nep-cna New Economics Papers
on China
Issue of 2015‒08‒01
thirteen papers chosen by
Zheng Fang
Ohio State University

  1. Income Growth, Urbanization, and Food Demand in China By Zheng, Zhihao; Henneberry, Shida R.; Zhao, Yinyu; Gao, Ying
  2. China's Capital and "Hot" Money Flows: An Empirical Investigation By Tao Cai; Vinh Q. T. Dang; Jennifer T. Lai
  3. Evaluating the impact of adapting CIMMYT wheat germplasm in China: implications for wheat productivity By Xiang, Cheng; Huang, Jikun
  4. Self-Consumption, Gifting, and Chinese Wine Consumers By Qing, Ping; Hu, Wuyang
  5. The Impacts of Chinese Exchange Rate Policy on World Soybean and Products Markets By Luo, Ji; Williams, Gary W.
  6. Food Scares, Market Power and Farm-Retail Price Spread: The Case of Pork Market in China By Dai, Jiawu; Li, Xun; Wang, Xiuqing; Yu, Qiushuo; Mao, Xiaojie
  7. Rice, wheat, and corn supply response in China By Brockhaus, Jan; Huang, Jikun; Hu, Jiliang; Kalkuhl, Matthias; von Braun, Joachim; Yang, Guolei
  8. Estimating the Effect of Land Fragmentation on Machinery Use and Crop Production By Lai, Wangyang; Roe, Brian; Liu, Yumei
  9. Impact of Chinese acquisition of a US Company on Consumer Willingness to Pay By Zhang, Yu Yvette; Palma, Marco A.; Jin, Shaosheng
  10. Information Effect on Farmers’ Willingness to Participate in Wetlands Restoration: The Case of China Poyang Lake Wetlands Restoration Program By Guan, Zhengfei; Zhu, Honggen; Wei, Xuan
  11. Fear and Trust: How Risk Perceptions of Avian Influenza Affect the Demand for Chicken By Zhou, Li; Turvey, Calum; Hu, Wuyang; Ying, Ruiyao
  12. Measuring consumer heterogeneous preferences for pork traits under media reports: choice experiment in sixteen traceability pilot cities, By Yan, Zhen; Zhou, Jie-hong; Li, Kai
  13. Spatial price transmission under different policy regimes: the case of Chinese soy and maize market By Yang, Guolei; Huang, Jikun; Kalkuhl, Matthias; von Braun, Joachim; Hu, Jiliang

  1. By: Zheng, Zhihao; Henneberry, Shida R.; Zhao, Yinyu; Gao, Ying
    Abstract: A complete demand system is estimated separately for urban and rural residents using a two-stage AIDS-QUAIDS model and pooled provincial and time-series data from 2000 to 2010. The estimated models are then used to project China’s rural and urban food demand in the future. Results suggest that with the continued rise in per capita income and urbanization rate, the budget shares of food grains and vegetables are expected to decrease while the shares of foods with animal origin and other high-valued foods are expected to rise. Moreover, urban residents will dominate the food demand in China.
    Keywords: income growth in China, food demand, urbanization, urban and rural residents, Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, C33, D12, Q18,
    Date: 2015
  2. By: Tao Cai (Sun Yat-sen University); Vinh Q. T. Dang (University of Macau); Jennifer T. Lai (Guangdong University of Foreign Studies and Hong Kong Institute for Monetary Research)
    Abstract: We examine time-series characteristics of China's capital flows during 1998-2014. More specifically, we employ Kalman filtering state-space models to gauge relative importance of permanent and transitory components in China's overall FDI, equity, bond, other investment, and bank credit flows. Our results show that only in the case of FDI are both gross inflow and net flow dominated by a permanent stochastic level, suggesting that this source of capital is largely permanent. Incorporating covariates into the state-space models, we find that larger difference between RMB onshore and offshore interest rates encourages capital inflows that are dominated by a transitory component. Greater global risk perception, proxied by S&P 500's volatility index, on the other hand, discourages them. These covariates imply that capital control may not be effective in stemming volatile and speculative flows. Our results on bilateral capital flows between China and US also suggest that these flows are less persistent and more volatile during 1998-2014 than previously found based on 1988-1997 data. Our results bear important policy implications as China engages in further reforms in its domestic financial system and greater integration with the world financial system.
    Keywords: Capital Flow, Permanent Component, Transitory Component, State Space Model, China
    JEL: C22 C5 F21
    Date: 2015–07
  3. By: Xiang, Cheng; Huang, Jikun
    Abstract: Wheat is one of the most important crops in China. This study examines the contributions of wheat germplasm from different sources to wheat total factor productivity (TFP). Based on a unique dataset on planted area, pedigree and agronomic traits by variety for 17 major wheat-growing provinces from the past three decades, the results show that wheat TFP has grown steadily in the past three decades. On average, existing varieties are replaced by new ones in less than four years. Chinese wheat breeders have increasingly used CIMMYT breeding stocks to generate new wheat varieties, with CIMMYT germplasm contributing about 7% of the genetic material in Chinese wheat varieties during the past three decades and about 9% in recent years. More than 26% of all major wheat varieties released in China after 2000 contain CIMMYT germplasm. The use of CIMMYT gemplasm has resulted in an increase in TFP of 5% to 14% in the past three decades, depending on the measurement used. This represents from 3.8 million to 10.7 million tons of added grain. The paper concludes with policy implications for plant breeders and policy makers in China, as well as for international donors.
    Keywords: Wheat, Germplasm, Productivity, Agricultural and Food Policy, Crop Production/Industries, Production Economics, Productivity Analysis,
    Date: 2015
  4. By: Qing, Ping; Hu, Wuyang
    Abstract: Chins is the world largest red grape wine consuming country. Using data from a recent survey conducted in three diverse cities in China, this study examines Chinese consumers’ expenditure and preferences for wine for both self-consumption and gifting. Results indicate that in addition to price, Chinese consumers looked for other wine attributes such as brand and color but there are significant regional differences in wine preference and expenditure. On average, Chinese spend more on gift wines than for their own consumption. Increase in self-consumption contributed significantly to increases in gifting but the reverse effect was much weaker. Factors contributing to self-consumption and gifting are different and sometimes the effects were completely opposite such as consumers’ experiences with wine, the role of wine advertisement, and the occasions when wine was consumed. Implications are drawn for wine standards and classification policies and for wine producers and marketers in China as well as around the world.
    Keywords: China, expenditure, gift, regional, self-consumption, wine, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Marketing, Q13,
    Date: 2015
  5. By: Luo, Ji; Williams, Gary W.
    Abstract: This study examines the impacts of China’s exchange rate policy on commodity market with a lengthy vertical supply chain. By taking the soybean industry as a case, the analysis considers the joint effects of the undervaluation of the RMB/$US exchange rate and the interactions along vertical supply chain relative to prices, supplies, demands, and trade of world soybean and soybean products, In the analysis, the effects of China’s monetary policy of RMB undervaluation on world soybean, soybean meal and soybean oil supplies, demands, prices and trade over the 1993/94 through 2012/13 are measured. Simulation results show RMB undervaluation has significant effects on world soybean and soybean products markets. China’s monetary policy of RMB undervaluation is likely to increase China’s soybean price and reduce China’s soybean imports. It is also found that China has borne most of the burden from its own exchange rate undervaluation policy over the years.
    Keywords: exchange rate policy, soybean, supply chain, undervaluation, Agribusiness, Agricultural and Food Policy, Demand and Price Analysis, Financial Economics, Food Consumption/Nutrition/Food Safety, International Development, International Relations/Trade, Livestock Production/Industries, Marketing, Production Economics,
    Date: 2015
  6. By: Dai, Jiawu; Li, Xun; Wang, Xiuqing; Yu, Qiushuo; Mao, Xiaojie
    Abstract: Pork market, as one of the most important food markets in China, is frequently exposed to food scare events such as Porcine Reproductive & Respiratory Syndrome (PRRS), Swine Influenza (SI), and Classical Swine Fever (CSF). This research first investigates the impact of food scare incidents on pork market in China with a theoretical framework, proving that if there is no market power, farm-retail price spread should be a function of marketing cost only. Using monthly data of pork retail price and pork producer price from 2001 to 2014, empirical analysis provides evidence that food scare events significantly influence both pork retail price and farm-retail price spread, indicating the existence of market power in Chinese pork market as well as the differential impact of food scares on retailers and producers.
    Keywords: food scares, market power, price spread, Chinese pork market, Agricultural and Food Policy, International Development, Livestock Production/Industries, Marketing,
    Date: 2015
  7. By: Brockhaus, Jan; Huang, Jikun; Hu, Jiliang; Kalkuhl, Matthias; von Braun, Joachim; Yang, Guolei
    Abstract: This study analyses the indica rice, winter wheat, and corn production response to prices, rainfall, temperatures, and other parameters for the agriculturally most important provinces in China. System and difference GMM estimators are used as the number of groups is large compared to the time periods and the production response is a dynamic process. We find that all crops strongly respond to prices around planting time and shortly after while prices further away from the time of planting turn out insignificant. Furthermore, rainfall affects the production positively and high temperatures negatively for all crops. The results for other variables differ between the crops. Mixed outcomes are found for irrigation, fertilizer prices, area affected by droughts and interaction terms. Results suggest that irrigation is only partly able to compensate for impacts of weather variability. The presented method for analyzing the price response at different points in time may also be used for general model specification tests.
    Keywords: agricultural supply response, China, crop production, food prices, supply elasticity, Agribusiness, Agricultural and Food Policy, Crop Production/Industries, Food Security and Poverty, Production Economics, O13, Q11, Q13, Q18,
    Date: 2015–05–28
  8. By: Lai, Wangyang; Roe, Brian; Liu, Yumei
    Abstract: Using a recent data set from farm households in the provinces of Hebei and Shandong, we investigate the effect of land fragmentation on machinery use as well as the effect of machinery use on crop production. Endogeneity is addressed by utilizing land fragmentation due to previous long-term land assignment as an instrument and first difference estimation between normalized wheat and corn output from the same plots in the same year. The main results indicate that consolidating an average farm of 0.31 hectares from 2.28 plots to one plot increases machinery use by about 10%. Further, a 10% increase of machinery use increases crop production between 0.5% and 1%.
    Keywords: agricultural production, China, land fragmentation, land use policy, machinery use, Crop Production/Industries, Land Economics/Use, Production Economics, Q1,
    Date: 2015–05–25
  9. By: Zhang, Yu Yvette; Palma, Marco A.; Jin, Shaosheng
    Abstract: In this study, we explore how the acquisition of Smithfield, the world’s larger pork producer, by a Chinese firm Shuanghui, on consumers’ WTP to meat product using experimental auctions. Our results indicate that the acquisition benefits Shuanghui in particular and other Chinese firms in general in terms of consumer’s willingness to pay. On the other firms, the general impacts on US firms might be negative, probably due to expected lower price or reduced perceived difference between domestic and imported meat products.
    Keywords: Merging & Acquisition, Multinational business, Consumer Willingness to Pay, Experiments, Auctions, Agribusiness, Consumer/Household Economics, Marketing, JEL Codes: C91, D44, D12, F23, Q13,
    Date: 2015
  10. By: Guan, Zhengfei; Zhu, Honggen; Wei, Xuan
    Keywords: Information effect, wetlands restoration, Poyang Lake, willingness to participate, Environmental Economics and Policy, Institutional and Behavioral Economics, Land Economics/Use,
    Date: 2015–05
  11. By: Zhou, Li; Turvey, Calum; Hu, Wuyang; Ying, Ruiyao
    Abstract: This article quantifies the impact of H7N9 bird flu on chicken demand and consumer willingness to pay (WTP) in China. The surveys were administered to the same group of respondents in April 2012 and 2013. In 2012 we asked generic questions regarding food safety in chilled chicken without any mentioning of bird flu and in 2013 in the midst of the outbreak we resurveyed the group again. Since these respondents were surveyed both times (before and after the bird flu outbreak), the data formed a “natural experiment”. We measure risk perception, fear and trust against actual reduction in consumption and stated change in WTP for safe chicken between 2012 and 2013. Through a survey conducted in each year on the same Chinese urban consumers, we are able to construct a Marshallian-Hicksian elasticity measure signifying the relative welfare loss from a food risk. Furthermore, we found that: (1) like fear, the impact of distrust (especially the distrust in government) was negative for consumption; (2) macro fear of H7N9’s spreading, and distrust in government enhanced the deviation of consumption and WTP; (3) stronger consumer heterogeneity in consumption existed in cities with higher number of incidences; (4) the sheer mentioning of H7N9 is more important and negative than whether it was associated with a risk-perception reducing or risk-perception elevating message given to consumers; and (5) unlike what the conventional theory would predict that upon the rising of a specific risk factor, demand will drop and WTP for safter products will increase, while consumption of chicken never increased after the emergence of H7N9 in 2013, WTP for safer chicken did not increase either relative to generic risks associated with consuming chicken in 2012.
    Keywords: Risk Perception, Food Safety, H7N9 Avian Influenza, WTP, Consumer Behavior, Fear, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,
    Date: 2015
  12. By: Yan, Zhen; Zhou, Jie-hong; Li, Kai
    Abstract: The absence of original information in traceability system is the major risk to pork safety in China. An increasing number of recent media reports on pork safety problems at source have attracted great attention and thought to be a growing threat to risk perception amplification on pork safety, even leading to public panic. Understanding how people react to media report is essential to enhance pork quality management, and the design of effective information dissemination policy. This paper was among the first to explore the impact of media report about potential benefits and risk of traceability on consumer utility valuation and preference heterogeneities for select pork traits. By capturing key issues from online media reports in last three years both on benefit (positive group) and risk (negative gourp) of traceability as information shock showed to interviewees, we investigate willingness to pay from 788 consumers across sixteen traceability pilot cities, China. A orthogonal factorial design was employed, which resulted in twelve choice sets based on four two-level traits including information source (farmer or slaughter info.), production (free or captive range), brand (have or not), certificate (have or not), and three-level price. The mixed logit and latent class models are employed to examine preferences heterogeneity by using 28368 choice samples. The findings indicate that consumers value certification more than other pork traits, while only preference on farmerinfo labeling significantly imcreases in negative information group. Highly valued farmerinfo and free range labeling in same class from positive information shock, while consumer preference for free range in one class from negative group. The results suggests existence of preference heterogeneity based on two aspects of media report. Considering heterogeneity within population segments provides a framework for adapting information dissemination to react in food crisis for firm managers, and to improve pork product labeling policy interventions for food supervisors by integrating preferred pork traits in a traceability system.
    Keywords: Media report, Preference heterogeneity of pork traits, Choice experiments, Mixed logit and latent class model, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics,
    Date: 2015
  13. By: Yang, Guolei; Huang, Jikun; Kalkuhl, Matthias; von Braun, Joachim; Hu, Jiliang
    Keywords: Agricultural and Food Policy,
    Date: 2015–05–27

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