nep-cna New Economics Papers
on China
Issue of 2007‒03‒24
nine papers chosen by
Zheng Fang
Ohio State University

  1. Can the Chinese trade surplus be reduced through exchange rate policy? By Garcia-Herrero, Alicia; Koivu, Tuuli
  2. EU and US safeguards against Chinese textile exports: What consequences for West African cotton-producing countries? By Delpeuch, Claire
  3. Comparing the evolution of spatial inequality in China and India: a fifty-year perspective By Gajwani, Kiran; Kanbur, Ravi; Zhang, Xiaobo
  4. Asian century or multi-polar century ? By Dollar, David
  5. Valuing the health impacts from particulate air pollution in Tianjin By Zhou Yuan; Richard S.J. Tol
  6. Class Origin, Family Culture, and Intergenerational Correlation of Education in Rural China By Hiroshi Sato; Li Shi
  8. Water Use in China’s Domestic, Industrial and Agricultural Sectors: An Empirical Analysis By Zhou Yuan; Richard S.J. Tol
  9. Adaptation to Sea-level Rise in the People’s Republic of China – Assessing the Institutional Dimension of Alternative Organisational Frameworks By Maren A. Lau

  1. By: Garcia-Herrero, Alicia (BOFIT); Koivu, Tuuli (
    Abstract: This paper shows empirically that China’s trade balance is sensitive to fluctuations in the real effective exchange rate of the renminbi, although the size of the surplus is such that exchange rate policy alone will be unable to address the imbalance. One of the main reasons why the reduction in the trade surplus is limited is that Chinese imports are reduced with a real appreciation of the renminbi. By estimating bilateral import equations, we find that it is imports from other Southeast Asian countries which fall. This result reflects the vertical integration of Southeast Asia with China through the 'Asian production network'. We find, in turn, that imports from Germany – which serve China’s domestic demand – behave as one would expect, ie they increase with renminbi real appreciation. All in all, our results raise concerns on the impact of renminbi appreciation on Southeast Asia even if regional currencies do not follow the renminbi’s upward trajectory.
    Keywords: China; trade; exports; real exchange rate
    JEL: F10 F14
    Date: 2007–03–19
  2. By: Delpeuch, Claire
    Abstract: In 2005, following the phase-out of the Agreement on Textile and Clothing, the EU and the US have implemented new restrictions on textile and clothing imports from China. Available data suggests that the shortfall thus imposed on China, in terms of textile exports to the EU and to the US, is significant. West African cotton-producing countries are very dependant on cotton earnings for their GDP and over the last years, most of the growth of their cotton exports’ revenues has resulted from increasing exports to China. The results of a model of Chinese and West African cotton exchanges suggests that Chinese imports of West African cotton are strongly dependant on its textile exports to the EU and the US. EU and US safeguards against Chinese textile might have seriously hampered West African cotton exports opportunities over the past two years.
    Keywords: West-Africa; cotton; ATC; EU and US safeguards; China; textile
    JEL: Q17 F13
    Date: 2007–03
  3. By: Gajwani, Kiran; Kanbur, Ravi; Zhang, Xiaobo
    Abstract: "In the second half of the last century, both India and China have undergone major transitions and have moved to more liberalized economies. This paper relates the observed patterns in regional inequality to major events during this period. Because of China's institutional barriers to migration, regional inequality is much higher than in India. Also, China's decentralization and opening up are closely related to the observed regional inequality – particularly the inland-coastal disparity – since the reform period. From the Green Revolution age to the period of economic liberalization in India, the evolution of regional comparative advantage has shifted from the quality of land to the level of human capital as India integrates with the international market. Therefore, India's states have become clustered into two clubs: more educated and less educated ones." Authors' Abstract
    Keywords: Liberalization, Liberalized economies, Regional inequality, Migration, Decentralization, Green Revolution, Economic conditions, International economic relations, Human capital, Spatial inequality,
    Date: 2006
  4. By: Dollar, David
    Abstract: The " rise of Asia " is something of a myth. During 1990-2005 China accounted for 28 percent of global growth, measured at purchasing power parity (PPP). India accounted for 9 percent. The rest of developing Asia, with nearly a billion people, accounted for only 7 percent, the same as Latin America. Hence there is no general success of Asian developing economies. China has grown better than its developing neighbors because it started its reform with a better base of human capital, has been more o pen to foreign trade and investment, and created good investment climates in coastal cities. China ' s success changes the equation going forward: its wages are now two to three times higher than in the populous Asian countries (Bangladesh, India, Indonesia, Pakistan, and Vietnam), and China will become an ever-larger importer of natural resource and labor-intensive products. Developing countries need to become more open and improve their investment climates to benefit from these opportunities. China itself faces new challenges that could hamper its further development: unsustainable trade imbalance with the United States, energy and water scarcity and unsustainable use of natural resources, and growing inequality and social tension. To address the first two of these challenges, good cooperation between China and the United States is essential. The author concludes that we are more likely to be facing a " multi-polar century, " than an Asian century.
    Keywords: Economic Theory & Research,Population Policies,Energy Production and Transportation,Pro-Poor Growth and Inequality,Trade and Regional Integration
    Date: 2007–03–01
  5. By: Zhou Yuan; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: Although China has made dramatic economic progress in recent years, air pollution continues to be the most visible environmental problem and imposes significant health and economic costs on society. Using data on pollutant concentration and population for 2003, this paper estimates the economic costs of health related effects due to particulate air pollution in urban areas of Tianjin, China. Exposure-response functions are used to quantify the impact on human health. Value of a statistical life and benefit transfer are used to obtain the unit value of some health effects. Our results show significant health costs associated with air pollution in Tianjin. The total economic cost is estimated to be US$1.1 billion, about 3.7% of Tianjin’s GDP in 2003. The findings underscore the importance of urban air pollution control. Finally, the policy implications for alternative energy options and climate policies are given.
    Keywords: particulate air pollution, PM10, economic valuation, Tianjin
    JEL: Q51 Q53
    Date: 2005–09
  6. By: Hiroshi Sato (Hitotsubashi University, Tokyo); Li Shi (Beijing Normal University)
    Abstract: This paper examines the determinants of intergenerational correlation of education in rural China by using a data from a large survey of households. Three generations who completed education during the period from pre-1949 to the beginning of the 2000s are included. The focus is on the influence of family class status (chengfen) on offspring education. Our investigation suggests that family class status is still important for the intergenerational transmission of education. The offspring of landlord/rich peasant families are more likely to achieve higher educational attainment, even though parental education, family wealth, and other family characteristics are the same. The unique determinant of the intergenerational transmission of education in the postreform era is found to be an education-oriented family culture, created as an intergenerational cultural rebound against class-based social discrimination during the Maoist era. We have also found that the cultural reaction is a combination of class-specific effects with cohort-specific effects.
    Keywords: education, intergenerational correlation, social class, social discrimination, family culture
    JEL: D31 J24 N35 O15
    Date: 2007–02
  7. By: Katrin Rehdanz; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: One problem in international climate policy is the refusal of large developing countries to accept emission reduction targets. Brazil, China and India together account for about 20% of today’s CO2 emissions. We analyse the case in which there is no international agreement on emission reduction targets, but countries do have domestic targets, and trade permits across borders. We contrast two scenarios. In one scenario, Brazil, China and India adopt their business as usual emissions as their target. In this scenario, there are substantial exports of emission permits from developing to developed countries, and substantial economic gains for all. In the second scenario, Brazil, China and India reduce their emissions target so that they have no net economic gain from permit trade. Here, developing countries do not accept responsibility for climate change (as they bear no net costs), but they do contribute to emission reduction policy by refusing to make money out of it. Adopting such break-even targets can be done at minor cost to developed and developing countries (roughly $2 bln/year each in extra costs and foregone benefits), while developing countries are still slightly better off than in the case without international emissions trade. This result is robust to variations in scenarios and parameters. It contrasts with Stewart and Wiener (2003) who propose granting “hot air” to developing countries to seduce them to accept targets. In 2020, China and India could reduce their emissions by some 10% from the baseline without net economic costs.
    Keywords: climate policy, developing countries, emission permits, emission reduction targets
    JEL: Q54
    Date: 2005–07
  8. By: Zhou Yuan; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: Demand management plays an increasingly important role in dealing with water scarcity in China. It is important to understand the level and pattern of water use in various sectors across the regions for any measures being put into effect. The aim of this study is to enhance the understanding of the factors that influence water demand by examining closely the water use in domestic, industrial and agricultural sectors. Using province level panel data from 1997 to 2003, the examination shows that the regional disparity in the level and pattern of water uses is considerable. The estimation of water demand shows that both economic and climatic variables have significant effects on water demand. The results suggest an income elasticity of 0.42 for the domestic sector, an output elasticity of -0.32 for industrial water use (per unit of output), and an output elasticity of –0.24 for irrigated agriculture (per land area).
    Keywords: water use, regional variation, elasticity, demand management
    JEL: L95 Q25
    Date: 2005–06
  9. By: Maren A. Lau
    Abstract: Global sea-levels are rising due to global warming. Major impacts on the world’s coasts are sand beach erosion, salination of ground water, and inundation. Adaptation is the only option to address these future threats as the mitigation of CO2 emissions is not capable of preventing sea-level rise. There are several organisational frameworks existing that can incorporate adaptation measures. Integrated Coastal Zone Management is proposed most often. Alternative frameworks are disaster management and sectoral frameworks involved in prevention activities, such as the water management that often holds responsibility for dike building. However, the integration of adaptation into an organisation framework is further dependent on institutional capacity within a political system. In order to illustrate what approach is feasible for a hierarchical political system the People’s Republic of China is taken as an example. An analysis of various frameworks and institutional responsibilities shows that the institutional dimension of organisation is decisive when seeking for an adequate framework to include adaptation to sea-level rise in. This paper is based on empirical results from a series of interviews and the analysis of official publications on frameworks and institutional responsibilities. It concludes with a recommendation on a climate change based framework.
    Keywords: adaptation, sea-level rise, climate change, institutions, frameworks
    JEL: Q54
    Date: 2006–01

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