nep-cna New Economics Papers
on China
Issue of 2007‒03‒10
eleven papers chosen by
Zheng Fang
Ohio State University

  1. China’s Trade and Growth: Impact on Selected OECD Countries By Malory Greene; Nora Dihel; Przemyslaw Kowalski; Douglas C. Lippoldt
  2. Hard or Soft? Institutional Reforms and Infrastructure Spending as Determinants of Foreign Direct Investment in China By K. C. Fung; Alicia García-Herrero; Hitomi Iizaka; Alan Siu
  3. The impact of trade with China and India on Argentina ' s manufacturing employment By Castro, Lucio; Olarreaga, Marcelo; Saslavsky, Daniel
  4. Bank Efficiency in China, Rent Seeking versus X-inefficiency: A non-parametric Bootstrapping Approach. By Matthews, Kent; Guo, Jianguang; Zhang, Nina; Wang, Lina
  5. Rational Inefficiency and non-performing loans in Chinese Banking: A non-parametric Bootstrapping Approach. By Matthews, Kent; Guo, Jianguang; Zhang, Nina
  6. "China's Energy Security: National Security, Ecological Balance and Regional Co-operation" By Haider A. Khan; Mariko Frame
  7. Real Financial Integration among the East Asian Economies: A SURADF Panel Approach By Chan, Tze-Haw; Baharumshah, Ahmad Zubaidi; Lau, Evan
  8. Extending health insurance to the rural population : an impact evaluation of China ' s new cooperative medical scheme By Wagstaff, Adam; Lindelow, Magnus; Gao Jun; Xu Ling; Qian Juncheng
  9. Trade integration in East Asia : the Role of China and production networks By Haddad, Mona
  10. On the Importance of Equity in International Climate Policy: An Empirical Analysis By Lange, Andreas; Vogt, Carsten; Ziegler, Andreas
  11. Congestion in the Chinese automobile and textile industries revisited By A.T. Flegg; D.O. Allen

  1. By: Malory Greene; Nora Dihel; Przemyslaw Kowalski; Douglas C. Lippoldt
    Abstract: This paper examines China's emergence as a global player in international markets over the last few decades. It provides an overview of China's trade policy environment following the country's process of market opening and joining the WTO. The report analyses China’s role in international processing activities and moving up the global value chain. It also examines China’s impact on world prices and the deterioration of its own terms of trade. The paper looks at China's two-pronged export...
    Keywords: telecommunications, investment, trade and growth, trade policy, insurance, banking, intellectual property rights, computable general equilibrium, value chain, China, services trade, trade restrictiveness index
    Date: 2006–11–28
  2. By: K. C. Fung (University of California at Santa Cruz); Alicia García-Herrero (Banco de España); Hitomi Iizaka (University of California at Santa Cruz); Alan Siu (University of Hong Kong - School of Economics and Finance)
    Abstract: In this paper, we examine empirically whether hard infrastructure, in the form of more highways and railroads, or soft infrastructure, in the form of more market oriented institutions through deeper reform, lead to more foreign direct investment (FDI) in China. We use data of outward FDI from the United States, Japan, Hong Kong, Taiwan and Korea to various regions of China from 1990 to 2002. We control for the standard determinants of FDI, namely regional market size, wage rates, human capital and tax policies. We add indices of hard and soft infrastructure and find that soft infrastructure, in the form of more market oriented institutions through deeper structural reform, consistently outperforms hard infrastructure as a determinant of FDI.
    Keywords: china, fdi determinants
    JEL: F21 F23
    Date: 2006–06
  3. By: Castro, Lucio; Olarreaga, Marcelo; Saslavsky, Daniel
    Abstract: For many in Latin America, the increasing participation of China and India in international markets is seen as a looming shadow of two " mighty giants " on the region ' s manufacturing sector. Are they really mighty giants when it comes to their impact on manufacturing employment? The authors attempt to answer this question by estimating the effects of trade with China and India on Argentina ' s industrial employment. They use a dynamic econometric model and industry level data to estimate the effects of trade with China and India on the level of employment in Argentina ' s manufacturing sector. Results suggest that trade with China and India only had a small negative effect on industrial employment, even during the swift trade liberalization of the 1990s.
    Keywords: Labor Markets,Free Trade,Economic Theory & Research,Water and Industry,Trade Policy
    Date: 2007–03–01
  4. By: Matthews, Kent (Cardiff Business School); Guo, Jianguang; Zhang, Nina; Wang, Lina
    Abstract: This study demarcates cost-inefficiency in Chinese banks into X-inefficiency and inefficiency caused by rent seeking behaviour. A protected banking market not only encourages weak management and X-inefficiency but also public ownership and state directed lending encourages moral hazard and bureaucratic rent seeking. This paper uses bootstrap non-parametric techniques to estimate measures of X-inefficiency and rent-seeking inefficiency for the 4 state owned banks and 11 joint-stock banks over the period 1997-2004. In contrast to other studies of the Chinese banking sector, the paper argues that reduced inefficiency is an indicator that the competitive threat of the opening up of the banking market in 2007 has produced tangible benefits in improved performance.
    Keywords: Bank Efficiency; China; X-inefficiency; DEA; Bootstrapping
    JEL: D23 G21 G28
    Date: 2007–02
  5. By: Matthews, Kent (Cardiff Business School); Guo, Jianguang; Zhang, Nina
    Abstract: The existing Chinese banking system was born out of a state-planning framework focussed on the funding of state-owned enterprises. Despite the development of a modern banking system, numerous studies of Chinese banking point to its high level of average inefficiency. Much of this inefficiency relates to the high level of non-performing loans held on the banks books. This study argues that a significant component of inefficiency relates to a defunct bureaucratic incentive structure. Using bootstrap non-parametric techniques the paper decomposes cost-inefficiency into X-inefficiency and rational inefficiency caused by bureaucratic rent seeking. In contrast to other studies of the Chinese banking sector, the paper argues that a change in the incentive structure and the competitive threat of the opening up of the banking market in 2007 has produced reduced inefficiency and improved performance.
    Keywords: Bank Efficiency; China; X-inefficiency; DEA
    JEL: D23 G21 G28
    Date: 2007–02
  6. By: Haider A. Khan (GSIS, University of Denver); Mariko Frame (GSIS, University of Denver)
    Abstract: This paper analyzes both global and regional approaches to solving problems of energy security and ecological imbalance by addressing specifically the problems of China's energy security. PRC's growing energy dependence has become a major concern for both economic and national security policymakers in that country. The ambitious goal of modernization of the economy along the lines of the other newly industrialized economies(NIEs) of Asia has succeeded only too well, and it is difficult to reorient economic priorities. If examined rigorously, such an economic strategic assumption can be seen to entail the goal of creating further technological capabilities. In particular, China seems to be firmly committed to the creation of a largely self-sustaining innovation system as part of a knowledge-based economy of the future . Such innovation systems, called positive feedback loop innovation systems or POLIS have been created by advanced countries, and NIEs such as South Korea and Taiwan are proceeding to create these as well. But this will add to its energy burden and further dependence on the US as the power which controls the key sea lanes. Only a strategic reorientation to building a self-sustaining POLIS and appropriate regional cooperation institutions can lead to the way out of the current dilemma for China.
    Date: 2007–03
  7. By: Chan, Tze-Haw; Baharumshah, Ahmad Zubaidi; Lau, Evan
    Abstract: To testify RIP, this study scrutinizes the mean-reversion behavior of bilateral real interest differentials (RIDs) in eight East Asian economies. We incorporate the ASEAN-5, South Korea and China (mainland) with the US and Japan taken as base countries. Four sub-samples within 1976-2004 are being considered to accentuate the effects of institutional changes and financial crises. To rectify the deficiency in extant univariate and panel tests, the newly proposed SURADF statistics by Breuer et al. (2002) is utilized. Overall, the findings are in favor of RIP such that RIDs are found mean-reverting (except China) and with faster adjustment, especially during the post-crisis era. Such outcome is in accord with the enhanced financial integration among the ASEAN-5 and South Korea with their major trading partners, suggesting that further economic cooperation and currency arrangements in the region are bright to preserve potential financial shocks. Conversely, the real financial integration among China-US and China-Japan are not yet empirically recognized notwithstanding the recent surge of capital flows into the mainland.
    Keywords: Real Interest Differentials; SURADF Panel Unit Root Test; Half-life; Confidence Intervals; Financial Integration
    JEL: G15 C13 F36
    Date: 2005
  8. By: Wagstaff, Adam; Lindelow, Magnus; Gao Jun; Xu Ling; Qian Juncheng
    Abstract: In 2003, after over 20 years of minimal health insurance coverage in rural areas, China launched a heavily subsidized voluntary health insurance program for rural residents. The authors use program and household survey data, as well as health facility census data, to analyze factors affecting enrollment into the program and to estimate its impact on households and health facilities. They obtain estimates by combining differences-in-differences with matching methods. The authors find some evidence of lower enrollment rates among poor households, holding other factors constant, and higher enrollment rates among households with chronically sick members. The household and facility data point to the scheme significantly increasing both outpatient and inpatient utilization (by 20-30 percent), but they find no impact on utilization in the poorest decile. For the sample as a whole, the authors find no statistically significant effects on average out-of-pocket spending, but they do find some-albeit weak-evidence of increased catastrophic health spending. For the poorest decile, by contrast, they find that the scheme increased average out-of-pocket spending but reduced the incidence of catastrophic health spending. They find evidence that the program has increased ownership of expensive equipment among central township health centers but had no impact on cost per case.
    Keywords: Health Monitoring & Evaluation,Housing & Human Habitats,Small Area Estimation Poverty Mapping,Regional Rural Development,Health Economics & Finance
    Date: 2007–03–01
  9. By: Haddad, Mona
    Abstract: Production networks have been at the heart of the recent growth in trade among East Asian countries. Fragmen tation trade, reflected mainly in the trade in parts and components, is expanding more rapidly than the conventional trade in final goods. This is mainly due to the relatively more favorable policy setting for international production, agglomeration benefits arising from the early entry into this new form of specialization, considerable intercountry wage differentials in the region, lower trade and transport costs, and specialization in products exhibiting increasing returns to scale. The economic integration of China has deepened production fragmentation in East Asia, countering fears of crowding out other countries for international specialization. International production fragmentation in East Asia has intensified intraregional trade but has depended heavily on extraregional trade in final goods. While production networks centered on China have contributed significantly to growth in East Asia, they also breed vulnerabilities. They have not automatically led to technology spillovers and have led to an extreme interdependence across East Asian countries.
    Keywords: Economic Theory & Research,Free Trade,Trade Policy,Trade Law,Technology Industry
    Date: 2007–03–01
  10. By: Lange, Andreas; Vogt, Carsten; Ziegler, Andreas
    Abstract: Based on unique data from a world-wide survey of agents involved in international climate policy, this paper empirically analyzes the importance of equity in this field. We find that equity issues are considered highly important in international climate negotiations and that the polluter-pays rule and the accompanying poor losers rule are the most widely accepted equity principles. Our econometric analysis shows a strong influence of the economic or emission performance of the agents’ country on the importance of equity issues and principles: (i) Equity issues are seen as more important by individuals from G77/China countries or from countries with less current per capita GDP and less future per capita CO2 emissions. (ii) Agents from richer countries are less in favor of incorporating the polluter-pays and the ability-to-pay principle in future international climate agreements. (iii) The poor losers rule is more strongly supported by individuals from G77/China countries or by individuals from countries with less current per capita GDP. While these results are consistent with pure economic self-interest, the support for the egalitarian principle runs contrary to economic intuition: In the long-run, agents from richer countries are more in favor of incorporating the egalitarian principle. Furthermore, the effect of the economic performance variables on the desired degree of incorporating the polluter-pays principle interestingly becomes less significant in the long-run. This indicates that future international climate agreements could possibly be based on a combination of the polluter-pays, the egalitarian, and the poor losers rule.
    Keywords: International Climate Policy, International Environmental Negotiations, Equity Issues, Probit Models
    JEL: D63 H41 Q48 Q54
    Date: 2006
  11. By: A.T. Flegg (School of Economics, University of the West of England); D.O. Allen (School of Economics, University of the West of England)
    Abstract: This paper re-examines a problem of congested inputs in the Chinese automobile and textile industries, which was identified by Cooper et al. (Socio-Economic Planning Sciences 35 (2001) 227-242). These authors employed a single approach to measuring congestion, however, so it is of interest to see whether other approaches would yield very different answers as regards the severity of this problem. Indeed, the measurement of congestion is an area where there has been much theoretical debate but relatively little empirical work. Here we use the data set assembled by Cooper et al. for the period 1981-1997 to compare and contrast the measurements of congestion generated by three alternative approaches. We find that these measurements are indeed very different.
    Keywords: Monetary Policy;
    Date: 2007–03

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