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on China |
| By: | Sandra Poncet; Florian Mayneris; Tao Zhang |
| Abstract: | We study how the 2004 reform of minimum wage rules in China has affected the survival, average wage, employment and productivity of local firms. To identify the causal effect of minimum wage growth, we use firm-level data for more than 160,000 manufacturing firms active in 2003 and complement the triple difference estimates with an IV strategy that builds on the institutional features of the 2004 reform. We find that the increase in city-level minimum wages resulted in lower survival probability for firms that were the most exposed to the reform. For surviving firms, wage costs increased without negative repercussions on employment. The main explanation for this finding is that productivity significantly improved, allowing firms to absorb the cost shock without hurting their employment nor their profitability. At the city-level, our results show that higher minimum wages fostered aggregate productivity growth thanks to productivity improvements of incumbent firms and net entry of more productive ones. Hence, in a fast-growing economy like China, there is a cleansing effect of labor market standards. Minimum wage growth allows more productive firms to replace the least productive ones and forces incumbent firms to strengthen their competitiveness, these two mechanisms boosting the aggregate efficiency of the economy. |
| Keywords: | minimum wages;firm-level performance;aggregate TFP;China |
| JEL: | F10 F14 O14 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2014-16&r=cna |
| By: | Loren BRANDT; Johannes VAN BIESEBROECK; Yifan ZHANG |
| Abstract: | Over the reform period, industry has been the source of forty percent of GDP, and has contributed 90% of China’s exports. Annual firm level surveys that begin in 1992, along with industry-wide census in 1995, 2004 and 2008 are rich sources of data on firms’ actions in this important sector. It is well-known that working with Chinese data requires overcoming challenging measurement issues. Macroeconomic series are often suspected to suffer from political interference or reporting biases that stem from political incentives. Working with the firm-level data has its own challenges. Making sure that comparisons over time are consistent is perhaps the most difficult and pervasive issue. This is because of sampling as well as measurement issues for key variables, such as ownership type, real output, value-added, wages, and the capital stock. These problems are apparent, for example, in discrepancies between the evolution of aggregates from the firm-level data and aggregate statistics in the national income accounts. In this paper, we provide an introduction to these data sets. We discuss and illustrate several of the issues that make comparability over time difficult and we suggest solutions for many of them. The importance of a particular measurement issue often depends on the exact application. We illustrate this point by tracing the evolution of the relative productivity level of entrants and incumbents over time, trying to distinguish between changes in actual performance and changes driven by measurement problems. We conclude by identifying a few promising areas of future research and margins on which collaboration among users to improve these data might be beneficial. |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces14.15&r=cna |
| By: | Timothy Swanson (Centre for International Environmental Studies, IHEID, The Graduate Institute of International and Development Studies, Geneva); Chiara Ravetti; Yana Popp Jin; Mu Quan; Zhang Shiqiu |
| Abstract: | This paper looks at the problem of information control behind the unsustainable levels of air pollution in China. In particular, it focuses on a large urban area, Beijing, and it examines the role of the public, government-controlled information and the adaptation choices of households in response to signals about high pollution. Our analysis is based on a simple theoretical framework in which people migrate from rural areas to polluted cities, receiving a signal from the government about urban pollution; hence, they decide whether to adapt to pollution or not. We find that the government has no incentive to ensure sustainable air quality, as it can distort pollution information in order to attract cheap labour. We then analyse empirically two different air pollution indexes from different sources and agents’ behaviour in an original household survey collected in Beijing. We find that the official air pollution values are systematically distorted, creating perverse incentives for households to react to bad air quality, especially for people who rely on government-controlled sources of information. |
| Keywords: | Air Pollution; Government; Information; Averting Behaviour; Sustainability. |
| JEL: | Q53 Q56 Q58 |
| Date: | 2014–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:gii:ciesrp:cies_rp_27&r=cna |
| By: | Chan, Mark K.; Kwok, Simon |
| Abstract: | We analyze the effects of a recent financial reform that enables cross-market invest-ment between Hong Kong and Shanghai stock exchanges. Using a vector error-correction model, we found that the reform announcement considerably narrows the equilibrium level of price disparity and strengthens the price comovement of shares that are cross-listed in both markets. First, there is a substantial increase in the number of cross-listed firms with cointegrated share prices, and the estimated equilibrium relationship is in support of the relative law of one price. Second, our model predicts that the price disparity narrows by as much as 40 percent in equilibrium. Third, we found that both markets adjust in response to a disequilibrium in price disparity, leading to a sizable error-correction activity. The Shanghai market contributes to approximately two-thirds of the price discovery process. Competition and informativeness of trading affect the relative role of price discovery in each market. |
| Keywords: | Capital account liberalization; co-integration; vector error-correction model; cross-listing; Chinese A-H shares |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2014-08&r=cna |
| By: | Martha Prevezer; Lutao Ning; Yuandi Wang |
| Abstract: | Research Question: How does Chinese corporate governance in publicly-listed firms affect the relationship between innovation productivity and top management turnover? Is state shareholding in China a positive force for innovation productivity? Research Insights: A balance is maintained between the negative effect of (relatively high) top management turnover on investment horizons and innovation productivity, mitigated by positive effects of high state ownership, up to a certain level of ownership concentration. Beyond this level, potential for abuse by the dominant shareholder curtails positive effects on innovation. This contrasts with foreign dominant shareholders where no alignment between dominant shareholder and top management occurs and shorter investment horizons are preferred with lower innovation productivity. Theoretical Implications: In China, with state-held and controlled publicly listed firms, there is an alliance between the dominant shareholder and top management with relatively low employee protection and weak protection for lesser shareholders . This may have positive outcomes for long term innovation but may also lead to principal-principal abuses. Any such alliance needs to be tempered by stronger internal governance structures to protect minority shareholders. But stronger protection may in turn reduce investment horizons and lower innovation. Policy Implications: As well as strengthening external corporate governance mechanisms, insider corporate governance mechanisms need to be strengthened to discipline managers. However stronger countervailing powers to secondary shareholders, stronger Supervisory Board rights and greater independence of Directors may tend to decrease time horizons of investment for the firm and impede innovation. |
| Keywords: | Corporate governance, Top management turnover, innovation performance, China |
| JEL: | P3 L2 P5 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:cgs:wpaper:53&r=cna |
| By: | Cheng, Fang-Ting |
| Abstract: | As can been seen from the U.S.'s non-ratification of the Kyoto Protocol, together with the negotiations toward the post-Kyoto Protocol framework, the U.S. and China have been quarrelling over their responsibilities and have contradicted one another over the introduction of compulsory domestic greenhouse gases emission reduction targets. Therefore, for a long time, it has been argued that the controversy between the two countries has hindered the process of forging an international agreement to deal with climate change. On the other hand, Sino-U.S. bilateral cooperation on climate change has significantly increased in recent years in summit talks and their Strategic & Economic Dialogue (S&ED), especially after the 15th Conference of Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC) in Copenhagen, one of whose aims was to facilitate positive negotiations for the post-Kyoto Protocol agreement. Analyzing this in the light of recent developments, we find that the U.S. and China have tended to address climate change and related issues from a pluralistic viewpoint and approach, by regarding the achievement of bilateral cooperation and global agreements as their common strategic objective. |
| Keywords: | China, United States, Climatic change, Foreign relations, Environmental problems, Climate change, Mitigation, Adaptation, Copenhagen Accord, Cancun Agreement, UNFCCC, Sino-U.S. relationship, U.S.-China Strategic & Economic Dialogue (S&ED) |
| JEL: | K32 O13 O19 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper476&r=cna |
| By: | Brasili, Cristina; Barone, Barbara; Bin, Peng |
| Abstract: | Paraphrasing the 1996 World Food Summit definition, “food insecurity” exists when “not” all people, “not” at all times, have physical and economic access to sufficient safe and nutritious food. In this perspective, our study examines the relation between spatial inequality and vulnerability to food insecurity from a socioeconomic perspective. A longitudinal analysis is applied to estimate the regional food vulnerability at provincial and sub-provincial level and the rural and urban contributions to the integral regional vulnerability are underlined. Theil Index and Herfindahl Index are used to quantify the basic factors for the evaluation of economic vulnerability to food consumption and diversity of food structure, which we also based on to proceed further studies and benchmark 31 Chinese provinces and municipalities by their vulnerability to food insecurity. Our main aim is to fill up the gap of analysing regional food vulnerability in a socioeconomic point of view in China, and hence to better depict the regional disparity in food vulnerability and try to provide useful information on the reality of food insecurity. |
| Keywords: | Food insecurity, economic vulnerability, regional disparity, convergence, Agribusiness, Agricultural and Food Policy, Marketing, Q180, O130, O180, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aiea14:173107&r=cna |
| By: | Olga Timokhina (St. Petersburg National Research University of Information Technologies, Mechanics and Optics) |
| Abstract: | In the paper we review Chinese foreign direct investment in Africa, which have increased significantly in the last decade. So-called BRICS countries (Brazil, Russia, India, China and South Africa) are actively investing abroad, becoming leading FDI exporters among emerging economies, and China is dominating in BRICS outward FDI (the share of Chinese outward FDI in world outward FDI was 6.05% in 2012). China has become a significant FDI exporter in the late 1990-s and by 2012 Chinese outward FDI stock reached 121080 ml. USD figure. Chinese investments are held both by private enterprises and state-owned companies. Chinese OFDI challenges the classic internationalization theories, which are based on the observation of traditional FDI from developed economies that are historically, economically and institutionally different from China. Undoubtedly the Chinese government plays a critical role in encouraging Chinese companies to invest in Africa, providing direct and indirect investment policy regulation, subsidizing and promotion of FDI. Africa is still perceived as a risky direction for investment, though China is actively investing in this region. Since resource-seeking motivation for investment is especially relevant for China, resource-rich African countries are attractive for Chinese state-owned companies. Bilateral trade between China and Africa in 2012 is rapidly growing and accounted for about 5 percent of China's total trade and about 16 percent of Africa's overall trade. China's FDI outflows to Africa are also increasing (from 500 mln. USD in 2003 to almost 15 bln. USD by 2012). The paper analyses Chinese OFDI in Africa and focuses on corporate social responsibility (CSR) of Chinese companies. In particular, we review regulatory documents for CSR in China and their application for Chinese investment in Africa. The strategic importance of CSR is not always acknowledged in by Chinese enterprises, thus resulting in shortage of capacity to incorporate CSR into corporate management. China clearly has an important economic role to play in Africa‟s development. The Chinese government has established China Africa Development Fund to support Chinese investors in African projects and has invested in creation of six special economic zones across the continent. All these measures influence the perception of China as an investor in African economies. |
| Keywords: | Foreign direct investment, corporate social responsibility, state regulation, BRICS, China, Africa, emerging markets, governmental policy, liberalization of investment |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:msm:wpaper:2014/29&r=cna |