nep-cna New Economics Papers
on China
Issue of 2015‒09‒18
nine papers chosen by
Zheng Fang
Ohio State University

  1. Happiness Inequality in China By Yang, Jidong; Liu, Kai; Zhang, Yiran
  2. Internet use and subjective well-being in China By Nie, Peng; Nimrod, Galit; Sousa-Poza, Alfonso
  3. Towards Recoupling? Assessing the Global Impact of a Chinese Hard Landing through Trade and Commodity Price Channels By Ludovic Gauvin; Cyril Rebillard
  4. Firm Dynamics and Regional Inequality of Productivity in China By Canfei He; Yi Zhou
  5. Industry Relatedness, Agglomeration Externalities and Firm Survival in China By Canfei He; Qi Guo; David Rigby
  6. Technological Relatedness and Firm Productivity: Do low and high performing firms benefit equally from agglomeration economies in China? By Anthony J. Howell, Canfei He, Rudai Yang, Cindy Fan; Canfei He; Rudai Yang; Cindy Fan
  7. China's Economic Transformation: Lessons, Impact, and the Path Forward By Tomas Hellebrandt; Jacob Funk Kirkegaard; Robert Z. Lawrence; Paolo Mauro; Silvia Merler; Sean Miner; Jeffrey J. Schott; Nicolas Veron
  8. Demographics and Aggregate Household Saving in Japan, China, and India By Chadwick C. Curtis; Steven Lugauer; Nelson C. Mark
  9. Constructing Tests that Can Measure and Compare the Maths and Physics Skills of Engineering Students in Russia and China By Elena Y. Kardanova; Ekaterina S. Enchikova; Shi H; Johnson N.; Lydia O. Liu; Liyang Mao; Prashant Loyalka

  1. By: Yang, Jidong; Liu, Kai; Zhang, Yiran
    Abstract: Along with China becoming an upper-middle-income country from a lower-middle-income one after 2009, the happiness inequality in China has been enlarged. Based on the Chinese General Social Survey (CGSS) database (2003-2012), this paper investigates the determinants of the happiness inequality in China and explores what factors contribute to its enlargement after 2009. We find that a rise of income inequality as well as the population share of middle age cohorts can widen China’s happiness inequality, while an increase in income or education level has a reducing impact. Owning a house and being in employment also have happiness inequality reducing impacts. A decomposition analysis shows that the deterioration of China’s happiness inequality is mainly caused by coefficient effects, i.e., the relationships between happiness inequality and its influencing factors have changed, which reflects the dramatic change in the Chinese economy and society. Among the coefficient effects, regional heterogeneity plays an important role. Policies enhancing economic performance and education as well as reducing income inequality and regional inequality can help to reduce happiness inequality and improve social harmony in China.
    Keywords: happiness inequality, income, income inequality, education, China
    JEL: I28 I31 J17 J21 J28
    Date: 2015–09–14
  2. By: Nie, Peng; Nimrod, Galit; Sousa-Poza, Alfonso
    Abstract: Using data from the 2010 China Family Panel Studies, we analyze the association between Internet use and various measures of subjective well-being (SWB) in a sample of 16- to 60- year-old Chinese. Our analysis shows that although intensive Internet use is significantly associated with lower levels of SWB, we hardly observe any associations when the focus is on participation in specific online activities. Nevertheless, SWB depends on perceptions of Internet use; that is, the importance that different individuals ascribe to different purposes for using the Internet and how much they believe that their Internet use is displacing other activities. Our results suggest that, contrary to previous findings, differences in beneficial outcomes (the third level digital divide) do not necessarily arise from individuals' actual Internet use (the second level digital divide) but rather may result from their subjective perceptions of such usage. Our findings also point to a possible cultural factor that puts Chinese Internet users at psychological risk.
    Keywords: China,digital divides,depression,happiness,Internet use,life satisfaction
    JEL: I10 D10 J10 Q53
    Date: 2015
  3. By: Ludovic Gauvin; Cyril Rebillard
    Abstract: China’s rapid growth over the past decade has been one of the main drivers of the rise in mineral commodity demand and prices. At a time when concerns about the sustainability of China’s growth model are rising, this paper assesses to what extent a hard landing in China would impact other countries, with a focus on trade and commodity price channels. After reviewing the main arguments pointing to a hard landing scenario – historical rebalancing precedents, overinvestment, unsustainable debt trends, and a growing real estate bubble – we focus on a sample of 36 countries, and use a global VAR methodology adapted to conditional forecasting to simulate the impact of a Chinese hard landing. We model metal and oil markets separately to account for their different end-use patterns and consumption intensity in China, and we identify three specific transmission channels to net commodity exporters: through real exports, through income effects (related to commodity prices), and through investment (a fall in commodity prices reducing incentives to invest in the mining and energy sectors); we also look at the role played by the exchange rate as a shock absorber. According to our estimates, emerging economies (ex. China) would be hardest hit – with a 7.5 percent cumulated growth loss after five years –, in particular in South-East Asia but also in commodity-exporting regions such as Latin America; advanced economies would be less affected. The "growth gap" between emerging and advanced economies would be considerably reduced, leading to partial recoupling.
    Keywords: China, hard landing, spillovers, global VAR, conditional forecast, commodities, recoupling.
    JEL: C32 F44 E32 E17 F47 Q02
    Date: 2015
  4. By: Canfei He; Yi Zhou
    Abstract: Industrial change processes are underlying forces that determine the change of regional productivity. In developed market economies, less productive firms are more likely to exit while productive firms have more chance to enter and to survive. As a result, spatial inequality of firm dynamics will directly influence the inequality of regional productivity. This study investigates how firm dynamics would affect regional productivity using firm level data during 1998-2007 in China. We first estimate total factor productivity (TFP) for each firm based on the semi-parametric method proposed by Olley and Pakes (1996). Regional productivity is derived by weighing the firm TFP using gross industrial output. There is considerable spatial inequality of TFP paired with a trend of convergence over the time period of 1999-2007. Decomposition of TFP growth shows that firm entry, exit and survival do contribute to TFP change and their contributions vary across prefectures substantially. The between share holds the largest regional difference, as the most important factor contributing to the spatial inequality of regional TFP. The restructuring of SOEs has critically contributed to the spatial inequality of TFP by raising TFP in the traditional industrial bases and by facilitating the development of productive private and foreign sectors particularly in the coastal region. The finding indicates that resource reallocation across firms with different ownerships is the key mechanism to improve regional productivity.
    Keywords: Firm Dynamics, Regional Inequality, TFP, Decomposition Method, China
    Date: 2015–09
  5. By: Canfei He; Qi Guo; David Rigby
    Abstract: The importance of agglomeration externalities for economic activities is widely recognized. Recent developments highlight the importance of industry relatedness to the performance of firms, industries and regions. This study explores the determinants of firm survival in China and tests the significance of industry relatedness using firm-level data over the period 1999-2007. Industry relatedness is developed from the co-occurrence analysis of paired industries. Results based on Cox regression models show that firms benefiting from industry relatedness and governmental supports are more likely to survive. However, the influence of relatedness varies across industries and provinces. This study highlights the significant influence of local forces on firm dynamics and enriches our understanding of regional industrial restructuring in China.
    Keywords: Industry relatedness, Agglomeration Externalities, Firm Survival, China
    Date: 2015–09
  6. By: Anthony J. Howell, Canfei He, Rudai Yang, Cindy Fan; Canfei He; Rudai Yang; Cindy Fan
    Abstract: Building on the evolutionary economic geography literature, we employ the density measure introduced by ? to dynamically track the impact of technological relatedness on firm productivity. We rely on advanced quantile regression techniques to determine whether technological relatedness stimulates productivity and whether the size of the effect varies for low and high performing firms. Lastly, taking China’s economic transition into account, we test whether changes in the local industrial mix brought about by China’s market reforms enable or inhibit performance-enhancing spillovers. We show that a dynamic tradeoff exists between agglomeration costs and benefits that depends, in part, on the firm’s placement along the productivity distribution: the effect of technological relatedness reduces productivity for the least performing firms, but enhances it for better performing firms. As a result, spillovers via technological relatedness lead to improvements in the geographical welfare by intensifying the learning effect for the vast majority of co-located firms, in spite of increasing productivity disparities between the bottom and top performing firms.
    Keywords: Firm Productivity, Relatedness, Agglomeration Economies, Firm Heterogeneity
    Date: 2015–09
  7. By: Tomas Hellebrandt (Peterson Institute for International Economics); Jacob Funk Kirkegaard (Peterson Institute for International Economics); Robert Z. Lawrence (Peterson Institute for International Economics); Paolo Mauro (Peterson Institute for International Economics); Silvia Merler (Bruegel); Sean Miner (Peterson Institute for International Economics); Jeffrey J. Schott (Peterson Institute for International Economics); Nicolas Veron (Peterson Institute for International Economics)
    Abstract: China's efforts to transition from an economy driven by investment and exports to one based on private consumption and services are roiling global markets. Its problems are compounded by an economic slowdown, rising debt levels, languishing real estate market, and lagging productivity growth. In these essays, scholars from the Peterson Institute for International Economics (PIIE) recommend a number of reforms for Chinese leaders to consider, including steps to further open up its capital account and develop its financial markets. This collection of papers is part of a series of interactions and discussions between PIIE and the China Finance 40 (CF40) Forum, which began in 2012. The papers are intended to illuminate the challenges facing China as it engages increasingly with the global economy and builds on its phenomenal economic success of the past three decades.
    Date: 2015–09
  8. By: Chadwick C. Curtis; Steven Lugauer; Nelson C. Mark
    Abstract: We present a model of household life-cycle saving decisions in order to quantify the impact of demographic changes on aggregate household saving rates in Japan, China, and India. The observed age distributions help explain the contrasting saving patterns over time across the three countries. In the model simulations, the growing number of retirees suppresses Japanese saving rates, while decreasing family size increases saving for both China and India. Projecting forward, the model predicts lower household saving rates in Japan and China.
    JEL: E2 J1
    Date: 2015–09
  9. By: Elena Y. Kardanova (National Research University Higher School of Economics.); Ekaterina S. Enchikova (National Research University Higher School of Economics.); Shi H (Stanford University.); Johnson N. (Stanford University.); Lydia O. Liu (Educational Testing Service.); Liyang Mao (Educational Testing Service.); Prashant Loyalka (National Research University Higher School of Economics.)
    Abstract: Although the number of engineering graduates has expanded rapidly in the last two decades, relatively little is known about the quality of engineering programs worldwide. In particular, few studies look at differences in the degree to which students are learning skills across different engineering programs within and between countries. There is particular interest in the investigation of the engineering education quality in the countries with the rapidly growing economy, such as BRICS countries. Until now, there was little research in this field and one of the main reasons for this is the difficulty in developing an assessment approach and the accompanying set of instruments, which would allow for measurement and international comparison. Our study describes a set of procedures for developing such an assessment framework of instruments, to measure and compare skill levels and gains across engineering programs. We first describe a systematic approach for constructing cross-nationally comparable instruments in maths and physics for students in the first two years of their undergraduate engineering programs. The approach includes both a priori procedures (including expert assessments to avoid construct, method, and item bias), and a posteriori procedures (including the psychometric analysis of test quality, differential item functioning, and identifying and reducing bias in the data). In addition to describing this set of procedures in theory, we also show how we systematically implemented these procedures. Drawing on data that we collected from over 24 engineering experts and 3,600 engineering students across Russia and China, we provide evidence that it is possible to create tests that are cross-culturally valid, equate-able, and free from bias
    Keywords: engineering education, BRIC countries, quality of education, cross-cultural measurement
    JEL: Z
    Date: 2015

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