nep-cna New Economics Papers
on China
Issue of 2015‒06‒27
fifteen papers chosen by
Zheng Fang
Ohio State University

  1. The One-Child Policy and Household Savings By Taha Choukhmane; Nicolas Coeurdacier; Keyu Jin
  2. Magical transition ? intergenerational educational and occupational mobility in rural China : 1988?2002 By Emran,Shahe; Sun,Yan - EAPCE
  3. The Long-term Health Effects of Fetal Malnutrition: Evidence from the 1959-1961 China Great Leap Forward Famine By Kim, Seonghoon; Fleisher, Belton M.; Sun, Jessica Ya
  4. Insuring against Health Shocks: Health Insurance and Household Choices By Liu, Kai
  5. Seeing is learning: Vision care for rural and migrant children in China By Zhang, Yanjie; Glauben, Thomas
  6. Self-Protection Investment Exacerbates Air Pollution Exposure Inequality in Urban China By Siqi Zheng; Cong Sun; Matthew E. Kahn
  7. The Heterogeneous Impact of Pension Income on Elderly Living Arrangements: Evidence from China's New Rural Pension Scheme By Cheng, Lingguo; Liu, Hong; Zhang, Ye; Zhao, Zhong
  8. Regional Effects of Export Tax Rebate on Exporting Firms: Evidences From China By Tan, Yong; An, Liwei; Hu, Cui
  9. Trade, Migration and Productivity: A Quantitative Analysis of China By Trevor Tombe; Xiaodong Zhu
  10. A lesson in market contestability : calculating the cost of Chinese state intervention in iron ore price negotiations By Luke Hurst
  11. Science-industry-linkages in China: What drives MNCs to collaborate with Chinese academic partners and what makes them successful By Tagscherer, Ulrike
  12. Hayek, local information, and the decentralization of state-owned enterprises in China By Huang,Zhangkai; Li,Lixing; Ma,Guangrong; Xu,L. Colin
  13. The Influence of Partners’ Views on Chinese Auditors’ Judgments Related to Professional Scepticism By Sammy Xiaoyan Ying; Chris Patel
  14. China?s Carbon Emissions Report 2015 By Zhu Liu
  15. The international transfer of wind power technology to Brazil and China By Gandenberger, Carsten; Unger, Daniel; Strauch, Manuel; Bodenheimer, Miriam

  1. By: Taha Choukhmane (Yale University); Nicolas Coeurdacier (Département d'économie); Keyu Jin (London School of Economics and Political Science (LSE))
    Abstract: We investigate how the `one-child policy' has impacted China's household saving rate and human capital in the last three decades. In a life cycle model with endogenous fertility, intergenerational transfers and human capital accumulation, we show how fertility restrictions provide incentives for households to increase their offspring's education and to accumulate financial wealth in expectation of lower support from their children. Our quantitative OLG model calibrated to household level data shows that the policy significantly increased the human capital of the only child generation and can account for a third to 60% of the rise in aggregate savings. Equally important, it can capture much of the distinct shift in the level and shape of the age-saving profile observed from micro-level data estimates. Using the birth of twins (born under the one child policy) as an exogenous deviation from the policy, we provide an empirical out-of-sample check to our quantitative results; estimates on savings and education decisions are decidedly close between model and data.
    Keywords: Life Cycle Savings, Fertility, Human Capital, Intergenerational Transfers
    JEL: E21 D10 D91
    Date: 2014–09
  2. By: Emran,Shahe; Sun,Yan - EAPCE
    Abstract: This paper presents evidence on intergenerational educational and occupational mobility in rural China over a period of 14 years (1988?2002). To understand whether the estimated inter-generational persistence can be driven solely by unobserved heterogeneity, biprobit sensitivity analysis and heteroskedasticity-based identification are implemented. The empirical results show that there have been dramatic improvements in occupational mobility from agriculture to nonfarm occupations; a farmer?s children are not any more likely to become farmers in 2002, although there was significant persistence in occupation choices in 1988. In contrast, the intergenerational mobility in educational attainment has remained largely unchanged for daughters, and it has deteriorated significantly for sons. There is strong evidence of a causal effect of parental education on a son?s schooling in 2002. The paper provides some possible explanations for the dramatic divergence between occupational and educational mobility in rural China from 1988 to 2002.
    Keywords: Education For All,Education and Society,Effective Schools and Teachers,Access&Equity in Basic Education,Primary Education
    Date: 2015–06–22
  3. By: Kim, Seonghoon (Singapore Management University); Fleisher, Belton M. (Ohio State University); Sun, Jessica Ya (Singapore Management University)
    Abstract: We report evidence of long-term adverse health impacts of in utero exposure to malnutrition based on survivors in their 50s who were born during the China Famine that occurred in the years 1959-1961. We take advantage of recently available data provided by the China Health and Retirement Longitudinal Study (CHARLS) to corroborate evidence supporting the Fetal Origin Hypothesis. We find that fetal exposure to malnutrition has large and long-lasting impacts on both physical health and cognitive abilities, including the risks of suffering a stroke, physical disabilities in speech, walking and vision, and measures of mental acuity. Our findings on the health impacts of fetal malnutrition on middle-age survivors suggest that it would be desirable to trace the changes of health status of the famine survivors as they age into later life stages. We suspect that such further study would support the lifetime benefits of in utero and early infancy health interventions that extend through the life cycle in the form of avoiding both physical and mental impairment.
    Keywords: fetal origin hypothesis, malnutrition, health, China Famine
    JEL: I10 I12 J14
    Date: 2015–06
  4. By: Liu, Kai (Norwegian School of Economics)
    Abstract: This paper provides empirical evidence on the role of public health insurance in mitigating adverse outcomes associated with health shocks. Exploiting the rollout of a universal health insurance program in rural China, I find that total household income and consumption are fully insured against health shocks even without access to health insurance. Household labor supply is an important insurance mechanism against health shocks. Access to health insurance helps households to maintain investment in children's human capital during negative health shocks, which suggests that one benefit of health insurance could arise from reducing the use of costly smoothing mechanisms.
    Keywords: China, health insurance, health shock
    JEL: D1 O1 I1
    Date: 2015–06
  5. By: Zhang, Yanjie; Glauben, Thomas
    Abstract: Uncorrected vision is prevalent among rural children and those who migrate from rural areas to urban areas with their parents in China, of which more than 20 per cent are nearsighted. Since 2012 the Rural Education Action Program (REAP) has carried out the largest empirical vision care project ever conducted in China. More than 20,000 children in different parts of China have been screened and about 5,000 pairs of eyeglasses have been dispensed to those who are nearsighted. REAP has been able to create a comprehensive picture of vision care for rural and migrant children in China. The successfully implemented project so far has provided valuable lessons for treating vision problems. First, wearing eyeglasses can remarkably improve children's educational performance and self-confidence. Second, in contrast to widespread opinion in rural China, eyeglasses are by no means harmful to children's eyesight. Third, and in contrast to another myth, specific 'eye exercises' used as a traditional alternative to eyeglasses cannot slow the onset or progression of myopia. Finally, teacher incentives to encourage children to wear eyeglasses will improve rates of eyeglasses usage, help to overcome vision problems and thus lower educational barriers. Based on these findings, researchers of the project are currently working with local governments in rural China to incorporate vision care into the healthcare agenda.
    Date: 2015
  6. By: Siqi Zheng; Cong Sun; Matthew E. Kahn
    Abstract: Urban China’s high levels of ambient air pollution both lowers quality of life and raises mortality risk. China’s wealthy have the purchasing power to purchase private products such as air filters that allows them to offset some of the pollution exposure risk. Using a unique data set of Internet purchases, we document that households invest more in masks and air filter products when ambient pollution levels exceed key alert thresholds. Richer people are more likely to invest in air filters, which are much more expensive than masks. Our findings have implications for trends in inequality in human capital accumulation and in quality of life inequality in urban China.
    JEL: Q53 Q55 R21
    Date: 2015–06
  7. By: Cheng, Lingguo (Shanghai University of Finance and Economics); Liu, Hong (Central University of Finance and Economics); Zhang, Ye (Nanjing University); Zhao, Zhong (Renmin University of China)
    Abstract: This paper investigates the impact of pension income on living arrangements of the elderly. Taking advantage of a unique opportunity due to the recent establishment and expansion of the social pension system in rural China, we explicitly address the endogeneity of pension status and income through a fixed-effect model with instrumental variable approach by exploiting exogenous time variation in the program implementation at county level. We find an overall positive effect of pension income on independent living as well as considerable heterogeneity. The elderly with easy access to their adult children, possessing higher financial capacity, in less long-term care and psychological need, and having more education are more likely to live independently after receiving pension income. Our results confirm that independent living is a normal good, but highlight that living arrangement is multidimensional in rural China.
    Keywords: pension income, living arrangements, heterogeneity, China
    JEL: J12 H55 I38
    Date: 2015–06
  8. By: Tan, Yong; An, Liwei; Hu, Cui
    Abstract: In this paper, we extend the model of Melitz (2003) to separate the direct and indirect impact of an export tax rebate on the intensive margin of firm-level export sales at the sub-national level. The direct impact of the rebate is associated with a reduction of an exporting firm’s variable costs, while the indirect impact manifests itself through higher regional wages as a result of increased demand for local labor. First, the empirical results imply that a 1% rise in the export tax rebate rate increases the export sales among continuing exporters by 0.4% through the direct channel. Second, the same rebate increase reduces export sales among continuing exporters by 0.02% through indirect channel. Both effects are statistically significant, and are consistent with the model's predictions.
    Keywords: Export Tax Rebate, Regional Labor Market, Direct Impact, Indirect Impact
    JEL: D22 F10 F14 L10
    Date: 2015–06–21
  9. By: Trevor Tombe; Xiaodong Zhu
    Abstract: We study how misallocation due to goods- and labour-market frictions affect aggregate productivity in China. Combining unique data with a general equilibrium model of internal and international trade, and migration across regions and sectors, we quantify the magnitude and consequences of trade and migration costs. The costs were high in 2000, but declined afterward. The decline accounts for roughly two-fifths of aggregate labour productivity growth in China between 2000 and 2005. Reductions in internal rather than international costs are particularly important. Despite the decline, migration costs are still high and potential gains from further reform are large.
    Keywords: migration, internal trade, spatial misallocation, gains from trade, aggregate productivity, China
    JEL: F1 F4 R1 O4
    Date: 2015–06–20
  10. By: Luke Hurst (East Asian Bureau of Economic Research)
    Abstract: This article analyses the motivation and impact of the 2009 intervention of the China Iron and Steel Association (CISA) in benchmark price negotiations. The impact of the transition from benchmark pricing to a spot market mechanism, which was a consequence of the CISA’s intervention, is examined using a constrained bilateral monopoly model to calculate the financial impact of switching pricing mechanisms on Australian exporters and Chinese importers.
    Keywords: iron ore, China
    JEL: F13 L16 L11
    Date: 2015–04
  11. By: Tagscherer, Ulrike
    Abstract: [Motivation and background ...] The presented report describes and analyzes the results of a survey among 30 foreign invested enterprises in China in 2014. The survey was conducted once before in 2011/2012 and the update in 2014 was specifically designed to create a better understanding of the recent dynamics in innovation in China, especially in the collaboration between MNCS and Chinese universities and research institutes. The main questions the survey wants to answer are: who are the key drivers for collaboration, what are the key success factors and which are the most recent developments in these industry-science-collaborations. The survey also answers the question of what policy makers could do to increase the collaboration and to reinforce spill-over effects into the Chinese science system as well as to create a supportive environment for MCNs R&D activities in China.
    Date: 2015
  12. By: Huang,Zhangkai; Li,Lixing; Ma,Guangrong; Xu,L. Colin
    Abstract: Hayek argues that local knowledge is a key for understanding whether production should be decentralized. This paper tests Hayek?s predictions by examining the causes of the Chinese government?s decision to decentralize state-owned enterprises. Since the government located closer to a state-owned enterprise has more information over that enterprise, a greater distance between the government and the enterprise should lead to a higher likelihood of decentralization. Moreover, where communication costs and the government?s uncertainty over an enterprise?s performance are greater, the government is more likely to decentralize enterprises so that it can better utilize local information. This paper finds empirical support for these implications.
    Keywords: E-Business,Knowledge Economy,Economic Theory&Research,Debt Markets,Municipal Financial Management
    Date: 2015–06–22
  13. By: Sammy Xiaoyan Ying (Macquarie University); Chris Patel (Macquarie University)
    Abstract: Professional scepticism remains one of the most important and controversial topics in auditing. This study examines the influence of partners’ views on auditors’ professional scepticism in China. This examination is important given the hierarchical structures of audit firms, and even more important in China given the strong cultural emphasis on subordination and obedience. Specifically, this study invokes social contingency theory to provide insights into partner influences on auditors from an accountability perspective. It is expected that auditors with knowledge of partners’ views are likely to be susceptible to pressure to align their judgments to the partners’ views, and such pressure influences auditors’ professional scepticism when exercising judgments. A between-subjects experiment was conducted with practicing auditors in China. The independent variable, partners’ views on professional scepticism, was manipulated across three groups: (1) a control group, in which there is no information about partners’ view, (2) a group in which partners’ known views reflect low emphasis on professional scepticism, or (3) a group in which partners’ known views reflect high emphasis on professional scepticism. The results provide evidence that when partners’ views on professional scepticism are known, auditors perceive considerable amount of pressure to follow the partners’ views. Further, the results show that when partners’ views reflect low emphasis on professional scepticism, auditors’ levels of professional scepticism are significantly lower compared to when partners’ views are unknown. However, when partners’ views reflect high emphasis on professional scepticism, auditors’ levels of PS do not significantly differ from when partners’ views are unknown. Furthermore, the results show that when auditors learn partners’ views, increased intensity of perceived pressure can strengthen the effects of partners’ influences on auditors’ professional scepticism. The findings of this study have important implications for auditing regulators, professionals, and audit firms.
    Keywords: Professional Scepticism, Auditing, China, Partner influences
    JEL: C93 M42 M40
    Date: 2015–06
  14. By: Zhu Liu
    Abstract: In 2012 China was the largest contributor to carbon emissions from fossil fuel burning and from cement production. With 8.50 Gt CO2 in in carbon emissions from fossil burning and cement production in 2012, China was responsible for 25% of global carbon emissions. China?s cumulative emissions from fossil fuel burning and cement production from 1950-2012 were 130 Gt CO2. The magnitude and growing annual rate of growth of China?s carbon emissions make this country the major driver of global carbon emissions and thus a key focus for efforts in emissions mitigation. This report presents independent data on China?s carbon emissions from 1950-2012, and provides a basis to support mitigation efforts and China?s low-carbon development plan.
    Date: 2015–01
  15. By: Gandenberger, Carsten; Unger, Daniel; Strauch, Manuel; Bodenheimer, Miriam
    Abstract: Enhancing developing countries' access to climate technologies is an important contribution to effectively addressing climate change at the global level. In this study, we analyses the drivers and barriers for the transfer of wind power technology from the perspective of multinational technology suppliers. The findings and comparison of two case studies on the transfer of wind power technology to China and Brazil are presented, focusing on which transfer channels were chosen and why, as well as what kind of impact this choice had on the local diffusion of the transferred technology. While the case study on China arrives at the conclusion that a variety of transfer channels are used and hybrid governance modes, such as licensing and joint ventures, are favored in particular, the Brazilian case revealed that transfers within multinational companies to their subsidiaries are by far the dominant transfer channel. Both case studies revealed that government restrictions have a considerable impact on the choice of transfer channel, which is due both to the strong involvement of the receiving countries' governments in market creation activities for renewable energies and to their control over energy markets and infrastructures. [...]
    Keywords: International Technology Transfer,Transfer Channel,Wind Power,Knowledge Spillover,Transaction Costs Economics
    Date: 2015

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