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on China |
| By: | Chad P. Bown |
| Abstract: | This chapter assesses China's integration into the global trading system by examining areas of international political-economic "friction" associated with its increased trade. We use a number of newly constructed data sets to examine tensions associated with its rapidly increasing trade and the trade policy commitments that China and its trading partners have undertaken as part of its 2001 WTO accession. With respect to China's exports, we examine data on WTO members' use of antidumping and their discriminatory treatment of Chinese firms prior to and following accession. We conclude that the application of antidumping against China has become more discriminatory since its 2001 accession. Furthermore, evidence from a regression analysis rules out the theory that pre-accession discrimination is associated with foreign targeting of high import tariff Chinese products as a WTO accession negotiation strategy. We also provide evidence that WTO members are also discriminating against China's exports by substituting use of new import-restricting "China-safeguard" policy instruments. Next, with respect to China's imports, we examine data on China's antidumping use - now the WTO's fifth most frequent user of antidumping - by targeted sectors and countries. We also provide evidence from products within China's largest sectoral user of a positive relationship between the size of the accession year tariff liberalization and the subsequent resort to antidumping protection after accession. Finally, we examine China's experience in managing frictions associated with its growing role in world trade through formal WTO dispute settlement proceedings. |
| JEL: | F13 F5 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13349&r=cna |
| By: | Guonan Ma; Robert N. McCauley |
| Abstract: | The paper argues that China's capital controls remain substantially binding. This has allowed the Chinese authorities to retain some degree of short-term monetary autonomy, despite the fixed exchange rate up to July 2005. Although the Chinese capital controls have not been watertight, we find sustained and significant gaps between onshore and offshore renminbi interest rates and persistent dollar/renminbi interest rate differentials during the period of a de facto dollar peg. While some cross-border flows do respond to market expectations and relative yields, they have not been large enough to equalise onshore and offshore renminbi yields. |
| Keywords: | Foreign exchange market, capital flows, capital controls, monetary policy, financial stability and the Chinese economy |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:233&r=cna |
| By: | Mehrotra, Aaron (BOFIT); Peltonen, Tuomas (BOFIT); Santos Rivera, Alvaro (BOFIT) |
| Abstract: | We model provincial inflation in China during the reform period. In particular, we are interested in the ability of the hybrid New Keynesian Phillips Curve (NKPC) to capture the inflation process at the provincial level. The study highlights differences in inflation formation and shows that the NKPC provides a reasonable description of the inflation process only for the coastal provinces. A probit analysis suggests that the forward-looking inflation component and the output gap are important inflation drivers in provinces that have advanced most in marketisation of the economy and have most likely experienced excess demand pressures. These results have implications for the relative effectiveness of monetary policy across the Chinese provinces. |
| Keywords: | China; inflation; regional; New Keynesian Philips Curve; GMM |
| JEL: | C22 E31 |
| Date: | 2007–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2007_019&r=cna |
| By: | Ari Van Assche; Byron Gangnes |
| Abstract: | In this paper, we make use of a unique world electronics production data set to assess China’s upgrading trajectory in the global electronics industry. Contrary to existing studies, we find no evidence that China’s electronics production activities are more sophisticated than one would expect from its level of development. We also find little evidence that China is rapidly upgrading into more sophisticated production activities. <P>Cette étude emploie une banque de données unique sur la production électronique mondiale pour évaluer la trajectoire de perfectionnement de la Chine dans le secteur électronique mondial. Contrairement aux études existantes, nous ne trouvons aucune évidence que les activités de production de la Chine dans le secteur électronique sont plus sophistiquées que ce à quoi on pourrait s’attrendre de son niveau de développement. En plus, nous trouvons peu d'évidence que la Chine perfectionne rapidement ses activités de production. |
| Keywords: | China, industrial upgrading, electronics., Chine, perfectionnement industriel, électronique. |
| JEL: | O10 O14 L63 |
| Date: | 2007–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2007s-16&r=cna |
| By: | Irene Brambilla; Amit Khandelwal; Peter Schott |
| Abstract: | This paper analyzes China's experience under U.S. apparel and textile quotas. It makes use of a unique new database that tracks U.S. trading partners' performance under the quota regimes established by the global Multifiber Arrangement (1974 to 1995) and subsequent Agreement on Textiles and Clothing (1995 to 2005). We find that China was relatively more constrained under these regimes than other countries and that, as quotas were lifted, China's exports grew disproportionately. |
| JEL: | F1 F13 F15 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13346&r=cna |
| By: | Stefan Gerlach (Bank for International Settlements); Wensheng Peng (Hong Kong Monetary Authority) |
| Abstract: | We estimate output gaps using three methods for Mainland China on annual data spanning 1982-2003. The estimates are similar and appear to co-move with inflation. Standard Phillips curves, however, do not fit the data well. This may reflect the omission of some important variable(s) such as the effect of price deregulation, trade liberalisation and/or changes in the exchange rate regime. We reestimate the Phillips curves assuming that there is an unobserved variable that follows an AR(2) process. The modified model fits the data much better and accounts for some of the surprising features of the simple Phillips curve estimates. |
| Keywords: | output gap, Phillips curve, China, omitted variab les |
| JEL: | C22 E30 E40 E53 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:202005&r=cna |
| By: | Maurice Obstfeld (University of California, Berkeley (E-mail: obstfeld@econ.berkeley.edu)) |
| Abstract: | In the face of huge balance of payments surpluses and internal inflationary pressures, China has been in a classic conflict between internal and external balance under its dollar currency peg. Over the longer term, Chinafs large, modernizing, and diverse economy will need exchange rate flexibility and, eventually, convertibility with open capital markets. A feasible and attractive exit strategy from the essentially fixed RMB exchange rate would be a two-stage approach, consistent with the steps already taken since July 2005, but going beyond them. First, establish a limited trading band for the RMB relative to a basket of major trading partner currencies. Set the band so that it allows some initial revaluation of the RMB against the dollar, manage the basket rate within the band if necessary, and widen the band over time as domestic foreign exchange markets develop. The ultimate goal is a floating exchange rate coupled with some relative of inflation targeting. Second, put on hold ad hoc measures of financial account liberalization. They will be less helpful for relieving exchange rate pressures once the yuan/basket rate is allowed to move flexibly within a band, and they are best postponed until domestic foreign exchange markets develop further, the exchange rate is fully flexible, and the domestic financial system has been strengthened and placed fully on a market-oriented basis. |
| Keywords: | Renminbi, China Currency, China Balance of Payments, Fixed Exchange Rate Exit Strategy |
| JEL: | F32 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:ime:imedps:07-e-11&r=cna |
| By: | Eswar S. Prasad (Cornell University and IZA) |
| Abstract: | Is the Chinese growth miracle - a remarkably high growth rate sustained for over two decades - likely to persist or are the seeds of its eventual demise contained in the policies that have boosted growth? For all its presumed flaws, the particular approach to macroeconomic and structural policies that has been adopted by the Chinese government has helped to deliver high productivity and output growth, along with a reasonable degree of macroeconomic stability. In tandem with a benign international environment, this approach makes it unlikely that the economy will face a collapse in growth. But there comes a point when the policy distortions needed to maintain this approach could generate imbalances, impose potentially large welfare costs, and themselves become a source of instability. The traditional risks faced by emerging market economies, especially those related to having an open capital account, do not loom large in the case of China. In the process of securing protection against external risks, however, Chinese policymakers may have increased the risks of internal instability. There are a number of factors that could trigger unfavorable economic dynamics that, even if they don’t rise to the level of a crisis, could have serious adverse repercussions on growth and welfare. The flexibility and potency of macroeconomic tools to deal with such negative shocks is constrained by the panoply of policies that has supported growth so far. |
| Keywords: | macroeconomic policies, exchange rate flexibility, capital account liberalization, financial sector reforms |
| JEL: | F3 E5 O1 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2995&r=cna |
| By: | Wai-yan Cheng (City University of Hong Kong); Yan-leung Cheung (City University of Hong Kong); Yuen-ching Tse (City University of Hong Kong) |
| Abstract: | This study considers the impact of a change to listing rules covering IPO performance in the Hong Kong stock market. The change, introduced in 1994, imposed a three-year pre-listing earning requirement on new issues. The objective of this research is to screen out a subset of poor IPO performers. We find there is no significant difference in performance between IPOs before and after the regulatory change. We further divide our sample of IPOs registered before the regulatory change into two sub-samples: those that did and those that did not fulfil the earnings requirement. The result shows that there is no significant difference in performance between the two IPO sub-samples. This implies that the existence of pre-listing earnings does not guarantee good long-term IPO performance and the pre-listing earnings of new issues is not an effective screen for 'bad' IPO performers. This study further analyzes the rationale for rule change in the context of recent developments in the Hong Kong stock market and concludes that the rule change is part of the reform programme aimed at introducing a second board market for small companies and at attracting more China-related listings to the main board. |
| Keywords: | IPO, regulatory change, Hong Kong |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:172005&r=cna |