Introduction to: Econometric Modeling of China

Prior to the starting of the economic reform initiated by Deng Xiaoping in the Peoples' Republic of China in 1978, the concepts of modern economic analysis played little formal role inside the country. As for econometrics, neither was it part of the academic curriculum nor were the statistical materials for empirical model building to be found.Outside the PRC, some economists with deep special interest in the economy of China attempted to try to follow economic events externally, using crude estimates of macroeconomic data and rough estimates of parametric specifications that were not necessarily in the minds of Chinese decision makers but more familiar to those schooled in "Western" economics. As early as 1968, such efforts produced a very comprehensive volume on trends and prospects of the Chinese economy around that time: Economic Trends in Communist China, edited by Alexander Eckstein, Walter Galenson and Tachung Liu, Aldine Publishing Co., Chicago, 1968. This was followed by a series of publications on the Chinese Economy by the Joint Economic Committee of the US Congress in 1967, 72, 75 and 78.1 They were incisively summed up by Alexander Eckstein as China's Economic Revolution, Cambridge University Press, 1977.2 These studies have tried hard to collect all the scanty statistical data available then and knit them together to peep into the working of the Chinese economy and find out the trends or prospects for the Chinese economy after the Cultural Revolution or economic reform. In the 80's a significant amount of statistical data gradually began to flow out, even to foreign researchers. Modeling the Chinese economy in the macro-econometric way appeared to be possible…