abstract： The 13th Five-year Plan of China has set stricter regulatory standards for environmental pollution, but in the meantime, regional protection and consequent resource misallocation in reality have greatly affected regional environmental welfare performance. Unlike traditional analyses that only considered macroscopic input and output factors, this paper includes health factors of social residents into a microanalysis frame and divides the general development performance of regions in China into macroscopic economic performance and microscopic environmental welfare performance by using the DEA-Hybrid-Network model. Then, effects of regional protection and resource misallocation on regional environmental welfare performance are analyzed based on the provincial panel data during the period of 2002 to 2014 Analysis results show that regional protection that embodied by market segmentation can restrict the free flow of merchandise and factors and further aggravate regional resource misallocation. It can also be seen from the results that although effects of regional protection and resource misallocation on regional macroscopic economic performance are not significant, their obstructive influences on microscopic environmental welfare performance are notable. The results also illustrate that regional protection and resource misallocation can aggravate the losses of environmental welfare performance in other regions through the spatial spillover effect, which indicates that regional environment management features close spatial relevance and mutually-beneficial treatment. Therefore, it will be of great practical significance to improve regional environmental welfare performance by reducing regional protection and market segmentation, and letting market play a decisive role in resource allocation.
Key Words： Regional Protection; Resource Misallocation; Environmental Welfare Performance; Network-Hybrid Data Envelopment Analysis; Spatial Spillover Effect

Abstract： By means of the Kaya identity, this paper has done the factor decomposition of carbon emission in industrial system, and modeled the upgrading of industrial structure by the production function. This paper the impact of the upgrading of production factors on the low-carbon development of industrial system, such as production technology, capital and labor force. The research found, low-carbon development of China’s industrial system was driven by the energy structure changes, the use of a large number of high carbon coal increased carbon emission density of industrial system. Because of higher output proportion and energy consumption proportion of the industry II, the energy intensity of China’s industrial system, that is, the efficiency of energy use is mainly affected by the industry II.
Key Words： Carbonization of Industrial System; Carbon Emission Intensity; Carbon Emission Density; Energy Consumption Intensity

Abstract： By employing Hamilton dynamic optimization and panel threshold model simultaneously, we introduce social capital into resource curse and analyze its mechanism for the first time. Make social capital and technology innovation endogenous, we set and solve four-department economic growth model including resource development industry and manufacturing industry, by which we investigates the intrinsic mechanism of social capital and technological innovation promoting economic growth. After mathematical analysis, we find that: self-accumulation of social capital leads more labor flowing into R&D department, motivating technology innovation, offsetting the crowding-out effect on technology innovation, cutting off the pathway of their source curse and promoting economic growth, namely social capital and technology innovation act as the threshold of resource curse. Furthermore, using panel data of 31-regions in China during 1998 to 2013, setting cross-effect of social capital and technology innovation as threshold variable, we find that: threshold does exist, before and after the threshold value. The source curse effect on economic growth gradually changes from strong to weak, and then disappears, even turns into resource blessing.
Key Words： Social Capital; Technology Innovation; Resource Curse; Threshold Effect

Abstract： This paper explores the human capital externality in service industry by estimating production functions using the China Second Economy Census data in 2008, which contains within-firm education composition of employees. Human capital externalities mostly exist in the large firms of service industry. Furthermore, we distinguish the source of externalities by dividing the human capital into three parts: intra-industry, other service industries and manufacturing industry. Then we find that the externalities generated by human capital in intra-industry, and other service industries increase along with the city size, but externality from the manufacturing industry decreases along with the city size. These results are robust to alternative production function forms and the measures of human capital. Finally, we investigate the mechanisms through which the human capital externalities arise. We find that the externalities from the interactions with the high skilled workers in intra-industry and other industries in services increase along with the city size, but the externality from the interactions with the high skilled workers in manufacturing industry decrease with city size. Our findings imply that large cities become increasingly important during the post-industrialization era.
Key Words： Human Capital Externality; Service Industry; City Size

Abstract： There are two different views about whether state-owned enterprises (SOEs) should be privatized. One view argues that only privatization can thoroughly solve SOEs efficiency problems. Another view suggests that privatization is hard to solve the bad performance problems of SOEs, and probably leads to serious appropriation of state-owned assets. Based on the new performance appraisal (EVA) of top management in “The Revision of Interim Measures for Business Performance Appraisals of Persons-in-Charge at Central Government-Owned Enterprises” in 2009, this paper tests the impact of the new EVA performance appraisal on CGOEs innovation. Using difference-in-differences approach, we find a significant increase of CGOEs patents after the implementation of the new EVA appraisal. We use a rich set of tests to show that the baseline results are robust to endogeneity and reverse causality. We further examine how EVA appraisal affects CGOEs Tobin’s Q and find that the increase of patents improves CGOEs value. This paper clarifies the controversy of privatization of SOEs, and enriches literature about top management incentive mechanisms and corporate innovation.
Key Words： Reform of SOEs; Privatization; Incentive Mechanism; Corporate Innovation

Abstract： While China considers adopting the property tax, there still lacks empirical support on tax system design and evidence on the social economic effects of the tax levy. This paper fills the niche in the Chinese literature. Based on the taxable capacity theory, this paper builds a model for the ability-to-pay index of China’s real property tax on five measures. We use data from the China Household Finance Survey (CHFS), estimate the differences of ability-to-pay index among several types of families in different provinces, and calculate the feasible differential effective tax rates. Under four exemption schemes (no exemption, first house exemption, per capita area exemption, and per capita value exemption), we calculate the distribution of the tax burden for families by their income level and investigate the redistributive effects, assuming that property tax revenue is used for basic public services that equally benefit all families. The results show considerable differences in the ability-to-pay index among families in different areas, thereby highlighting the local characteristics of the property tax. The results also identify the huge potential of the property tax on redistributing or adjusting income and wealth, with high income families bearing more than 50 percent of tax burden under each exemption scheme. Of the several exemption schemes, the “per capita value exemption” excels in vertical equity, income reallocation, and tax revenue adequacy.
Key Words： Property Tax; Tax Equity; Tax Burden; Redistributive Effect

Abstract： By using the donation data of listed firms in 2006—2014, we investigate how a CEO’s early-life poverty experience affects corporate philanthropy, as well as how the Wenchuan earthquake affects this relationship. The results show that, firstly, firms with CEOs born in poverty counties or grown up during “Great Famine” donate more to the society. Secondly, after the Wenchuan earthquake, there is much more increase in corporate donation for firms whose CEOs have poverty experience, indicating that the external shock of natural disasters could deeply touch the hearts of CEOs with poverty experience. These findings remain robust after a battery of robustness checks. Further analyses find that CEOs born in affluent areas do not outperform in corporate philanthropy. In addition, well-educated CEOs with poverty experience donate more to the society; CEOs born in a place where it suffered more serious famine in 1959—1961are more generous; however, political connections do not affect this relationship. Finally, CEOs with poverty experience have lower perk consumption.
Key Words： Corporate Philanthropy; Poverty Status in Birthplace; Famine Experience in Childhood; Wenchuan Earthquake

Abstract： This paper successfully identifies the dialects spoken by the chairman of the board and CEO respectively by combining the data of executives' birthplaces and “Atlas of Chinese Language”, and systematically analyzes the effect mechanism of the consistent of the dialect spoken by chairman of the board and CEO to the interactive relationship between them basing on the Sapir–Whorf hypothesis and social identity theory, and then empirically test the influence of such consistency to the agency cost using the data from China’s A Share Listed Company from 2008 to 2014. The results show that if chairman and CEO come from the same dialect area, the firm will have lower agency cost, which becomes more significant when the types of dialect are classified finer. After controlling the influence of non-culture factor, the dialects still plays a role. Further study finds that dialect identification can reduce agency cost only in private enterprise and work more powerful in the firm whose chairman is away from his hometown and in the area with population inflow. This paper thoroughly analyzes the influence of Chinese culture on corporate governance based on the pure data from single country, which supplements the microscopic research in “culture and finance” and provides new evidences for market participants to insight into the influences of Chinese traditional culture on economic development.
Key Words： Culture; Dialect; Corporate governance; Agency cost; Social identity

Abstract： Based on a unique setting created by the “18th Decree of ODCP of China” in October 2013, this paper empirically tests whether the market reacts differently when companies use different reasons in announcing the resignations of politically connected independent directors mandated by the 18th Decree. For the resignations triggered by the 18th Decree, we find a significantly negative market reaction when companies announce the resignation using a “personal” reason, but no significant market reaction when they use “the 18th Decree mandate” as the reason. The finding that the market reaction varies with the description of resignations triggered by the same regulatory event demonstrates the cognitive biases of investors in their decision making and the existence of framing effects in the capital market. The paper is the first domestic study that uses archival data to empirically test the framing effects, complementing the existing literature that mainly uses questionnaire surveys or experiments to investigate this behavioral bias. The paper also provides insight and methodology that can be applied in the future research that tests the framing effects. In addition, the study contains timely and important policy implications for the current China’s capital market.
Key Words： Framing Effect; The 18th Decree; Politically Connected Independent Director; Resignation of Independent Director