nep-cna New Economics Papers
on China
Issue of 2008‒11‒25
ten papers chosen by
Zheng Fang
Ohio State University

  1. Global Production Sharing and US-China Trade Relations By Prema-chandra Athukorala; Nobuaki Yamashita
  2. China's Exports and the Oil Price By Joao Ricardo Faria; Andre Varella Mollick; Pedro H. Albuquerque; Miguel Leon-Ledesma
  3. Is Cross-listing Associated with Stronger Executive Incentives? Evidence from China By Chi, Wei; Zhang, Haiyan
  4. Diet quality and income in Rural and Urban China: evidence from the Health and Nutrition Survey By Capacci, S.; Mazzocchi, M.; Liu, Y.
  5. Empirical analysis of agricultural trade between EU and China: Explanation behind China's growing agrifood imports By Huan-Niemi, E.; Niemi, J.
  6. Changes in the causes of earnings inequality in urban China from 1988 to 2002 By Asuyama, Yoko
  7. China and the Manufacturing Exports of Other Developing Countries By Gordon H. Hanson; Raymond Robertson
  8. The contribution of supply and demand shifts to earnings inequality in urban China By Asuyama, Yoko
  9. Understanding PPPs and PPP-based national accounts By Angus Deaton; Alan Heston
  10. Internal Finance and Growth: Microeconometric Evidence on Chinese Firms By Guariglia, Alessandra; Liu, Xiaoxuan; Song, Lina

  1. By: Prema-chandra Athukorala; Nobuaki Yamashita
    Abstract: This paper examines US-China trade relations, focusing on the ongoing process of global production sharing global production sharing—the breakup of the production processes into geographically separated stag—and the resulting trade complementarities between the two countries in world manufacturing trade. The results suggest that the USChina trade imbalance is basically a structural phenomenon resulting from the pivotal role played by China as the final assembly centre in East-Asia centered global production networks. Given the current state of China’s factor market conditions, US-China trade patterns are unlikely to change dramatically in the short to medium run.
    Keywords: China, global production sharing, U.S.-China trade imbalance
    JEL: F14 F23 O53
    Date: 2008
  2. By: Joao Ricardo Faria; Andre Varella Mollick; Pedro H. Albuquerque; Miguel Leon-Ledesma
    Abstract: The increase in oil prices in recent years has occurred concurrently with a rapid expansion of Chinese exports in the world markets, despite China being an oil importing country. In this paper we develop a theoretical model that explains the positive correlation between Chinese exports and the oil price. The model shows that Chinese growth can lead to an increase in oil prices that has a stronger impact on its export competitors. This is due to the large labor force surplus of China. We then examine this hypothesis by estimating a reduced form equation for Chinese exports using Rodrik (2006)’s measure of export competitiveness, together with the oil price, productivity, real exchange rate, and foreign industrial production over the monthly 1992-2005 period. The results suggest a stable relationship and yields slightly positive values for the price of oil and elastic coefficients for export competitiveness, along with the expected negative elasticity for the real exchange rate.
    Keywords: China; Oil prices; Competitiveness; Exports; Productivity
    JEL: F14 F43
    Date: 2008–11
  3. By: Chi, Wei; Zhang, Haiyan
    Abstract: This study examines whether firms incorporated in mainland China benefit from cross-listing in Hong Kong, China. The Hong Kong Stock Market has more stringent governance rules and a better investor protection than the mainland market. Hong Kong companies generally provide strong incentives to executives via equity-based compensation. Have cross-listed companies learned from Hong Kong local firms in adopting strong executive incentives? The evidence from this study suggests that top executive compensation of cross-listed firms is more sensitive to sales growth than mainland firms without cross-listing. However, compared to that of Hong Kong firms, executive pay of cross-listed firms are less sensitive to stock returns. Further study shows that it is necessary to differentiate state and non-state companies among the cross-listed firms, as they exhibit different patterns of executive incentives.
    Keywords: Cross-listing;Executive Compensation;Corporate Governance
    JEL: J33 M52
    Date: 2008–07
  4. By: Capacci, S.; Mazzocchi, M.; Liu, Y.
    Abstract: The specific objective of this paper is the investigation of the link between an improvement in Chinese households€٠wealth and the quality of their diet and the role played by this relationship on the overall nutrition transition process. Better economic conditions mean a worsening of the diet in terms of higher energy intakes from fats, only partially compensated by higher fruit and vegetable intakes. China nutrition transition is going on and the rapid economic growth may lead to adverse health consequences if the negative effects of this transition will not be contrasted.
    Keywords: Nutrition, diet quality, China, Food Consumption/Nutrition/Food Safety,
    Date: 2008
  5. By: Huan-Niemi, E.; Niemi, J.
    Abstract: This study attempts to identify and measure quantitatively the effects of changing economic environment and trade policies on China€ٳ agricultural imports from the EU as well as globally. The approach is to model behavioural relationships in the agricultural trade between China and the EU by using annual trade data from 1986 to 2005. The results indicate that Chinese agricultural imports are relatively inelastic to absolute price changes, but relative price changes significantly affect the market shares of EU exports due to price competition. Trade liberalisation in the form of tariff reductions is trivial in changing the quantity of China€ٳ agricultural imports from the EU. China€ٳ growing agrifood imports has been fuelled by rapid income growth of its population.
    Keywords: EU, China, agricultural trade, International Relations/Trade,
    Date: 2008
  6. By: Asuyama, Yoko
    Abstract: This paper analyzes the causes of earnings inequality in urban China from 1988 to 2002. Earnings inequality in urban China continuously increased, even when adjusting for regional price differences. This paper reveals how the causes of earnings inequality changed between the periods 1988-1995 and 1995-2002 by reflecting labor-related institutional reform in China. Contrary to the situation from 1988 to 1995, between 1995 and 2002, employment status became the largest disequalizer, and the decline of inter-provincial inequality contributed to a reduction in entire earnings inequality. Individual ability, represented by education and occupation, received much greater rewards. Throughout the period from 1988 to 2002, a large part of the explained inequality increase was due to change in price (valuation of each individual's attributes) and not due to change in quantity (composition of individual attributes).
    Keywords: China, Income distribution, Labor market, Earnings inequality, Inequality decomposition
    JEL: D31 J31
    Date: 2008–10
  7. By: Gordon H. Hanson; Raymond Robertson
    Abstract: In this paper, we examine the impact of China's growth on developing countries that specialize in manufacturing. Over 2000-2005, manufacturing accounted for 32% of China's GDP and 89% of its merchandise exports, making it more specialized in the sector than any other large developing economy. Using the gravity model of trade, we decompose bilateral trade into components associated with demand conditions in importing countries, supply conditions in exporting countries, and bilateral trade costs. We identify 10 developing economies for which manufacturing represents more than 75% of merchandise exports (Hungary, Malaysia, Mexico, Pakistan, the Philippines, Poland, Romania, Sri Lanka, Thailand, and Turkey), which are in theory the countries most exposed to the adverse consequences of China's export growth. Our results suggest that had China's export supply capacity been constant over the 1995-2005 period, demand for exports would have been 0.8% to 1.6% higher in the 10 countries studied. Thus, even for the developing countries most specialized in export manufacturing, China's expansion has represented only a modest negative shock.
    JEL: F15
    Date: 2008–11
  8. By: Asuyama, Yoko
    Abstract: This paper examines the degree to which supply and demand shift across skill groups contributed to the earnings inequality increase in urban China from 1988 to 2002. Product demand shift contributed to an equalizing of earnings distribution in urban China from 1988 to 1995 by increasing the relative product demand for the low educated. However, it contributed to enlarging inequality from 1995 to 2002 by increasing the relative product demand for the highly educated. Relative product demand was continuously higher for workers in the coastal region and contributed to a raising of interregional inequality. Supply shift contributed essentially nothing or contributed only slightly to a reduction in inequality. Remaining factors, the largest disequalizer, may contain skill-biased technological and institutional changes, and unobserved supply shift effects due to increasing numbers of migrant workers.
    Keywords: China, Income distribution, Labor market, Urban societies, Earnings inequality, Inequality decomposition
    JEL: D31 J31
    Date: 2008–10
  9. By: Angus Deaton; Alan Heston
    Abstract: PPP-based national accounts have become an important part of the database for macroeconomists, development economists, and economic historians. Frequently used global data come from the Penn World Table (PWT) and the World Bank's World Development Indicators; a substantial fraction of the world is also covered in the PPP accounts produced by the OECD and the European Union. This paper provides an overview of how these data are constructed, and discusses both the theory and the practical problems of implementing it. All of these data are underpinned by the International Comparison Program (ICP), which collects data on prices worldwide. The most recent round of the ICP was for 2005 with final results published in early 2008; version 7.0 of the Penn World Table will soon incorporate these results. The 2005 ICP, like earlier rounds, involved substantial revisions to previous data, most notably revising downwards the size of the Chinese (40 percent smaller) and Indian (36 percent) economies. We discuss the reasons for the revisions, and assess their plausibility. We focus on four important areas: how to handle international differences in quality, the treatment of urban and rural areas of large countries such as China, India, and Brazil, how to estimate prices for government services, health, and education, and the effects of the regional structure of the ICP. All of these affect the interpretation of previous data, as well as the current revisions. We discuss previous revisions of the PWT, and their effects on various kinds of econometric analysis. The paper concludes with health warnings that should be kept in mind when using these data, which are not always suitable for the purposes to which they are put. Some international comparisons are close to impossible, even in theory, and in others, the practical difficulties make comparison exceedingly hazardous.
    JEL: E01 N1 O47
    Date: 2008–11
  10. By: Guariglia, Alessandra (University of Nottingham); Liu, Xiaoxuan (Chinese Academy of Social Sciences); Song, Lina (University of Nottingham)
    Abstract: Does the availability of internal finance constrain firm growth? Or does it foster it? To answer these questions, we use a panel of 407,096 Chinese firms over the period 2000−2005. We estimate dynamic assets growth equations augmented with cash flow, and find that the growth of state owned enterprises is not affected by cash flow, while that of privately owned firms is most affected. Considering that they represent 62% of the observations in our sample and that, in spite of being typically discriminated against by financial institutions, private firms have experienced sensational growth rates, our results suggest that internal finance has fostered rather than constrained their growth.
    Keywords: assets growth, cash flow, financial constraints
    JEL: D92
    Date: 2008–10

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