nep-cna New Economics Papers
on China
Issue of 2015‒05‒22
eleven papers chosen by
Zheng Fang
Ohio State University

  1. How You Export Matters: Export Mode, Learning and Productivity in China By Xue Bai; Kala Krishna; Hong Ma
  2. Fiscal Decentralization, Rural Industrialization, and Undocumented Labor Mobility in Rural China (1982-87) By Chen, Yiu Por (Vincent)
  3. Declining trust in growing China: A dilemma between growth and socio-economic damage By Dai, Shuanping; Elsner, Wolfram
  4. CEI: a new indicator measuring City Commercial Credit Risk initiated in China By Ruonan Lin; Yi Gu
  5. How Has the Global Financial Crisis Affected Syndicated Loan Terms in Emerging Markets?: Evidence from China By Guglielmo Maria Caporale; Suman Lodh; Monomita Nandy
  6. Take-off, Persistence, and Sustainability : The Demographic Factor of Chinese Growth By Cai Fang, Lu Yang
  7. Determinants of Chinese Direct Investments in the European Union By Christian Dreger; Yun Schüler-Zhou; Margot Schüller
  8. Impacts of a second generation biofuel policy on regional economy and carbon emission reduction: the case of Jatropha diodiesel in China By Wang, Zanxin
  9. A Narrative Indicator of Monetary Conditions in China By Sun, Rongrong
  10. The Impact of Globalization on CO2 Emissions in China By Shahbaz, Muhammad; Khan, Saleheen; Ali, Amjad; Bhattacharya, Mita
  11. Economic Transition and Labour Market Dynamics in China: An Interpretative Survey of the ‘Turning Point’ Debate By Prema-chandra Athukorala; Zheng Wei

  1. By: Xue Bai; Kala Krishna; Hong Ma
    Abstract: This paper shows that how firms export (directly or indirectly via intermediaries) matters. We develop and estimate a dynamic discrete choice model that allows learning-by-exporting on the cost and demand side as well as sunk/fixed costs to differ by export mode. We find that demand and productivity evolve more favorably under direct exporting, though the fixed/sunk costs of this option are higher. Our results suggest that had China not liberalized its direct trading rights when it joined the WTO, its exports and export participation would have been 30 and 37 percent lower respectively.
    JEL: F13 F14 L1
    Date: 2015–05
  2. By: Chen, Yiu Por (Vincent) (City University of Hong Kong)
    Abstract: This paper explores the relationship between fiscal decentralization, which gave greater rural industrialization and fiscal authority to local governments, and the emergence of rural-rural undocumented inter-provincial labor migration during China's initial reform period. A Heckman model is employed to correct for the zero observation problems and to consistently estimate the labor mobility with a modified gravity equation. Given the institutional barriers, the fiscal decentralization has two contending effects on labor market integration: Local economic development promotes labor mobility, but local public goods crowding restrains the inflow of labor at the destination. The crowding effect is stronger at lower levels of government.
    Keywords: fiscal decentralization, local economic development, local public goods, rural labor mobility
    JEL: H30 J61 J68 D72
    Date: 2015–04
  3. By: Dai, Shuanping; Elsner, Wolfram
    Abstract: Declining general trust has become a serious social issue in China in recent years. This paper attempts to understand and analyze this social phenomenon from a social interaction perspective. Based on a repeated prisoners´ dilemma game on networks, it finds that the evolution of general trust is dependent on changes of the social interaction structure, and the increases of both social and spatial distance may explain a decrease of the levels of cooperation and general trust. In addition, we find that the traditional Chinese family and clan networks culture has an ambiguous effect on general trust, and simple reactive social "homing behavior" might be critical for China´s future economic development. In order to recover the general trust level, a major strategic option for China, and for fast growing countries in economic transition in general, is to (re-)develop appropriate network structures and properties, as our model indicates.
    Keywords: economic transition,growth and development,migration,trust,games on networks,China
    JEL: B52 C72 D01 D02 D30 E24 O17 O43 O53 P21 Z10
    Date: 2015
  4. By: Ruonan Lin; Yi Gu
    Abstract: Aiming at quantifying and evaluating the regional commercial environment along with the level of economic development among cities in mainland China, the concept of China City Commercial Environment Credit Index(CEI) was first introduced and established in 2010. In this manuscript, a historical review and detailed introduction of CEI is included, followed by statistical studies. In particular, an independent statistical cross-check for the existing CEI-2012 is performed and significant factors that play the most in influential roles are discussed.
    Date: 2015–05
  5. By: Guglielmo Maria Caporale; Suman Lodh; Monomita Nandy
    Abstract: This paper examines the impact of the recent global financial crisis on the cost of debt capital (syndicated loans) in a leading emerging market, namely China, using difference-in-differences and GARCH approaches. Before the crisis China adopted banking reforms allowing entry of foreign banks and more domestic participation in the syndicated loan market. As a result, during the crisis the volume of syndicated loans grew steadily, in contrast to other countries. In addition, the amount of foreign syndicated loans decreased and average maturity increased compared to the precrisis period. Our findings provide useful information to policy makers to devise effective responses to financial crises.
    Keywords: Loan Spread, Loan Amount, Loan Maturity, China, Financial Crisis
    JEL: G21 G32 P34
    Date: 2015
  6. By: Cai Fang, Lu Yang
    Abstract: With the reduction of the working-age population and the increase of the population dependency ratio as the main characteristics of the demographic dividend having disappeared, China’s potential growth rate decreases. And our results suggest that demographic dividend contributed to nearly one forth of the economic growth in China in the past three decades, while TFP growth explains another one third with the remainder mainly due to capital accumulation, explaining nearly half. China’s potential growth rate will slow down—from nearly 10 per cent in the past 30 years to 7.5 per cent on average during 2011-2015—due to the diminished demographic dividend, but reform measures are conductive to clearing the institutional barriers to the supply of factors and productivity, thereby slowing the declining trend of potential growth rate. The aggregate reform dividend (e.g., relax family planning policy, postpone the retirement age, improvement of education and training, tax cut, and improvement of TFP) could reach to 1-2 percentage points on average during 2016-2050.
    Keywords: potential growth rate, Demographic dividend, reform dividend, total factor productivity
    JEL: O47 J21 C53
    Date: 2015–04
  7. By: Christian Dreger; Yun Schüler-Zhou; Margot Schüller
    Abstract: This paper analyses the determinants of Chinese direct investment (DI) in the European Union (EU). Evidence is based on panel Poisson models drawing on two investment monitors for individual projects. We distinguish between the numbers of greenfield investments (GIs) and mergers and acquisitions (M&As). The findings indicate that market size and trade relationships with China are the primary factors driving Chinese DI in the EU. In contrast, more business-friendly institutions do not foster DI. Chinese enterprises might be risk averse, in other words prefer to choose their activities in regions with less competitive markets. The striking difference between GIs and M&As is related to unit labour costs. Higher costs make the host country less attractive for the establishment of new firms, but do not affect the involvement in existing firms. The sectoral dispersion of Chinese DI in the EU has not changed much since the global financial crisis of 2008. Most relevant shifts have occurred in research and development (R&D), where low-income EU countries have gained in attractiveness.
    Keywords: China FDI, Greenfield investments, mergers and acquisitions
    JEL: F21 E22 C25
    Date: 2015
  8. By: Wang, Zanxin
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy,
    Date: 2015–02
  9. By: Sun, Rongrong
    Abstract: In this paper, we apply the narrative approach, studying the PBC's historical records, to infer policy-makers' intentions and thereby build a time series of monetary policy indicator. We show that our narrative policy indicator is informative about economic activity. Changes in it reflect the PBC's responses to its perceptions of economic conditions. It is a good indicator of monetary policy actions. Finally, we show that compared to monetary aggregates, changes in interest rates and the required reserve ratio are more associated with changes in monetary policy, as measured by our narrative indicator, but only to a limited degree. None of them alone can be a good proxy of policy indicator.
    Keywords: the narrative-based policy indicator, quantitative policy measures, VAR, predictive power
    JEL: E52 E58
    Date: 2015
  10. By: Shahbaz, Muhammad; Khan, Saleheen; Ali, Amjad; Bhattacharya, Mita
    Abstract: This paper examines the Environmental Kuznets Curve (EKC) hypothesis for China in the presence of globalization. We have applied Bayer and Hanck combined cointegration test as well as the ARDL bounds testing approach to cointegration by accommodating structural breaks in the series. The causal relationship among the variables is investigated by applying the VECM causality framework. The study covers the period of 1970-2012. The results confirm the presence of cointegration among the variables. Furthermore, the EKC hypothesis is valid in China both in short-and-long runs. Coal consumption increases CO2 emissions significantly. The overall index and sub-indices of globalization indicate that globalization in China is decreasing CO2 emissions. The causality results reveal that economic growth causes CO2 emissions confirming the existence of the EKC hypothesis. The feedback effect exists between coal consumption and CO2 emissions. CO2 emissions Granger causes globalization (social, economic and political).
    Keywords: China, Coal Consumption, Globalization, CO2 emissions
    JEL: A1 A10
    Date: 2015–01–01
  11. By: Prema-chandra Athukorala; Zheng Wei
    Abstract: Has the Chinese economy approached the ‘Lewisian turning point’ that marks the ending of the initial phase of industrial transformation fueled by surplus labour? In this paper we undertake an interpretative survey of the literature on this issue, in the context of China’s labour market conditions prior to the reforms and structural change of the past three decades. The available evidence is mixed, and our assessment makes a strong case for probing institutional constraints to labour mobility from an economy-wide perspective, going beyond the confines of the rural economy.
    Keywords: China, Lewis model, Surplus labour, economic transition
    JEL: O15 O14 O53 J30
    Date: 2015

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