nep-cna New Economics Papers
on China
Issue of 2015‒08‒07
eight papers chosen by
Zheng Fang
Ohio State University

  1. Outsourcing Agricultural Production: Evidence from Rice Farmers in Zhejiang Province By Guo, Hongdong; Ji, Chen; Jin, Songqing; Huang, Zuhui
  2. Is There a City Size Bias? Destination Choice of Rural off-Farm Workers, Evidences from Three Areas in Rural China By Hu, Chaoran; Chen, Kevin Z.; Reardon, Thomas
  3. A Dynamic Economic Analysis of Nitrogen-Induced Soil Acidification in China By Yang, Ziyan
  4. Chinese consumers' perception of imported versus domestic pork quality By Chen, Maolong; Ortega, David. L; Wang, H.Holly
  5. Household-level impacts of property rights reform in peri-urban China: Evidence from the Chengdu National Experiment By Deininger, Klaus; Jin, Songqing; Liu, Shouying; Xia, Fang
  6. Unconditional cash transfers in China : an analysis of the rural minimum living standard guarantee program By Golan,Jennifer; Sicular,Terry; Umapathi,Nithin
  7. Linking apple farmers to markets: Determinants and impacts of marketing contracts in China By Ma, Wanglin; Abdulai, Awudu
  8. The Economy of People’s Republic of China from 1953 By Anton Cheremukhin; Mikhail Golosov; Sergei Guriev; Aleh Tsyvinski

  1. By: Guo, Hongdong; Ji, Chen; Jin, Songqing; Huang, Zuhui
    Abstract: China has recorded positive grain production growth rates for the past eleven consecutive years. This is a remarkable achievement given that China’s rapid industrialization and urbanization has led to a vast reduction of arable land and agricultural labor to non-agricultural sectors. While there are many factors contributing to this happy outcome of China’s grain production, one contributing factor that has begun to receive increasing attention is the emergence of agricultural outsourcing, a new rural institution that has emerged in recent years. This study aims to contribute to the limited but growing literature on agricultural outsourcing in China. Specifically, this study analyzes factors affecting farmers’ decisions to outsource any or some production tasks using data from rice farmers in Zhejiang province. Results from a logistic model show that farm size, prices, and government subsidy encourage farmers to outsource while ownership of agricultural machines and land fragmentation have negative effects on farmers decisions to outsource any task. Results also showed that determinants of outsourcing decisions vary with the production tasks that farmers outsourced.
    Keywords: Determinants, agricultural outsourcing, rice farmers, Zhejiang Province, China, Crop Production/Industries, Production Economics, D24, O12, O13,
    Date: 2015–06
  2. By: Hu, Chaoran; Chen, Kevin Z.; Reardon, Thomas
    Abstract: Nonfarm activities (NFA) are a crucial component of the livelihood strategies of China’s rural households. Empirical evidence shows that 51% of rural households’ income in Asia is from nonfarm earnings (Haggblade, Hazell and Reardon 2007). However, the increasingly uneven spatial distribution of these nonfarm economies has raised the concerns in many countries. It is found that rural towns or intermediate cities play the more important roles in rural poverty reduction than big cities (Berdegué et al. 2015), yet, we still see more migrants concentrating in urban big cities in China. To explore this paradoxical situation will provide some evidences for other developing countries experiencing rapid yet unbalanced urbanization. In this paper, we used a unique data set to find out what are the factors driving rural migrant’s destination choice and whether they are always attracted by large cities. Apart from this main research question, several other contributions are made to the literature. First, this paper performs pioneer research by conducting the estimation of the determinants of Chinese rural off-farm worker’s locational choice, including and comparing both local and migratory NFA, both of which are important among rural households in China, yet the former is generally ignored in the literature. Second, the Nested-Logit Model is used to relax the irrelevant alternatives assumption, proved to be inappropriate if directly adopted traditional Logit or Multinomial Logit model in our case. The results suggested the importance of transportation as well as education to attract rural migrants. We did not see rural migrants preferring larger cities while facing with decreasing travel distances. For rural nonfarm economy, it is also important to improve agricultural performance in rural areas to generate multiplier effects as well as providing education/trainings to rural off-farm workers to be involved in higher-skilled NFA.
    Keywords: Rural Nonfarm, Migration, Destination choice, Nested Logit Model, China, Agricultural and Food Policy, Community/Rural/Urban Development, International Development, Labor and Human Capital,
    Date: 2015
  3. By: Yang, Ziyan
    Abstract: This paper studies the environmental value of nitrogen fertilizer in a rapeseed-rice double-crop system in China to address the issue of nitrogen-induced soil acidification in China’s farmland. Previous literature always regarded the acid rain as the most important contributor to soil acidification. Thus, previous literature seldom linked soil quality with nitrogen leaching but studied acidification as a side product of air pollution. However, the latest scientific evidences show that China’s soil acidification is mainly caused by over-applied nitrogen fertilize because nitrogen leaching creates extra soil acidity in the entire production process. Hence, the first contribution of this study is that it analyzes soil acidification itself as an environmental externality induced by human behavior rather than an indirect consequence of air pollution. The second contribution is that this study solves for the optimal nitrogen management as an alternative way to solve for the problem of acidification while previous literature only focused on lime application. Theoretically, this study uses a dynamic optimization model to solve for the optimal nitrogen application and the steady state soil pH by maximizing the long-term profit of a two-season agriculture production subject to an acidity growth function. In China, the market price of nitrogen fertilizer only reflects its value in agricultural yields but ignores its environmental value. The steady state analysis compares the optimal nitrogen management that considers the environmental value of nitrogen and the myopic management that ignores its environmental value. There are two theoretical results. First, at the steady state, nitrogen application under the optimal management is greater than the myopic management if the total value of the marginal product of the soil pH at the steady state for an entire rotation is negative. If there is no externality generated by the nitrogen at the steady state, there is no difference between the optimal and myopic management. Second, for an increment of the optimal soil pH value, the marginal decrease of the optimal nitrogen application in season 2 is no greater than the marginal increase of the nitrogen application in season 1 adjusted by the absorption rate. Thus, for any increment in the optimal soil pH value, the total nitrogen application of a rotation increases. Hence, the myopic nitrogen management leads to an inefficient soil pH at the steady state for a long-term agricultural production. Empirically, it firstly uses a Seemly Unrelated Regression robusted by Bootstrap and Monte Carlo to estimate the production functions and acidity growth function using soil monitoring and agricultural production data from the World Bank Soil Monitoring Project in Anhui China (2001-2010). Then, following the first order conditions, it finds the numerical solutions for the optimal nitrogen management. The theoretical model shows that ignoring the environmental externality (myopic behavior) increases nitrogen applications and results in a lower steady state soil pH. The empirical results are consistent with theoretical finds. First, the myopic total nitrogen application of a rapeseed-rice system is only 15.74 kg/ha more than that of the optimal management. However, the myopic steady state soil pH is 0.77 units lower than that of the optimal management, which leads to a huge difference in agricultural production. Hence, nitrogen allocation between seasons is as vital as the total nitrogen application in preventing acidification. Second, the social value of nitrogen fertilizer that contains both production and environmental value is 4.92 RMB/kg, which is about two times of its average market price in 2013. Hence, the market price that ignores the environmental value gives the wrong incentives in fertilizer investment. Third, this study measures the market value of soil pH, which is 40.80 RMB/ha. Hence, agricultural inefficiency is created when myopic fertilizer investment decreases future soil pH productivity. This inter-disciplinary study highlights the importance of considering the environmental value of nitrogen fertilizer in a long-term agricultural production. It provides two policy implications to prevent soil acidification in China. First, the government could set the price of nitrogen based on both its production and environmental value. Second, the government could set up a soil monitoring and punishment system based on the value of soil pH to motivate farmers to apply the optimal nitrogen management. These two approaches are more feasible in China than lime application because Chinese farmers do not have the habits of using lime due to institutional reasons. The future direction of this study is to investigate the impacts of these institutional reasons on shaping nitrogen fertilizer and lime application habits in China.
    Keywords: Environmental Valuation, Nitrogen Leaching, Soil Acidification, Agricultural and Food Policy, Environmental Economics and Policy, N55, Q18, Q24,
    Date: 2015
  4. By: Chen, Maolong; Ortega, David. L; Wang, H.Holly
    Abstract: Economic globalization has opened up international markets for U.S. food products, especially new markets in emerging economies. While opportunities for increased demand for U.S. pork in China look promising, little is known about this emerging market. The objective of this study is to provide a thorough analysis of Chinese consumer’s perception and attitudes towards multiple pork attributes along with an evaluation of the potential for U.S. pork in China. To achieve this goal, an empirical model is constructed to identify the relationship between Chinese consumer’s pork quality perception and their attitudes towards various pork characteristics, including search, experience, and credence attributes. A system of equations is used to identify differences in consumers’ valuation of pork quality from different countries. The model is applied to survey data from consumers in three major cities in mainland China and Hong Kong, and is estimated using a seemingly unrelated regression estimation method. Our results indicate that food safety is the most important criterion of food quality for both mainland and Hong Kong consumers. The main difference is that, for mainland consumers, food safety is equally important when evaluating domestic and imported pork quality; but Hong Kong consumers are more concerned about food safety issues of domestic pork. Furthermore, we assess the effects of patriotism on consumer perception of food quality and find that they negatively impact mainland consumer’s view of pork from the U.S. Food marketing and agribusiness implications of our findings are discussed.
    Keywords: China, emerging markets, pork, consumer perceptions, patriotism, Agribusiness, Food Consumption/Nutrition/Food Safety, International Relations/Trade,
    Date: 2015
  5. By: Deininger, Klaus; Jin, Songqing; Liu, Shouying; Xia, Fang
    Keywords: International Development,
    Date: 2015
  6. By: Golan,Jennifer; Sicular,Terry; Umapathi,Nithin
    Abstract: This paper examines China?s rural minimum living standard guarantee (dibao) program, one of the largest minimum income cash transfer schemes in the world. Using household survey data matched with published administrative data, the paper describes the dibao program, estimates the program?s impact on poverty, and carries out targeting analysis. The analysis finds that the program provides sufficient income to poor beneficiaries but does not substantially reduce the overall level of poverty, in part because the number of beneficiaries is small relative to the number of poor. Conventional targeting analysis reveals rather large inclusionary and exclusionary targeting errors; propensity score targeting analysis yields smaller but still large targeting errors. Simulations of possible reforms to the dibao program indicate that expanding coverage can potentially yield greater poverty reduction than increasing transfer amounts. In addition, replacing locally diverse dibao lines with a nationally uniform dibao threshold could in theory reduce poverty. The potential gains in poverty reduction, however, depend on the effectiveness of targeting.
    Keywords: Poverty Monitoring&Analysis,Regional Economic Development,Services&Transfers to Poor,Rural Poverty Reduction
    Date: 2015–07–21
  7. By: Ma, Wanglin; Abdulai, Awudu
    Abstract: This study investigates the determinants of marketing contract choices and the related impact on farm net returns of apple farmers in China. We employ a two-stage selection correction approach (BFG) for the multinomial logit model. On the basis of the BFG estimation, we also use an endogenous switching regression model and a propensity score matching technique to estimate the causal effects of marketing contract choices on net returns. The empirical results reveal that written contracts increase apple Farmers’ net returns,while oral contracts exert an opposite impact.
    Keywords: Marketing Contracts, Multinomial Logit, Selectivity Correction, China, Agricultural and Food Policy, International Development, Marketing, C52, Q13,
    Date: 2015
  8. By: Anton Cheremukhin; Mikhail Golosov; Sergei Guriev; Aleh Tsyvinski
    Abstract: This paper studies growth and structural transformation of the Chinese economy from 1953 to 2012 through a lens of a two-sector growth model. The main goal of the paper is to provide a systematic analysis of both the pre-1978 reform and post-1978 reform periods in a unified framework. First, we construct a dataset that allows the application of the neoclassical model and computation of wedges, their components, and rates of TFP growth. Second, we determine the key quantitative factors behind growth and structural transformation. The changes in the intersectoral labor wedge play the dominant role in accounting for the change in the share of labor force in agriculture. TFP growth and changes in the intersectoral wedges are the two most significant factors contributing to GDP growth. Further decomposing the effects of reduction in wedges, we find that two components: the production component (the gap between the ratio of the marginal products of labor and relative wages) and the consumption component (the gap between the marginal rate of substitution and the relative prices) play a particularly large role. Third, we use the pre-reform period as a key benchmark to measure the success of the post-1978 reforms. We show that reforms yielded a significant growth and structural transformation differential. GDP growth is 4.2 percentage points higher and the share of the labor force in agriculture is 23.9 percentage points lower compared with the continuation of the pre-1978 policies. We provide extensive historical evidence for the reforms that are consistent with the evolution of the components of the wedges. The decrease in the production component of the intersectoral wedge is consistent with increased competition and demonopolization of the economy. The decrease in the consumption component of the wedge is consistent with the price and housing reforms. Finally, we project the path of the Chinese economy until 2050 and also calculate a lower bound on future growth by projecting pre-reform trends.
    JEL: N1 N55 O11 O14 O2 O41 P2
    Date: 2015–07

This nep-cna issue is ©2015 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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