On November 17, the 18th awarding ceremony of the Sun Yefang Economic Science Award & High-Level Forum on 70-year Development of China’s Economics was held at Renmin University of China. This Award is so far the highest award for economics in China. This year, it went to Prof. Chen Shiyi from the School of Economics, Fudan University.
The Sun Yefang Economic Science Award are presented to the latest top-notch economic achievements in China’s economic science field at the time. With insights from different perspectives, these works have made great contributions to the innovation of socialist economic theory with Chinese characteristics and the construction of the China School of Economics.
Focusing on resource allocation efficiency and providing innovative perspectives for high-quality economic development
Boosting resource allocation efficiency underlies high-quality economic development. In the past 20 years, Chen Shiyi has been dedicated to realizing China’s sustainable and high-quality economic development. He made suggestions and predictions based on resource allocation, emission reduction, performance analysis, productivity assessment, etc, and provided the scientific evidence for governments and enterprises to facilitate their management over sustainable development.
The award-winning paper “Dynamic Evolution of Resource Allocation Efficiency in China: a New Approach Incorportating Energy Factors”, co-authored by Prof. Chen Shiyi and Ph.D. Chen Dengke, was published in Social Sciences in China (Issue 4, 2017). The study offers a novel perspective for the research on high-quality economic development in China, which is not only of academic value, but also of operational feasibility.
Their findings show that despite the continuing growth of total factor productivity in China, resource allocation efficiency was relatively low. Distortion in resource allocation led to an average fall of 42.7% in total factor productivity from 1998 to 2013. The expansion of heavy industry after 2003 and the international financial crisis of 2008 worsened the degree of distortion, which was 12% higher when China was affected by the crisis than at other times. However, the degree of resource allocation has decreased somewhat in the “New Normal” state of the Chinese economy. The decomposition of resource allocation distortion on the basis of a “counter factual” strategy shows that inter-regional and inter-sectoral distortions can explain 51.6% and 48.4% of the total distortion respectively, while capital, labor and energy factors account for 43.8%, 21.2% and 36.1% of the total distortion respectively. In recent years, energy distortion has overtaken capital distortion to become a primary contributor to China’s resource allocation distortion. This warrants urgent attention.
According to the Chair of the Award Committee Jiang Xiaojuan, the paper, based on the fact that China’s energy input features rapid growth and large consumption, introduces the factor of energy into the model of resource allocation efficiency, expands the scope of theoretical research on resource allocation and points out that factor markets are still important to supply-side structural reform in China, and energy price reform is crucial to correcting resource allocation distortion.
Green finance bolstering integrated development of the Yangtze River Delta
In recent years, green finance, serving as the main content of China’s supply-side structural reform and a key approach to monetary resource allocation optimization, has gradually become a national strategy. Chen Shiyi said, “What is essential to green finance lies in the integration of financial services and the framework of sustainable development, merging the idea of green ecology into all kinds of financial services and forming a new financial system with new services, new methods and new models.” As a vanguard of China’s green finance, Chen contributed to the establishment of Fudan Institute of Green Finance in 2018 which is devoted to the development of green economy and finance.
Whether China can solve the problem of “imbalance and inadequacy” holds the key to its high-quality economic development. Chen said that green finance could benefit regional economic integration as it would urge the government and enterprises (financial enterprises included) to realize environment-friendly development, expand and deepen the supply-side structural reform in green investment and financing, and leverage market forces to strengthen the reasonable fund allocation in low-carbon, green and energy-saving industries. Through the “top-down” and “bottom-up” approaches conducted by the government and market, the green financial development would finally promote the collaboration and sustainable development of the whole industry.
Also led by Chen, the “Green Finance Competitiveness Report of Yangtze River Delta” released in 2018 highlights that Yangtze River Delta cities should take the lead in developing green finance and using financial leverage to accelerate ecological protection. During Shanghai Forum 2019, Fudan Institute of Green Finance released another report titled “Green Finance to Drive the Integrated Development of the Yangtze River Delta”. It is a vital reference for the standardization of green finance policies and regulations in the Yangtze River Delta. Chen believes that the development of green finance serves not only the Yangtze River Delta integration, but also its high-quality development.
