nep-cna New Economics Papers
on China
Issue of 2008‒12‒14
seven papers chosen by
Zheng Fang
Ohio State University

  2. The Intergenerational Content of Social Spending: Health Care and Sustainable Growth in China By Jean-Paul Fitoussi; Francesco Saraceno
  3. Dynamic Globalization and Its Potentially Alarming Prospects for Low-Wage Workers By Hans Fehr; Sabine Jokisch; Laurence J. Kotlikoff
  4. Why are Saving Rates of Urban Households in China Rising? By Marcos Chamon; Eswar Prasad
  5. The Value of Power in China: How Do Party Membership and Social Networks Affect Pay in Different Ownership Sectors? By Shuang LI; Ming LU; Hiroshi Sato
  6. Examining the Impact of the World Crude Oil Price on China's Agricultural Commodity Prices: The Case of Corn, Soybean, and Pork By Zhang, Qiang; Reed, Michael
  7. Implication of Cotton Price Behavior on Market Integration By Ge, Yuanlong; Wang, Holly H.; Ahn, Sung K.

  1. By: Ljungwall, Christer (China Economic Research Center); Gustavsson Tingvall, Patrik (China Economic Research Center)
    Abstract: Empirical evidence suggests that China has benefited from foreign direct investment (FDI). However, an important question that remains unanswered is whether China has benefited more from FDI than other countries in general and other transition and developing countries in particular. This paper investigates this issue by performing a Meta-analysis on a sample of 67 country-specific studies yielding 125 observations that have gauged the nexus between FDI and measures of income growth. The results show that studies on China report relatively high t-values and thus indicate that China may have benefited more than other countries from FDI.
    Keywords: Meta-analysis; Foreign direct investment; Economic growth; China
    JEL: F21 F23
    Date: 2008–11–01
  2. By: Jean-Paul Fitoussi (Observatoire Français des Conjonctures Économiques); Francesco Saraceno (Observatoire Français des Conjonctures Économiques)
    Abstract: The paper endorses the thesis that current macro imbalances are partly due to an excess of household savings in China, whose origin is to be found among other things in household uncertainty about the provision of public services like health care, pensions and education. Focusing on health services, because of their priority in the concerns of the Chinese people, we describe the recent trends in the provision of health care. We then argue that social spending by the government may have important intergenerational content, in that it allows higher private spending, lower inequality, higher levels of human capital and the like. All these factors are related to the potential growth rate of the economy. We conclude that a more important role of the government in the sector of public services, and in particular of health care, may help reduce the possibility of future bottlenecks, and hence help keeping the Chinese economy on a sustainable growth path. We conclude the paper by an assessment of the current debate on how to reform the system, and we advocate universal publicly funded basic health coverage.
    Keywords: Social Spending, Health Care, Sustainable Growth, Chinese Economy, Savings Glut
    JEL: I11 I18 N35
    Date: 2008
  3. By: Hans Fehr; Sabine Jokisch; Laurence J. Kotlikoff
    Abstract: Will incomes of low and high skilled workers continue to diverge? Yes says our paper's dynamic, six-good, five-region -- U.S., Europe, N.E. Asia (Japan, Korea, Taiwan, Hong Kong), China, and India -- general equilibrium, life-cycle model. The model predicts a near doubling of the ratio of high- to low-skilled wages over the century. Increasing wage inequality arises from a traditional source -- a rising worldwide relative supply of unskilled labor, reflecting Chinese and Indian productivity improvements. But China's and India's education policies matter. If successive Chinese and Indian cohorts become more skilled, major exacerbation of inequality will be precluded.
    JEL: F0 F20 H0 H3 J20 O0 O23
    Date: 2008–12
  4. By: Marcos Chamon; Eswar Prasad
    Abstract: From 1995 to 2005, the average urban household saving rate in China rose by 7 percentage points, to about one quarter of disposable income. We use household-level data to explain why households are postponing consumption despite rapid income growth. Tracing cohorts over time indicates a virtual absence of consumption smoothing over the life cycle. Saving rates have increased across all demographic groups although the age profile of savings has an unusual pattern in recent years, with younger and older households having relatively high saving rates. We argue that these patterns are best explained by the rising private burden of expenditures on housing, education, and health care. These effects and precautionary motives may have been amplified by financial underdevelopment, as reflected in constraints on borrowing against future income and low returns on financial assets.
    JEL: D12 E21 O16
    Date: 2008–12
  5. By: Shuang LI; Ming LU; Hiroshi Sato
    Abstract: Party membership and social networks, as two forms of nonmarket power, have significant effects on personal income. Do the effects vary across different ownership sectors (suoyouzhi xingzhi)? Using a nationally representative survey of urban households (China Household Income Project surveys in 1995 and 2002), we find that (1) party membership can significantly increase personal income, but this effect does not significantly differ between different ownership sectors or between the years 1995 and 2002 and (2) social networks are insignificant in State-Owned Enterprises (SOEs), while they contribute significantly to personal income in non-SOE sectors.
    Keywords: Income, Party membership, Social networks, Ownership, Maketization
    JEL: J40 O15 P26 Z13
    Date: 2008–11
  6. By: Zhang, Qiang; Reed, Michael
    Abstract: This study investigates effects of the world crude oil price on feed grain prices and pork prices in China. The results from time series techniques show the influences of crude oil price are not significant over the study period. The pork demand and supply result in the skyrocketing pork price.
    Keywords: Agribusiness, Demand and Price Analysis,
    Date: 2008
  7. By: Ge, Yuanlong; Wang, Holly H.; Ahn, Sung K.
    Abstract: The cotton market in China is highly interactive with international markets, especially, the US market. The prices in these two markets can reveal important market relations. Investigating the data of futures prices from the New York Board of Trade (NYBOT) and the Zhengzhou Commodity Exchange (CZCE) using several time series methods, we find a long-run cointegration relationship between these I(1) series. Furthermore, a bi-directional Granger Causality between these two futures markets is detected with Generalized Autoregressive Conditional Heteroskedasticity (GARCH) error specifications. We also find the relationship is impacted by the Chinese exchange rate policy change in the 2005.
    Keywords: cotton futures prices, cointegration, granger causality test, AR-GARCH., Agricultural Finance,
    Date: 2008

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