nep-cna New Economics Papers
on China
Issue of 2008‒11‒18
eighteen papers chosen by
Zheng Fang
Ohio State University

  1. The Effect of Exchange Rate Changes on China's Labor-Intensive Manufacturing Exports By THORBECKE, Willem; Hanjiang ZHANG
  2. Changes in Fruit and Vegetable Consumption over Time and across Regions in China: A Difference-in-Differences Analysis with Quantile Regression By Liu, Kang Ernest; Chang, Hung-Hao; Chern, Wen S.
  3. The Contribution of Foreign Direct Investment to China's Export Performance: Evidence from Disaggregated Sectors By Gu, Weishi; Awokuse, Titus O.; Yuan, Yan
  4. X-efficiency versus Rent Seeking in Chinese banks: 1997-2006 By Matthews, Kent; Guo, Jianguang; Zhang, Xu
  5. Is FDI into China Crowding Out FDI into the European Union? By Resmini, Laura; Siedschlag, Iulia
  6. Energy, Environment and the Sustainability of Economic Development in China By Fang, Xingming; Hu, Xiaoping; Wang, H. Holly
  7. The dual corporate income tax in China: the impact of unification By van der Hoek, M. Peter; Kong, Shuhong; Li, Zhenzi
  8. Migrant Labor Markets and the Welfare of Rural Households in the Developing World: Evidence from China By De Brauw, Alan; Giles, John
  9. The Impact of Economic Geography on Wages: Disentangling the Channels of Influence By Laura Hering; Sandra Poncet
  10. Vietnam Following in China?s Footsteps: The Third Wave of Emerging Asian Economies By Chaponniere, Jean-Raphael; Cling, Jean-Pierre; Zhou, Bin
  11. New Evidence on Overweight Children in Urban China and the Role of Socioeconomic Factors By Dong, Fengxia; Jensen, Helen H.
  12. The Effect of Legal Families on the Development of Business Law in China: Who’s Really Writing the Rules of the Game? By Krug, B.; Betancourt, N.
  13. The on-farm impact of alternative grazing management options to improve sustainability in western Chinese grasslands By Jones, Randall; Kemp, David; Michalk, David; Takahashi, Taro
  14. ICT adoption model of chinese SMEs By Skoko, Hazbo; Ceric, Arnela; Huang, Chun-yan
  15. Social Learning and Parameter Uncertainty in Irreversible Investment----Evidence from Greenhouse Adoption in Northern China By Wang, Honglin; Reardon, Thomas
  16. Developing Country Trade: Implications of China€ٳ Changing Trade and Competitiveness in Intensive and Extensive Margin Goods By Somwaru, Agapi; Tuan, Francis; Gehlhar, Mark; Diao, Xinshen; Hansen, Jim
  17. Explaining Production Inefficiency in China€ٳ Agriculture using Data Envelope Analysis and Semi-Parametric Bootstrapping By Monchuk, Daniel C.; Zhuo Chen
  18. Estimating Farm Level Multivariate Yield Distribution Using Nonparametric Methods By Zheng, Qiujie; Wang, H. Holly; Shi, Qinghua

  1. By: THORBECKE, Willem; Hanjiang ZHANG
    Abstract: Chinese policymakers have resisted calls for faster renminbi appreciation partly because they fear it will reduce low technology exports. We investigate this issue using a panel data set including China's exports of labor-intensive goods to 30 countries. We find that an appreciation of the RMB would substantially reduce China's exports of clothing, furniture, and footwear. We also find that an increase in foreign income, an increase in the Chinese capital stock, and an appreciation among China's competitors would raise China's exports. Since Europe is the second leading exporter of labor-intensive manufactures behind China, these results indicate that the large appreciation of the euro relative to the RMB since 2001 has crowded out European exports.
    Date: 2008–11
  2. By: Liu, Kang Ernest; Chang, Hung-Hao; Chern, Wen S.
    Abstract: Recently, there has been considerable interest in estimating food demand structure in China due to its huge market for food products. Previous literature has focused on the primary food products such as grains and meats, but studies on fruits and vegetables are limited. To fulfill this gap, this paper investigates the changes of fruit and vegetable consumption in Chinese urban households between 1993 and 2001. In this study, we use the difference-in-differences method with quantile regression to demonstrate how these changes of fruit and vegetable consumption over time may differ across regions. Additionally, how these changes may differ over the entire distribution. Using household survey data from 1993 and 2001 of three selected provinces, our results show that fruit consumption of Chinese urban households increased from 1993 to 2001 for households in the central and southern parts of China. Additionally, the magnitudes of the increasing trends differ across the entire distribution. In contrast, significant decreases of vegetable consumption are found, and results are robust across regions. However, the disparities of vegetable consumption across regions are not significant.
    Keywords: Fruit and vegetable consumption, China, inequality, quantile regression, difference-in-differences model., Food Consumption/Nutrition/Food Safety,
    Date: 2008
  3. By: Gu, Weishi; Awokuse, Titus O.; Yuan, Yan
    Abstract: There has been a long debate in the theoretical and empirical economic circles on how host country's exports respond to inward foreign direct investment (FDI). This paper examines whether FDI stimulates export performance of the recipient countries using the case of China. It contributes to the literature by investigating the relationship of FDI and export performance using disaggregated manufacturing sectors from 1995 to 2005. The empirical results suggest that FDI flows into China have statistically significant and positive effects on its exports and it exhibits differences across sectors.
    Keywords: export performance, foreign direct investment, China, panel data, International Relations/Trade, F21, F14, C33,
    Date: 2008
  4. By: Matthews, Kent (Cardiff Business School); Guo, Jianguang; Zhang, Xu
    Abstract: This study demarcates cost-inefficiency in Chinese banks into X-inefficiency and rent-seeking-inefficiency. A protected banking market not only encourages weak management and X-inefficiency but also public ownership and state directed lending encourages moral hazard and bureaucratic rent seeking. This paper uses bootstrap non-parametric techniques to estimate measures of X-inefficiency and rent-seeking inefficiency for the 4 state owned banks and 10 joint-stock banks over the period 1997-2006. The paper adjusts for the quality of loans by treating NPLs as a negative output. The paper shows that Chinese banks have reduced cost inefficiency and reduced X-inefficiency at a faster rate than rent-seeking inefficiency.
    Keywords: Bank Efficiency; China; X-inefficiency; DEA; Bootstrapping
    JEL: D23 G21 G28
    Date: 2008–11
  5. By: Resmini, Laura; Siedschlag, Iulia (Economic and Social Research Institute (ESRI))
    Abstract: We estimate an augmented gravity panel model to analyse the effects of FDI into China originating in OECD countries on FDI into EU and other countries over the period 1990-2004. Our results suggest that on average, ceteris paribus, over the analysed period, FDI inflows into China have been complementary to FDI inflows into EU15 countries but they have substituted FDI into the new EU countries in Central and Eastern Europe. In particular, small economies such as Bulgaria and the Baltic countries have been affected negatively by the surge in the FDI into China. This FDI diversion appears in the case of efficiency-seeking FDI.
    Keywords: DYNREG, Foreign direct investment, China, European Union
    JEL: F15 F36 F41
    Date: 2008
  6. By: Fang, Xingming; Hu, Xiaoping; Wang, H. Holly
    Abstract: Whether the high economic growth of China is sustainable is the matter of interest to the public, government and academic circle of China and meanwhile it catches the attention of the world because the development of China has been exerting increasing impact on the world economy. Since the high economic growth of China has been promoted by heavy and chemical industry (HCI) to a great extent, which resulted in high consumption of energy resource, high consumption of mineral resources and high emission of pollutants (the €ܴriple highness€ݩ, the sustainability of high economic growth of China depends on a sustainable growth road for China€ٳ HCI and effective control on the €ܴriple highness€ݮ We find that the contributing factors of the €ܴriple highness€ݠare not the growth of HCI itself but the small scale and out dated technology. We conclude that the €ܴriple highness€ݠcan be effectively controlled if some proper measures are adopted and the high growth of China can be sustainable.
    Keywords: economic growth, energy, resource, pollution, International Development, Resource /Energy Economics and Policy, O10, O11,
    Date: 2008
  7. By: van der Hoek, M. Peter; Kong, Shuhong; Li, Zhenzi
    Abstract: For many years, foreign funded companies in China enjoyed a relatively low tax rate and a series of preferential policies which were aimed at encouraging foreign direct investment in China. By adopting a new law in 2007, however, the National People's Congress proclaimed the end of the dual corporate-income-tax system. From 2008, the preferential tax treatment of foreign capital will be phased out. As a result, the income tax rate for domestic and foreign funded companies will be unified at the rate of 25%. This paper explores the impact of the dual corporate income tax system on both domestic and foreign funded enterprises and discusses the possible effects of the unification.
    Keywords: dual corporate income tax; China; unification; foreign funded enterprises
    JEL: H25
    Date: 2008–05
  8. By: De Brauw, Alan; Giles, John
    Abstract: In this paper, we examine the impact of reductions in barriers to migration on the consumption of rural households in China. We find that increased migration from rural villages leads to significant increases in consumption per capita, and that this effect is stronger for poorer households within villages. Household income per capita and non-durable consumption per capita both increase with out-migration, and increase more for poorer households. We also establish a causal relationship between increased out-migration and investment in housing and durable goods assets, and these effects are also stronger for poorer households. We do not find robust evidence, however, to support a connection between increased migration and investment in productive activity. Instead, increased migration is associated with two significant changes for poorer households: increases both in the total labor supplied to productive activities and in the land per capita managed by the household. In examining the effect of migration, we pay considerable attention to developing and examining our identification strategy.
    Keywords: Migration, Migrant Networks, Consumption, Poverty, Wealth, Rural China, Community/Rural/Urban Development, Consumer/Household Economics, Labor and Human Capital, O12, O15, J22, J24,
    Date: 2008
  9. By: Laura Hering; Sandra Poncet
    Abstract: This paper evaluates the role of economic geography in explaining regional wages in China. It investigates the extent to which market proximity can explain the evolution of wages, and through which channels. We construct a complete indicator of market access at the provincial level from data on domestic and international trade flows; this is introduced in a simultaneous-equations system to identify the direct and indirect effect of market access on wages. The estimation results for 29 Chinese provinces over 1995-2002 suggest that access to sources of demand is indeed an important factor shaping regional wage dynamics in China. We investigate three channels through which market access might influence wages beside direct transport-cost savings: export performance, and human and physical capital accumulation. A fair share of benefits seems to come from enhanced export performance and greater accumulation of physical capital. The main source of influence of market access remains direct transport costs.
    Keywords: Economic geography; international trade; wage; trade openness; capital accumulation; China
    JEL: F12 F15 R11 R12
    Date: 2008–10
  10. By: Chaponniere, Jean-Raphael; Cling, Jean-Pierre; Zhou, Bin
    Abstract: Vietnam has been following China?s path closely and very successfully for the last two decades, since the adoption of ?Doi moi? in 1986. Over those last two decades, economic growth rates in both countries have been the highest worldwide (with GDP growing by 8 per cent and 10 per cent per year, respectively). The increase of the Vietnamese share of world trade is the highest of all major Asian exporters (including China) since the mid-1990s. In the current international context, doubts have been raised by some economists concerning the possibility for new Asian countries -Date take-off and join the group of emerging countries. Several obstacles might block this emergence, such as the rise of China and the stringent rules of the World Trade Organization (WTO). This paper addresses this question with regard -Date Vietnam, who joined the WTO at the beginning of 2007: we study Vietnam?s potential for sustainable growth and international integration. We start by briefly describing economic reform and trade policies in Vietnam, and their results in terms of economic growth and world integration. We then analyse Vietnamese trade specialization and the bilateral relationship with China. Finally, we assess the competition between Vietnam and China on world markets, and show that the export structures are very different. Both countries have benefited Date a boom in their textile and clothing exports following the cessation of quotas (in the case of China) and the signing of USBTA (in the case of Vietnam). For Vietnam, reducing the specialization in textiles and clothing, and joining the Asian production network in electronics, represents a major challenge.
    Keywords: export-led growth, WTO, Vietnam, China
    Date: 2008
  11. By: Dong, Fengxia; Jensen, Helen H.
    Abstract: Problems of overweight and obesity among children have increased in China and pose a problem both for individuals as well as for public social and health care systems. This study explores factors contributing to weight problems among children age 6 to 18 years old in urban China. Data come from the 2004 China Health and Nutrition Survey. Results from a binary probit model show that parents' being overweight, some patterns of TV use, and more frequent eating in fast food restaurants influence children being overweight. Among younger children, parent's dietary knowledge was a significant factor. For adolescents, TV habits and concern about being liked by friends were significant. The results suggest that targeted nutrition education, especially for parents and adolescents, and control of TV ads are policies that may have an effect on reducing children's overweight.
    Keywords: China, children's nutrition, health, nutrition, obesity, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Health Economics and Policy,
    Date: 2008
  12. By: Krug, B.; Betancourt, N. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Legal Origin Theory is applied to Reform China’s legal system in order to create a development model for a national legal system influenced by multiple legal families. Utilizing an extensive literature review and assessment of national laws affecting property rights, the model depicts how a legal system develops on the national level under multiple normative influences. Further research will elaborate on the interactions between the normative influences within the legal system.
    Keywords: law and economics;China;property rights theory;legal origin theory
    Date: 2008–10–29
  13. By: Jones, Randall; Kemp, David; Michalk, David; Takahashi, Taro
    Abstract: Chinese grasslands are suffering considerable pressures from human and livestock populations. It has been estimated that 90% of Chinese grasslands are suffering from light to heavy levels of degradation. Allied to this is the low household income of herders and farmers dependant upon livestock products for their livelihood. Although a range of reasons have been proposed for the high levels of grassland degradation, principal among these are the high stocking rates adopted by farmers. This not only results in high utilisation rates of the pasture biomass, leading to bare areas and soil erosion, but individual animal productivity rates also decline. This paper presents the results of a modelling study of a grassland system in Gansu Province and Inner Mongolia Autonomous Region in northern China. This shows that reducing stocking rates leads to not only an increase in livestock productivity, but wholefarm returns are also increased. From a sustainability perspective, the greater pasture biomass remaining on the grassland also reduces the incidence of soil erosion in the areas.
    Keywords: sustainable grazing, bioeconomic model, China, Farm Management, Livestock Production/Industries, Resource /Energy Economics and Policy,
    Date: 2008
  14. By: Skoko, Hazbo; Ceric, Arnela; Huang, Chun-yan
    Abstract: Chinese SMEs have played an important role in stimulating economic growth, increasing employment, expanding exports and promoting science and technology innovations. In 2005 there were more than 10 million SMEs registered in the Industry and Commerce Department, accounting for 99 per cent of all registered corporations (UN Economic and Social Commission for Asia and Pacific; China Council for the Promotion of International Trade, 2006). Further development of the Chinese as well as of all modern economies is dependent on the speed and effectiveness of the implementation of ICT based solutions in businesses. While large companies have been quick to adopt ICT solutions and technologies, small and medium-sized enterprises (SMEs) have had more serious problems with the requirements and challenges of e-business. A number of ICT, e-commerce adoption methodologies have been suggested through literature most of this research, has however, focused on developed countries where the structure of the economy is common. There are only few studies that shed some light on prescribing strategies of ICT adoption for SMEs in developing countries, especially Chine. Furthermore, despite the enormous attention given to encourage SMEs to adopt ICT there has been little systematic research into the factors influencing, enabling and inhibiting the adoption of ICT within SMEs. In this article, author developed a model of ICT adoption of Chinese SMEs, founded on premises that the adoption and the use of ICT represent the fundamental source of competitiveness and the basis for firms’ survival in the world market. By applying the Qualitative-Comparative Analysis (QCA) method and Boolean algebra, author proposed a model of necessary and sufficient factors for ICT adoption by SMEs in Chine.
    Keywords: Keywords: adoption models; Boolean Algebra; SMEs; case studies; ICT; qualitative comparative analysis (QCA).
    JEL: O33
    Date: 2008–07
  15. By: Wang, Honglin; Reardon, Thomas
    Abstract: This paper introduces social learning into irreversible investment theory through parameter uncertainty, and shows that social learning could reduce parameter uncertainty to facilitate irreversible investment technology adoption. The theoretic model is tested by using household level data from energy saving greenhouse adoption in northern China, and empirical evidences are consistent with the theory: social learning has significantly positive impacts on greenhouse adoption, while market volatility discourages the adoption.
    Keywords: Social Learning, Technology Adoption, Irreversible Investment, Parameter Uncertainty, Energy Saving Greenhouse, Environmental Economics and Policy, Research and Development/Tech Change/Emerging Technologies, O12, O31, C61, D83, G12,
    Date: 2008
  16. By: Somwaru, Agapi; Tuan, Francis; Gehlhar, Mark; Diao, Xinshen; Hansen, Jim
    Abstract: This paper delves into China€ٳ differential growths in trade flows with high income and developing countries by focusing on bilateral content of trade data over the time period 1978-2005. Unlike other studies, we account for end use of traded goods ranging from primary, intermediate, and finished goods because China€ٳ policies impact all segments China€ٳ trade flows. In the last 28 years, China has specialized in deficits in the upstream production segments (parts and components) and rapid diversification in consumption goods (extensive margin). While in the late 1970s China€ٳ export and import growth on all goods with major high income countries is outstanding in the most recent years China€ٳ trade growth with developing countries has taken the lead while China is gaining in extensive margins goods trade. This general pattern evolving is in agreement with some of the new trade theory that gives a dominant role to an expansion of the number of export varieties (the extensive margin), which provides an additional channel for welfare gains from trade.
    Keywords: China, international trade, growth, intensive, extensive margins, developing countries, International Relations/Trade,
    Date: 2008
  17. By: Monchuk, Daniel C.; Zhuo Chen
    Abstract: In this paper we examine more closely the factors associated with production inefficiency in China€ٳ agriculture. The approach we take involves a two-stage process where output efficiency scores are first estimated using data envelope analysis (DEA), and then in the second stage, variation in the resulting efficiency scores are explained using a truncated regression model with inference based on a semi-parametric bootstrap routine. Among the results we find a heavy industrial presence is associated with reduced agricultural production efficiency and may be an indication that externalities from the industrial process, like air and ground water pollution, affect agricultural production. We also find evidence that counties with a large percentage of the rural labor force engaged in agriculture tend to be less efficient, which suggests that policies to facilitate the removal of labor from agriculture, but not necessarily from the rural areas, would bring about enhanced agricultural efficiency and calls into question policies that promote wholesale migration from rural areas. Sensitivity analysis indicates results are robust to influential observations and outliers.
    Keywords: China's agriculture, DEA, bootstrapping, technical efficiency, Production Economics, C14, Q1, R5,
    Date: 2008
  18. By: Zheng, Qiujie; Wang, H. Holly; Shi, Qinghua
    Abstract: Modeling crop yield distributions has been an important topic in agricultural production and risk analysis, and nonparametric methods have gained attention for their flexibility in describing the shapes of yield density functions. In this article, we apply a nonparametric method to model joint yield distributions based on farm-level data for multiple crops, and also provide a way of simulation for univariate and bivariate distributions. The results show that the nonparametric models, both univariate and bivariate, are estimated quite well compared to the original samples, and the simulated empirical distributions also preserve the attributes of the original samples at a reasonable level. This article provides a feasible way of using multivariate nonparametric methods in further risk and insurance analysis.
    Keywords: yield distribution, multi-variate nonparametric, China, farm-level, risks, Farm Management, Risk and Uncertainty,
    Date: 2008

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