Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CBE exam > Exam > Flashcards

Exam Flashcards

1
Q

Following Mao era, why was reform necessary?

A

1) Disillusion with dogma following Great Leap Forward & Cultural Rev
2) Nearby countries standard of living improving
3) Shift of mindset from class struggle to economic development

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Issues with old system? (Mao era)

A

1) Distorted pricing
2) Inefficient allocation of resources
3) No work incentive
4) No foreign trade

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Overview of stage 1 of economic reform process (1978-1984)

A

1) Prosperity of country placed above ideology (first emancipation of mind)
2) Experiment with SOE profit retention (1979, Sichuan)
3) Beginning of SEZ experiments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Overview stage 2 economic reform process (main period 84-89)

A

1) Dual track pricing (why? - prevent rapid price increase)
2) Gradualist approach (created opps for corruption)
3) Contract responsibility system

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Overview stage 3 reform (inertia, 89-93)

A

1) Economy overheating
2) Increased conservative influence
3) Post-Tiananmen

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Implications of Deng Southern Tour (1992)?

A

1) Re-energised reform process with a key focus on institutional reform including:
- Decision was officially made to pursue market system
- Rule of law
- Market supporting institutions
- Property rights

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Four Key SOE Challenges?

A

1) Inefficiency
2) Debt burden
3) Overstaffing
4) Policy burden/overstaffing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

2 stages of SOE reform?

A

1) Autonomy (79-92)
- Focussed on improving inner workings of SOE’s, ie Sichuan experiment, CRS, increased managerial authority
2) Marketisation (92 onwards)
- Process of building market supporting institutions, privatising SOE’s (hold large release small in 96-97)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Private sector contribution rule

A 
50 percent of tax revenue
60 percent of GDP
70 percent of technological innovation
80 percent of urban employment and
90 percent of new jobs and new firms
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Interplay between SOE’s and banking systems?

A

Banking system is SOE dominated
Much more interest alignment between SOE banks & SOE firms, hence big imbalance between private & SOE access to funding
Leads to shadow banking sector

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the Kuznets Curve?

A

Economic theory that suggests an inverted u relationship between GDP per capita growth and inequality
After a certain point reached, inequality begins to fall

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How serious is inequality in China? Include comparisons

A

Current Gini coefficient estimated >0.5

  • Very high for Asia
  • Comparable to Latin America
  • Australia is 0.33
  • Grown by approximately 0.25 percentage points since reform began
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the types of inequality?

A

“RRES”

1) Rural Urban
- Most serious (contributes over half of total inequal)
2) Regional
- Product of initial reform policies and natural endowments (SEZ’s, fiscal decentralisation)
3) Educational inequality
- The returns from education are growing, and more rapidly at the University level, then technical school, then high school
4) Sector inequality
- Income in monopolistic industries (where modern SOE’s tend to dominate, such as telecommunications) are higher than non-monopolistic industries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What has been done to combat inequality?

A

1) Regional initiatives (GWD, Rise of Central China)
2) Introduction of dibao
3) Anti-corruption campaign

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What further actions can be taken to combat inequality?

A

Progressive tax system which mitigates the underlying problem of returns to capital outpacing GDP and returns to wages

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

How much wealth does 1% of Chinese population own?

A

1/3

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Difference between international trade & international investment?

A

Trade:
- Imports & Exports
Investment
- Investment in a nation into activities controlled by investing firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Why did China join WTO?

A

1) NX key part of GDP, thereby increasing NX, and increase GDP
2) Promote trade with other countries, leading to:
- Improve access to tech
- Learn from advanced firms
- Increase competitive pressure on local firms to drive efficiency

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Consequences of joining WTO?

A

China exports grew by >20% within a year driving employment growth, GDP growth and improve living standards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Benefits of inward FDI?

A

1) Learning opps
2) Greater options for consumers
3) Improve local firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Negatives of inward FDI?

A

1) Crowding out effect

2) Competitive pressure on local firms will inevitably lead to casualties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Two major perspectives on outward FDI?

A

1) Springboard
- Access to foreign resources can increase competitiveness of firms VS foreign firms
2) Escape
- Heavy gov intervention, low IP protection and shady legal system make firms want to enter more developed foreign markets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Why Chinese firms engage in OFDI?

A

1) Extremely strong government support encourages it
2) Revenue & Risk diversification
3) Greater access to key resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Challenges of Chinese OFDI?

A

1) Regulatory differences across borders
2) Cultural imbalances
3) Reputational challenges (Chinese reputation for imitation goods, low cost low quality)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

How does Gov support OFDI?

A

1) State-owned banks offer favourable terms
2) Subisidies
3) Major policies encourage overseas investment (BRI, AIIB, Going Out strategy)

26
Q

How much OFDI conducted by SOE’s?

A

80% (2013)

27
Q

Where does China rank on OFDI inflows list?

A

Second (2019) and could rise if further reforms in high profit strategic industries

28
Q

CSR Pyramid?

A

Bottom to top:

  • Economic
  • Legal
  • Ethical
  • Philanthropic
29
Q

Trajectory of CSR reporting in China?

A

Grown annually since 2007

30
Q

Internal drivers of CSR in China?

A

(THIC)
Tradition
- Cultural tradition embedded in indigenous philosophies
High-quality growth
-Product of shifting towards high quality economic growth
Institutional vacuum
- Response to poorly formed institutions to implement such actions
Crises management
- Response to major crises such as Sichuan earthquake

31
Q

External drivers of CSR in China?

A

(MISS)
Market access
- Such reporting is required to enter certain developed markets
International standards
- Certain actions must be taken to fit global standards such as reporting expectations
Stakeholder activism
- Stakeholders pressuring companies to take certain ethical actions
Supply Chain expectations
- Many companies in China operate as part of global supply chains, meaning standards from foreign countries must apply

32
Q

Interplay between philosophies and CSR

A

Positive
Confucuian concept of “ren” can force companies to operate within a prism of social benevolence, meaning they only pursue activities that both benefit the firm and society
Negative
Confucian concepts are vague, eg: focus on harmony can be meaningfully interpreted in many different ways from many diff perspectives (such as employer/boss)

33
Q

Guanxi definition

A

The social fabric of reciprocities between individuals and organisations

34
Q

Characteristics of guanxi?

A 
(TPPR)
Transferrable
Personal
Pragmatic
Reciprocal
35
Q

Guanxi Narrative?

A

1) Role of markets and institutions
2) Absence leads to institutional void
3) In China, this void filled by guanxi
4) Characteristic of transition economies
- markets expand, but the systems are not there to guide it in the right direction.

36
Q

Chinese context that creates corruption opportunities

A

1) Transitioning economy with many market failures
2) Government with access to inimitable, high val resources (eg: land & info)
3) Such failures pose risks to firms, who try to mitigate by building relationships

37
Q

Definition of corruption

A

Abused of entrusted power or position for private gain

38
Q

Why corruption so prominent in China?

A

Imbalance between economic and political reforms

39
Q

Mutual dependence theory?

A

Both parties (firms/officials) have an incentive to collaborate with each other

Officials: Want to drive eco. growth
Firms: Need access to officials resources for business gain

40
Q

How has Gov attempted to address corruption?

A

Xi Jinping Three-pronged strategy

1) Do not dare corrupt (punishments)
2) Unable to corrupt (Strong oversight, new agencies, stronger laws)
3) Do not want (Driving improved ethics)

41
Q

Other actions to address corruption?

A
  • Increased freedoms for media to conduct investigative work in the public interest
  • More robust legislative system, with less government intervention into judicial procedures to allow for truly independent application of rule of law
42
Q

What is corporate governance?

A

Means by which companies are controlled and decisions are made

43
Q

What is agency theory?

A 
Purpose of CG is to monitor managers
Separation of ownership and control
Principal-Agent Problem
Agents are individualistic and self-serving
- Conflict of interest
- Information assymetry
44
Q

What is stewardship theory?

A

Purpose of CG is to empower managers to fulfil their (assumed) aligned interests
Managers can be trusted to pursue to the corporations best interests
Managers are motivated intrinsically

45
Q

Stakeholder Theory

A

Purpose of CG is to satisfy the wide range of stakeholders, not just shareholders
Impact on society is a factor in decision making
Stakeholder engagement is important part of decision making process

46
Q

Key macro-institutional milestones of CG in China?

A

Creation of Shanghai & Shenzhen stock exchanges in 1990/1991
Company law established (1993)
Laws passed in early 2000’s for independent directors

47
Q

Average proportion of ownership for majority shareholders (listed Chinese firms) in 2012?

A

In 2012, average proportion of ownership for largest shareholder was 36%

48
Q

Legal size of boards?

A

Between 5 and 19 board members, 1/3 independent

49
Q

Recommendations to improve board of directors impact on CG?

A

1) Greater need for independent board members to exercise authority
2) Legal reform
- Greater clarity in laws
- Harsher punishments

50
Q

Stage 1.1 (1978-1983)

A
  • Following death of Mao
  • Eco dev above ideology
  • Xiaogang
  • Sichuan experiment
  • SEZ’s
  • Fiscal decentralisation
51
Q

Stage 1.2 (1983-1989)

A
  • Major reform period
  • CRS
  • Dual track pricing
  • 4 commercial banks
52
Q

Stage 1.3 (1989-1993)

A
  • Reform stalling
  • Overheating economy
  • Increased conservative power threatening to un-do reforms
  • Tiananmen Square
53
Q

STAGE 2 (1993 onwards)

A 
Following Deng Southern Tour
•	Major institutional reforms
o	Intro of dibao
o	Tax and Fiscal system reform
o	Prevented commercial banks from investment banking practices in line with developed standards
o	SOE privatisation
	Grasp large, release small
54
Q

Code of Corp Governance Year?

A

2002

55
Q

China R&D investment rank?

A

2nd

56
Q

CSR appear in Company Law year?

A

2006

57
Q

Matthew Effect Summary

A

Advantage begets advantage

58
Q

Company Law year?

A

1994

59
Q

Private firms become legit?

A

1984

60
Q

Rural-urban income ratio

A

1:3

61
Q

Hu-Wen Decade growth rate

A

10-11%

62
Q

First 5 year plan years?

A

1953-1957

CBE exam (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions