nep-cna New Economics Papers
on China
Issue of 2008‒02‒09
seven papers chosen by
Zheng Fang
Ohio State University

  1. The Impact of Banks and Non-Bank Financial Institutions on Local Economic Growth in China By Cheng , Xiaoqiang; Degryse, Hans
  2. Does the Chinese Banking System Promote the Growth of Firms? By Panicos O. Demetriades; Jun Du; Sourafel Girma; Chenggang Xu
  3. What Accounts for the Rising Sophistication of China's Exports? By Zhi Wang; Shang-Jin Wei
  4. Does Hepatitis B infection or son preference explain the bulk of gender imbalance in China ? : a review of the evidence By Das Gupta, Monica
  5. China's Impact on the Exports of Other Asian Countries: A Note By Kumakura, Masanaga; Kuroko, Masato
  6. How sensitive are Latin American exports to Chinese competition in the U.S. market ? By Molina, Danielken; Micco, Alejandro; Lopez-Cordova, J. Ernesto
  7. Profiting from Government Stakes in a Command Economy: Evidence from Chinese Asset Sales By Charles Calomiris; Raymond Fisman; Yongxiang Wang

  1. By: Cheng , Xiaoqiang (BOFIT); Degryse, Hans (BOFIT)
    Abstract: This paper provides evidence on the relationship between finance and high growth in China. Employing data for 27 Chinese provinces over the period 1995–2003, we assess the impact of banks and non-bank financial institutions on local economic growth. We argue that banks have had a larger impact than non-banks on local economic growth as they benefited earlier and more profoundly from China’s financial reforms than their non-bank counterparts.
    Keywords: growth; financial development; Chinese provinces; banks
    JEL: E44 G21
    Date: 2008–02–04
  2. By: Panicos O. Demetriades; Jun Du; Sourafel Girma; Chenggang Xu
    Abstract: Using a large panel dataset of Chinese manufacturing enterprises during 1999-2005, which accounts for over 90% of China’s industrial output, and robust econometric procedures we show that the Chinese banking system has helped to support the growth of both firm value added and TFP. We find that access to bank loans is positively correlated with future value added and TFP growth. We also find that firms with access to bank loans tend to grow faster in regions with greater banking sector development. While the effects of bank loans on firm growth are more pronounced in the case of purely private-owned and foreign firms, they are positive and statistically significant even in the case of state-owned and collectively-owned firms. We show that excluding loss-making firms from the sample does not change the qualitative nature of our results.
    Keywords: Chinese banking system development; value added and TFP growth; panel dataset
    JEL: E44 O53
    Date: 2008–02
  3. By: Zhi Wang; Shang-Jin Wei
    Abstract: Chinese exports have become increasingly sophisticated. This has generated anxiety in developed countries as competitive pressure may increasingly be felt outside labor-intensive industries. Using product-level data on exports from different cities within China, this paper investigates the contributing factors to China's rising export sophistication. Somewhat surprisingly, neither processing trade nor foreign invested firms are found to play an important role in generating the increased overlap between China’s export structure and that of high-income countries. Instead, improvement in human capital and government policies in the form of tax-favored high-tech zones appear to be the key to the country's evolving export structure. On the other hand, processing trade, foreign invested firms, and government-sponsored high-tech zones all have contributed significantly to raising the unit values of Chinese exports within a given product category.
    JEL: F1 O1
    Date: 2008–02
  4. By: Das Gupta, Monica
    Abstract: China has a large deficit of females, and public policies have sought to reduce the son preference that is widely believed to cause this. Recently a study has suggested that up to 75 percent of this deficit is attributable to hepatitis B infection, indicating that immunization programs should form the first plank of policy interventions. However, a large medical dataset from Taiwan (China) shows that hepatitis B infection raises women ' s probability of having a son by only 0.25 percent. And demographic data from China show that the only group of women who have elevated probabilities of bearing a son are those who have already borne daughters. This pattern makes it difficult to see how any biological factor can explain a large part of the imbalance in China ' s sex ratios at birth -- unless it can be shown that it somehow selectively affects those who have borne girls, or causes them to first bear girls and then boys. The Taiwanese data suggest that this is not the case with hepatitis B, since its impact is unaffected by the sex composition of previous births. The data support the cultural, rather than the biological, explanation for the " missing women. "
    Keywords: Population Policies,Gender and Health,Disease Control & Prevention,Gender and Law,Reproductive Health
    Date: 2008–01–01
  5. By: Kumakura, Masanaga; Kuroko, Masato
    Abstract: Despite widespread interest in China's growing trade surplus and its impact on other countries, empirical research in these issues is handicapped by the lack of reliable statistics on aggregate import and export prices. Although researchers estimate the trade volumes of China and other East Asian countries using a variety of surrogate price indices, an inappropriate deflator can give rise to a significant bias in econometric analysis. This paper discusses the potential seriousness of this problem by examining recent studies on the export competition between China and other Asian countries.
    Keywords: China, East Asia, Trade Price Index, Electronics, Exports, Trade problem
    JEL: F14 F31
    Date: 2007–12
  6. By: Molina, Danielken; Micco, Alejandro; Lopez-Cordova, J. Ernesto
    Abstract: This paper estimates the elasticity of substitution of U.S. imports using detailed trade data over the 1990-2003 period. The authors use a two-stage least squares framework in order to identify the elasticity parameter of interest. The authors use the elasticity estimates to assess the extent to which Latin American and Chinese goods compete in the U.S. market by providing forecasts of how alternative policy scenarios may affect exports to the United States. The analysis considers the following scenarios: (i) currency revaluation in China; (ii) elimination of U.S. tariffs on Latin American exports un der a hemispheric free trade agreement; and (iii) the elimination of quotas on apparel and textile exports under the Multi-Fiber Agreement. The findings show that a 20-percent appreciation of the renminbi reduces Chinese exports to the United States by a fifth, although since other regions increase sales to that market (0.5 percent for Latin America), U.S. imports decline by only 1.7 percent. Hemispheric free trade would increase Latin America ' s exports to the United States by around 3 percent. The removal of the quotas would lead to a sharp increase in Chinese sales to the United States (40 percent), but Latin America would see its share of the U.S. market decline by around 2 percent (2.5 percentage points). China ' s gains would come mainly at the expense of other regions of the world.
    Keywords: Economic Theory & Research,Free Trade,Markets and Market Access,Trade Policy,Debt Markets
    Date: 2008–01–01
  7. By: Charles Calomiris; Raymond Fisman; Yongxiang Wang
    Abstract: We document the market response to an unexpected announcement of proposed sales of government-owned shares in China. In contrast to the "privatization premium" found in earlier work, we find a negative effect of government ownership on returns at the announcement date and a symmetric positive effect in response to the announced cancellation of the government sell-off. We argue that this results from the absence of a Chinese political transition to accompany economic reforms, so that the positive effects on profits of political ties through government ownership outweigh the potential efficiency costs of government shareholdings. Companies with former government officials in management have positive abnormal returns, suggesting that personal ties can substitute for the benefits of government ownership. The "privatization discount" is higher for firms located in Special Economic Zones, where local government discretionary authority is highest. This is consistent with the view that firms in these locations are more dependent on government connections. We also find that companies with relatively high welfare payments to employees, which presumably would fall with privatization, benefit disproportionately from the privatization announcement.
    JEL: G15 G38 H11 L33
    Date: 2008–02

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