nep-cna New Economics Papers
on China
Issue of 2008‒02‒23
three papers chosen by
Zheng Fang
Ohio State University

  1. Economic Geography, Spatial Dependence and Income Inequality in China By Laura Hering; Sandra Poncet
  2. Reconciling the Chinese Financial Development with its Economic Growth: A Discursive Essay By Maswana, Jean-Claude
  3. Trade between China and the Netherlands: a Case Study of Globalization By Frank A.G. den Butter; Raphie Hayat

  1. By: Laura Hering; Sandra Poncet
    Abstract: This paper contributes to the analysis of growing income disparities within China. Based on a structural model of economic geography using data on per capita income, we evaluate the extent to which market proximity and spatial dependence can explain growing income inequality between Chinese cities. We rely on a data set of 195 Chinese cities between 1995 and 2002. Our econometric specification incorporates an explicit consideration of spatial dependence effects in the form of spatially lagged per capita income. We provide evidence that the geography of access to markets is statistically significant in explaining variation in per capita income in China, especially so in provinces with low migration inflows which is coherent with NEG theory.
    Keywords: Income inequality; economic geography; spatial dependence; China
    JEL: E1 O1 O5 R1
    Date: 2007–12
  2. By: Maswana, Jean-Claude
    Abstract: China‘s strong economic performance and its financial development outcomes are extremely difficult to reconcile with the dominant verdict that its financial system is seriously inefficient. Using an evolutionary perspective as a metaphor, this essay offered suggestions that adaptive efficiency criteria may help solve the apparent puzzle. An adaptive efficiency criterion offers conceptual as well as methodological approaches to resolving this puzzle and contradiction. The essay‘s discussions reveal that much of what critics cite as intermediation inefficiencies –non performing loans, directed credit allocation– are, in fact, a dissipative energy generating required spillovers fuelling the entire system. From this perspective, the essay argues that the relevant evaluation criterion for the Chinese financial system would be ―adaptive efficiency, instead of the conventional allocative one. This arises since China is an emerging economic system characterized primarily by state-owned financial institutions and whose goals are developmental.
    Keywords: Financial Development; China; Adaptive Efficiency; Co-evolutionary Perspective
    JEL: O1 P20 O4
    Date: 2005–03
  3. By: Frank A.G. den Butter (VU University Amsterdam); Raphie Hayat (KPMG Corporate Finance, Amsterdam)
    Abstract: During the last decades, the growth of trade between China and the Netherlands has been larger than the increase in bilateral trade flows between China and most other countries. Using a time series based gravity model, this paper investigates the main determinants of this increase. The empirical analysis indicates that, apart from GDP growth, Dutch in-house offshoring to China is a major determinant of Dutch import growth from China. Dutch firms tend to offshore production in-house when the asset specificity of the traded inputs is high and offshore via the market when this asset specificity is low. Controlling for these product types also reveals that transport costs are more important for trade in homogeneous and reference priced goods than for trade in differentiated goods
    Keywords: international trade; transaction costs; offshoring; foreign direct investments; asset specificity; gravity model
    JEL: F14 L16 L23

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