Table of Content

15 February 2024, Volume 0 Issue 2

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Theoretical Economics

Promoting the High-Quality Development of the Yangtze River Economic Belt through Regional Synergy and Integration

LIU Zhi-biao, CHEN Chang-jiang, YE Mao-sheng

2024, 0(2):  3-10. 

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To further promote the high-quality development in the Yangtze River Economic Belt, it is necessary to solve the three major contradictions between the ecological environment and the industrial structure, between the development of regional coordination and integration and the market segmentation, and between the development of internal circulation and the development of external circulation. Strengthening regional coordination and integration is the key path and main way to solve these contradictions and achieve high-quality development of the Yangtze River Economic Belt. The result of the analysis of the regional coordination and integration in the Yangtze River Economic Belt shows that on the one hand, there are the market segmentation and the protection of regional governments, on the other hand, the real situation is the uneven development in various regions, which hinders the ability of provincial and municipal economies to obtain the economies of scale and scope, thus becoming the main reason for hindering and restricting the coordination and integration of various regions in the Yangtze River Economic Belt. In order to promote regional coordination and integration and achieve regional collaborative and integrated development, we need not only to vigorously promote the integrated cooperation between local governments, but also we need to form a unified large market with free flow of commodity factor resources and fair competition. On the basis of “overall strategy, planning with one blueprint, environmental protection with one standard, and one transportation network”, we should promote the joint construction of the Yangtze River Science and Technology Innovation Corridor along the Yangtze River Economic Belt, promote the coordinated and integrated development of world-class advanced manufacturing clusters in the Yangtze River Economic Belt, and construct a new international and domestic dual circulation development pattern dominated by domestic demand.

Middle Income Trap and Middle Income Stage: A Concurrent Discussion on the Breakthrough of China’s Catching-up Path

LIU Hai-ying, TIAN Fang-yu, LIU Da-yu

2024, 0(2):  11-28. 

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The“14th Five-Year Plan”and the“Outline of 2035 goals”clearly state that per capita GDP will reach the level of moderately developed countries by 2035, which provides an important strategic guidance and time plan for China to cross the middle-income trap. Based on making a deep explanation of the concept of the middle-income trap, this paper uses the typical facts summary, the analysis of convergence as well as a quantile vector autoregressive model to draw the following conclusions: first, with the development of China’s economy, the traditional growth engines can no longer provide sustained impetus for economic growth, while technological progress and institutional quality are playing an increasingly prominent role in driving economic growth; second, as a middle-to-high income country, China coexists with the developed countries such as the United States and Japan in a same convergence club, which shows that China has not fallen into the middle income trap, it just stays at the middle income stage; third, the recent decline in efficiency caused by the “technology-capital mismatch”has slowed down economic growth to some extent, but the impact of this effect is relatively limited and still within a reasonable range. On the contrary, the effectiveness of the institutional level improvement has remained stable, and the institutional quality has played a positive role in promoting long-term growth. It can be seen that correcting the“technology-capital dislocation”as well as continuously giving play to the institutional advantages are the key guarantee and the only way for China to catch up with the developed countries.

Public Economics & Administration

The Development Logic, International Experience of Digital Public Finance and the Enlightenment to China

WANG Ting-ting

2024, 0(2):  29-41. 

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Digital public finance is a new fiscal governance model formed by countries in the process of adapting to the development of the digital economy and the deepening fiscal reforms. It has the main features of the connectivity of financial information, the intelligentization of financial management, the integration of financial business and the efficiency of financial governance, which is of great significance for improving the efficiency of financial management, promoting the fairness of financial distribution and strengthening the precise supervision of financial risks. It can be seen from the observation ofits practice that some of the foreign countries have established a multi-tiered and wide-ranging digital financial system in such aspects as the integrated management of financial data, the dynamic monitoring of tax source information, the accessibility of public services, and the protection of financial security and citizens’ privacy; but there still exist some challenges, such as insufficient overall planning, weak institutional stability, ineffective implementation, and weak security guarantees. Given that China’s digital public finance construction is still in the initial stage, we should draw experiences and lessons from the foreign countries, find out the deficiencies and seek ways to improve them in light of China’s actual situation. Therefore, we should construct an overall framework and strengthen the unity and synergy of digital finance construction; consolidate the foundation of governance and promote the theoretical supporting and standard establishments of digital public finance; strengthen the technology integration and improve the level of information governance and the efficiency of financial decision-making; focus on the prevention of data privacy risks andprotection of the basic rights and interests of each participant.

Vertical Fiscal Imbalance, Public Expenditure Bias and Local Budget Executive Contraction

GUAN Zhi-chao, FU Min-jie

2024, 0(2):  42-56. 

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The reform of the budget system is an important part of the public finance modernization. The problem of the local budget executive contraction comprehensively reflects the insufficiency of government’s budget management ability and macro-control ability. Based on the typical facts of Chinese fiscal decentralization, this paper makes use of the inter provincial panel data from 1997 to 2020 in China to conduct an empirical analysis on the multiple mechanisms and the impact effects of vertical fiscal imbalance and public expenditure bias on local budget executive contraction. The results show that the direct effect of vertical fiscal imbalance will aggravate the local budget executive contraction, but the local budget executive contraction can be alleviated indirectly through the people’s livelihood public expenditure bias. The heterogeneity analysis reveals that the bias towards livelihood expenditures in developed regions has deepened the local budget executive contraction, while theunemployment rates and economic development levels in developed regions can alleviate the local budget executive contraction. The mechanism analysis reveals that the vertical fiscal imbalance has generally aggravated the local budget executive contraction, and the irrational financial structure of central and local governments has deepened the local budget executive contraction. Therefore, in order to alleviate the local budget executive contraction, it is necessary to control the degree of vertical fiscal imbalance and adjust the distribution of fiscal power and administrative power between the central and local governments; optimize the structure of local government expenditure structure and increase the proportion of livelihood expenditure; further promote the reform of the modern budget system, alleviate the local budget executive contraction, and implement the key details of the budget system.

Modern Finance

Integration and Restructuring of Local Financing Platforms, Implicit Guarantee Expectations and Default Risks

WANG Qiu-shi, WAN Rui, FAN Wen-cheng, WEI Zhi-hua

2024, 0(2):  57-70. 

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In recent years, local government financing platforms have undergone a“reckless”style of development, resulting in a substantial increase in government implicit debt due to extensive borrowing, and a sharp rise in the default risks of local government financing platforms as well. As the primary financing force for local government infrastructure projects, the transformation of local financing platforms has become a crucial approach to mitigating implicit debt risks. Based on a comprehensive credit risk model and an indefinite discrete recursive model, as well as the data from local financing platforms between 2017 and 2021, this paper conducts a study. The findings show that theintegration and restructuring of local financing platforms can leverage implicit guarantee expectations to subsequently reduce default risks. Under the moderating effect of implicit guarantee expectations, the integration and restructuring of local financing platforms can reduce default risks primarily through credit effects, operational effects, and interest rate effects. The heterogeneity analysis reveals that this impact is more significant among enterprises with smaller scales, weaker profitability, and regions with less developed economies. The extended analysis reveals that the integration for conglomerate enterprises can not only reduce the default risks of local financing platforms but alsoprogressively diminish the dependence on the implicit guarantee expectations as the conglomerate’s marketization develops. This constitutes a win-win choice. The above conclusion suggests that the integration and restructure of the local financing platforms can effectively reduce their default risks and further address the issues of hidden government debt.

How Do Internal and External Uncertainties Affect Cross-Border Bank Capital Flows?

JIN Wen-wen

2024, 0(2):  71-84. 

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Understanding the impact of internal and external uncertainties on cross-border bank capital flows and their mechanisms holds great importance in the prevention and control of financial risks in the new era. Based on 224 variables at 18 levels, this paper constructs an economic and financial uncertainty index of China. Then it investigates the impact of internal and external uncertainties on cross-border bank capital flows by taking China as a recipient country. The findings show that, firstly, the global impact of economic and financial uncertainty from the United States will suppress the cross-border bank capital inflows to China, and this impact is even more severe during the tightening period of the Federal Reserve’s monetary policy; secondly, the uncertainty of China’s economy and finance will help to promote the withdrawal of cross-border bank capital by exacerbating market panic, which is manifested as a hedging mechanism, and it will suppress cross-border bank capital inflows by affecting the relative returns of debt assets, which is manifested as a profit seeking mechanism; thirdly, under the influence of internal economic uncertainty, the higher the level of financial development in the reporting country, the less capital withdrawal from cross-border banks; fourthly, under the system of higher economic uncertainty in China, the external uncertainty has a significant impact and strong sustainability on cross-border bank capital inflows. In light of these findings, it is recommended that the government should effectively identify the source and types of uncertainties to enhance the cross-border capital monitoring system, enrich the cross-border capital regulatory toolbox based on different transmission mechanisms of uncertainties, and bolster the internal driving force and resilience of economic growth in China, so as to cope with the superimposed effects of multiple uncertainty shocks.

Business Administration

Research on the Influence of Manufacturing Servitization on the Internal Income of Enterprises

XIAO Ting, CHEN Zhou-yong

2024, 0(2):  85-96. 

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The manufacturing enterprises set foot in the service field for the purpose of innovating business models and getting a head start in the market competition. However, servitization is often difficult to bring substantial returns to enterprises in a short term, and the income of the executives and employees will change to varying degrees due to the implementation of the service strategy, thus changing the original income distribution structure of enterprises. This paper discusses the influence mechanism of servitization on the income level of executives and employees within enterprises and the income gap between the two groups. The empirical findings show that the degree of servitization of manufacturing enterprises is negatively correlated with the income of executives and employees, and the elastic coefficients of the income changes of employees and executives to the changed degrees of servitization are -2.3 and -1.7, respectively. It can be seen that the improvement of the degree of servitization will lead to the widening of the income gap between the two groups. The transmission mechanism, on the one hand, is that servitization causes fluctuations in enterprise performance, thus affecting the income of employees and executives; on the other hand, the implementation of serserization strategy urges enterprises to attract knowledgeable managers with high income, thus restraining the decline of senior executives’ income to a certain extent. In general, the negative impact of servitization on employees’ income will be reversed to a certain extent as enterprises gradually adapt to and control the information and resources in the service business field. The above conclusion reveals the issue of income distribution gap of different levels of personnel under the strategic changes of Chinese enterprises, which has enriched the relative theories of manufacturing services.

Opportunism vs. Ingenuity: The Impact of AI-Led Product Design on Consumer Purchase Intentions

LI Zhi-jun, LI Qing-yi, XIAO Chun-qu, ZHU Hong

2024, 0(2):  97-110. 

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The rapid iteration of Artificial Intelligence (AI) technology is profoundly impacting various aspects of the business world, prompting many brands to contemplate AI-driven approaches to new product design. It is worth exploring in depth how the use of AI design affects consumer willingness to purchase products. Through the four experiments of this paper, it is found that consumer willingness to purchase new products designed by AI is significantly lower compared to those designed by human designers. This is attributed to the diminished perception of brand effort when products are designed by AI. Additionally, an interactive effect exists between the sources of product design and brand images. For open brands, consumers show a stronger preference for purchasing new products designed by using AI, compared to those designed by human designers. For traditional brands, consumers are more inclined to buy new products that are designed by humans, rather than those generated through AI-led design processes. The above research results have enriched the literature on the sources of product design and algorithm aversion, and provide reference and inspiration for the commercial practice of applying and promoting AI design products for enterprises.

Industry & Trade

Can Digital Transformation Optimize the Location Distribution of Enterprises’ OFDI?

LI Ming-yang, ZHANG Nai-li

2024, 0(2):  111-124. 

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Currently, the scale of China’s outward foreign direct investment ranks among the top in the world, but there still exist such problemsas irrational distribution of enterprise OFDI location and so on. In order to improve the quality of overseas investment, it is of theoretical value and practical significance to explore whether digital transformation can optimize the location distribution of enterprise OFDI. Based on the assumption of enterprise heterogeneity, a gravity model is constructed, and it is found that there exists a U-shaped relationship between geographic distance and OFDI expansion margin.In addition, digital transformation can change the influence of geographic distance on enterprise OFDI expansion margin and optimize the location distribution of enterprise OFDI. The mechanism test reveals that digital transformation can reduce OFDI transaction costs, thus breaking through the limitations of geographical distance on overseas investment and optimizing the location distribution of enterprise OFDI. The heterogeneity analysis reveals that digital transformation can optimize enterprise OFDI location distribution with enterprise, regional and industrial heterogeneity. From the spatial dimension, digital transformation can play a role in optimizing the location distribution of enterprise OFDI regardless of whether the investment host country is a high-income economy or a middle-income or low-income economy, and whether it is a Belt and Road country (region) or a non-Belt and Road country (region). From the time dimension, digital transformation can continue to optimize enterprise OFDI location distribution. Based on the above conclusions, it is necessary to actively promote the digital transformation of enterprises, give full play to digitization in optimizing the distribution of enterprises’ overseas investment, maintain the stability of geo-economy, and realize deeper global cooperation.

The Coordinated Development between Digital Service Trade and Digital Infrastructure

WANG Qun-yong, MIAO Pei

2024, 0(2):  125-138. 

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There exists a mutually promoting collaborative relationship between digital service trade and digital infrastructure, however, the traditional measurement methods are difficult to accurately analyze this issue. Under the framework of social network analysis, this paper uses the random actor dominated model to explore this issue in detail. The findings show that there exists a synergistic development relationship between the digital infrastructure of an economy and the trade in digital services, which mutually affects each other. The well-developed digital infrastructure of both parties can reduce their costs of digital service trade, and thus have a significant positive impact on the import and export of digital service trade. The digital service trade will also affect the construction of digital infrastructure in economies: under the impact of the two mechanisms of internal incentives and external spillovers, to carry out digital service trade with economies with good digital construction will enhance their own digital infrastructure level. Through a heterogeneity analysis of different industries, it is found that digital infrastructure has the greatest impact on the intellectual property usage fees and the export ofother commercial services, and a greatest impact on the import of personal entertainment services, while the import and export trade of personal entertainment services has the greatest impact on digital infrastructure. Therefore, the government should play a leading role in promoting the coordinated and stable development of digital trade and digital construction by formulating reasonable plans, actively seeking international cooperation, and emphasizing the development of cultural industries.

Modern Accounting

Research on the Impact of Digital RMB Issuance on Financial Accounting System

WU Wen-yong, LI Ze-jun

2024, 0(2):  139-153. 

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Currently, digital RMB is being issued and circulated in China, the application scenarios of digital RMB are gradually expanding, and the proportion of digital RMB in payment is showing a rapid growth. The issuance and circulation of digital RMB has generated a wide and profound impact on the basic accounting hypothesis, the accounting basic function, the quality of enterprise information, and the existing financial management system, and will bring new challenges to the existing financial accounting system and the financial accounting, information disclosure, cash management, internal control, accounting organizational structure of enterprises. In order to meet these challenges, in terms of the construction of accounting legal system, it is necessary to establish the legal tender status of digital RMB, clarify the rules for the transfer of the ownership of digital RMB, formulate accounting standards for digital RMB, and improve the accounting informatization system and norms. In terms of internal accounting supervision of enterprises, the powers and responsibilities of financial and accounting positions should be reconfigured, the additional posts for system security maintenance should be created, the accounting systems should be revamped and upgraded, and the internal auditing of accounting information systems should be strengthened. In terms of digital RMB circulation management, it is necessary to expand the use of digital RMB, improve the starting point of sporadic payment and settlement, reduce the cash on hand limit, and strengthen the supervision of large amount of digital RMB circulation.

Data Asset Information Disclosure and Auditor Pricing Strategy

NIU Biao, YU Xiang, YUAN Ze-ming, DING Ya-nan

2024, 0(2):  154-164. 

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Data asset has become an important strategic resource of enterprises, and the disclosure of data asset information of enterprises has been widely concerned by the society. Taking the listed companies in Shanghai and Shenzhen stock exchanges from 2007 to 2021 as research objects, this paper examines the impact of data asset information disclosure on auditor pricing. The findings show that the disclosure of data asset information can reduce audit costs. The mechanism research reveals that data asset information disclosure can alleviate corporate financing constraints, drive corporate technological innovations, improve corporate reputation, and increase the work investment of auditors, thereby reducing their business and audit risks, so that ultimately lowering audit fees. The expansion analysis shows that the reducing effect of data asset information disclosure on audit costs is more significant in enterprises with high investor attention and high internal control quality. Therefore, the relevant departments should do a good job in top-level design and actively engage in market transactions of data elements; enterprises should establish a reasonable data asset management system as soon as possible; auditors should adapt to the development trend of the data element market and actively explore new methods for auditing data assets.