nep-cna New Economics Papers
on China
Issue of 2007‒11‒17
nine papers chosen by
Zheng Fang
Ohio State University

  1. China's Agricultural Crisis and Famine of 1959-61: A Survey and Comparison to Soviet Famines By Dennis Tao Yang
  2. The Financial Centres of Shanghai and Hong Kong: Competition or Complementarity? By Karreman, B.; Knaap, G.A. van der
  3. Resource abundance and regional development in China: By Zhang, Xiaobo; Xing, Li; Fan, Shenggen; Luo, Xiaopeng
  4. Impacts of Competitive Position on Export Propensity and Intensity: An Empirical Study of Manufacturing Firms in China By Fung, Hung-gay; Gao, Gerald Yong; Lu, Jiangyong; Mano, Haim
  5. A Divergent Path of Industrial Upgrading: Emergence and Evolution of the Mobile Handset Industry in China By Imai, Ken'ichi; Shiu, Jingming
  6. Comparing the Networks of Ethnic Japanese and Ethnic Chinese in International Trade By Kumagai, Satoru
  7. Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States By Iris Bohnet; Fiona Greig; Benedikt Herrmann; Richard Zeckhauser
  8. Globalisation and Labour Markets: Policy Issues Arising from the Emergence of China and India By David T. Coe
  9. Export-Total Factor Productivity Growth Nexus in East Asian Economies By Hailin Liao; Xiaohui Liu

  1. By: Dennis Tao Yang
    Abstract: China?s Great Leap Forward (GLF) of 1958-61, a campaign of unprecedented mobilization efforts to achieve rapid industrialization, ended as a catastrophe. National grain production collapsed and a widespread famine claimed millions of human lives. This paper reviews a growing economic literature on this historical crisis. While multiple causes are hypothesized, empirical findings suggest that the collapse of grain production was primarily attributable to a systematic failure in central planning, involving the diversion of agricultural resources to industry and excessive grain procurements that precipitated malnutrition among peasants and decimation of labor productivity. The resulting decline in grain availability, as well as urban bias in China?s food distribution system, became the main culprits of the enormous famine. In light of the Chinese experience, this paper also explores the role of defective planning in the Soviet famines of 1931-3 and 1947.
    Keywords: central planning, food supply, famine, urban bias, China, USSR
    Date: 2007
  2. By: Karreman, B.; Knaap, G.A. van der (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The contemporary rise of China in the new geo-economy is increasingly pressurising the spatial distribution of financial activity in mainland China and Hong Kong. With the re-emergence of Shanghai, many people foresee the furture demise of Hong Kong as the most important financial centre for the China mainland. This paper shows that conviction seems rather premature. Bases on the concepts of comparative advantage and market segmentation, the extent to which Shanghai and Hong Kong can be considered complementary financial centres is assessed. By using the listings of mainland China based companies on the stock exchange of each financial centre, it is shown that both cities do not only appear to have distinct hinterlands but they also differ strongly in terms of sectoral specialisation.
    Keywords: Geography of finance;financial centres;urban competition;Hong Kong;Shanghai;China;
    Date: 2007–09–13
  3. By: Zhang, Xiaobo; Xing, Li; Fan, Shenggen; Luo, Xiaopeng
    Abstract: "Over the past several decades, China has made tremendous progress in market integration and infrastructure development. Demand for natural resources has increased from the booming coastal economies, causing the terms of trade to favor the resource sector, which is predominantly based in the interior regions of the country. However, the gap in economic development level between the coastal and inland regions has widened significantly. In this paper, using a panel data set at the provincial level, we show that Chinese provinces with abundant resources perform worse than their resource-poor counterparts in terms of per capita consumption growth. This trend that resource-poor areas are better off than resource-rich areas is particularly prominent in rural areas. Because of the institutional arrangements regarding property rights of natural resources, most gains from the resource boom have been captured either by the government or state owned enterprises. Thus, the windfall of natural resources has more to do with government consumption than household consumption. Moreover, in resource-rich areas, greater revenues accrued from natural resources bid up the price of non-tradable goods and hurt the competitiveness of the local economy." from Authors' Abstract
    Keywords: Regional inequality, Resource curse, Dutch disease, Property rights,
    Date: 2007
  4. By: Fung, Hung-gay; Gao, Gerald Yong; Lu, Jiangyong; Mano, Haim
    Abstract: We examine the impacts of competitive industry position on firms’ export propensity and intensity in China. Drawing on the resource-based view and the structure-conduct-performance paradigm of firm behavior, we investigate whether firms with competitive industry position through cost leadership or differentiation strategy have different export behaviors. We use a longitudinal data of 213,662 manufacturing firms in China from 1998 to 2005 to show that firms that have developed competitive advantages in the domestic market are more likely to export and have higher levels of export intensity. Indigenous and foreign manufacturing firms exhibit different patterns of export behaviors. Foreign firms with differentiation advantages focus on local market expansion instead of seeking opportunity in export markets.
    JEL: F18
    Date: 2007–07
  5. By: Imai, Ken'ichi; Shiu, Jingming
    Abstract: Starting from almost null in the late 1990s, China’s mobile phone handset industry has grown to account for more than 40 percent of the current world production. While export growth has been overwhelmingly led by multi-national corporations (MNCs), increasingly fierce competition in the domestic market ignited by the advent of local handset makers has induced unique industrial evolution: (1) outgrowth of independent design houses specialized in handset development and (2) emergence of IC fabless ventures that design core ICs for handsets. In the background of this evolutionary industrial growth there are factors such as, the scale and increasing diversity of China’s domestic market that advantages local firms vis-à-vis MNCs; modularization of handset and semiconductor technologies; policy interventions that supports local startups. The emergence and evolution of China’s handset industry is likely to have international implications as the growth of the global demand for low-cost and multi-function mobile phone handsets is expected to accelerate. Thus, our case suggests that the conventional view of latecomer industrialization and upgrading that emphasizes the key role of international production networks organized by MNCs needs to be modified in order to accommodate China’s rise into perspective.
    Keywords: Industrial upgrading, China’s industrial growth, China, Telephone, Information services industry
    JEL: L1 L6 O1 O3 P2
    Date: 2007–10
  6. By: Kumagai, Satoru
    Abstract: In this paper I re-examined the trade enhancing effects of ethnic Chinese networks, found by Rauch and Trindade (2002), on a newer and extended data set. The effects are estimated by the gravity equation with the product of the population ratio (or absolute number) of the ethnic Chinese in both the importing and exporting countries, and are reaffirmed positive and statistically significant. I also compared the effects of two different ethnic Japanese networks, i.e., the networks of long-term Japanese stayers in foreign countries, and the networks of permanent Japanese residents in foreign countries. It is found that the former has stronger trade enhancing effects than the latter. This shows that the effects of ethnic networks on international trade can be generalized beyond the ethnic Chinese, and the ’cohesiveness’ of the ethnic network matters to the trade enhancing effects of the network.
    Keywords: Trade, Networks, East Asia, China, Japan, International trade, Overseas Chinese, Overseas Japanese
    JEL: F10
    Date: 2007–07
  7. By: Iris Bohnet (Kennedy School of Government, Harvard University); Fiona Greig (Kennedy School of Government, Harvard University); Benedikt Herrmann (School of Economics, University of Nottingham); Richard Zeckhauser (Kennedy School of Government, Harvard University)
    Abstract: Due to betrayal aversion, people take risks less willingly when the agent of uncertainty is another person rather than nature. Individuals in six countries (Brazil, China, Oman, Switzerland, Turkey, and the United States) confronted a binary-choice trust game or a risky decision offering the same payoffs and probabilities. Risk acceptance was calibrated by asking individuals their “minimum acceptable probability” (MAP) for securing the high payoff that would make them willing to accept the risky rather than the sure payoff. People’s MAPs are generally higher when another person rather than nature determines the outcome. This indicates betrayal aversion.
    JEL: C72 C91
    Date: 2007–10
  8. By: David T. Coe
    Abstract: Globalisation is having important effects on labour markets in OECD countries. The global supply of labour has increased enormously with the emergence of China and India. At the same time technological advances have contributed to heightened income inequality and changed the nature of globalisation itself, most vividly demonstrated by the rapid growth of offshoring of business services that were previously nontradable. It is argued in this paper that these developments are best characterized as an intensification and broadening of the process of globalisation rather than a fundamental change in the nature of globalisation. They will, nevertheless, have long-lasting effects on OECD labour markets, increasing the urgency of implementing the labour market policies set out in the Restated OECD Job Strategy. The paper concludes that the most important implication of the emergence of China and India in the context of widespread perceptions of increasing economic inequality may be to reduce support for globalisation in OECD countries. <BR>La mondialisation a des effets importants sur les marchés du travail des pays de l’OCDE. L’offre mondiale de main-d'œuvre a augmenté considérablement avec l’émergence de la Chine et l’Inde. Dans le même temps, les progrès technologiques ont contribué à renforcer les inégalités de revenus et ont changé la nature même de la mondialisation, comme en témoigne la croissance rapide de la délocalisation des services aux entreprises, qui étaient auparavant non-échangeables. On fait valoir dans ce document que ces évolutions correspondent plus à une intensification et un élargissement du processus de mondialisation qu'à un changement fondamental de nature de la mondialisation. Elles auront, néanmoins, des effets durables sur les marchés du travail dans les pays de l'OCDE, et renforcent de ce fait l'urgence de mettre en œuvre les politiques du marché du travail identifiées dans «La stratégie de l'OCDE pour l'emploi révisée ». Le document conclut que, dans un contexte de perception accrue de croissance des inégalités économiques, la principale conséquence de l’émergence de la Chine et l’Inde peut être de réduire le soutien à la mondialisation dans les pays de l’OCDE.
    JEL: F13 F16 J08
    Date: 2007–11–09
  9. By: Hailin Liao (Dept of Economics, Loughborough University); Xiaohui Liu (Business School, Loughborough University)
    Abstract: Despite increasing interest in the relationship between trade and macroeconomic performance in development economics, very limited studies have been conducted on the causal links between exports and productivity growth in Asian economies. This paper examines empirically the interplay between exports and productivity growth for eight East Asian economies in a multivariate framework by applying bound tests and modified Wald tests. The results indicate that causality is bi-directional in the case of Korea, Singapore and Taiwan, while unidirectional from productivity to exports for Mainland China, Hong Kong, Indonesia, Malaysia and the Philippines. These findings provide little support for the conventional export-led growth hypothesis.
    Keywords: TFP, exports, bound tests, lag-augmented VAR, East Asian economies
    Date: 2007–11

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