nep-cna New Economics Papers
on China
Issue of 2015‒10‒25
eight papers chosen by
Zheng Fang
Ohio State University

  1. Great and Small Walls of China: Distance & Chinese E-Commerce By Liang Chen; Garrett Johnson; Yao Luo
  2. Mainland Corridors v.s Maritime Corridors in ASEAN-China Economic Relation By Maddaremmeng A. Panennungi
  3. Parental education and child health: Evidence from an education reform in China By Samantha B. Rawlings
  4. Assessing Market (Dis)Integration in Early Modern China and Europe By Daniel Bernhofen; Markus Eberhardt; Jianan Li; Stephen Morgan
  5. Intensive and Extensive Margins of South–South–North Trade: Firm-Level Evidence By Lili Yan ING; Miaojie YU
  6. Divers Twins: The Impact of China on Italian and German Manufacturing Exports By Giorgia Giovannetti; Marco Sanfilippo,; Margherita Velucchi
  7. How Firms Export: Processing vs. Ordinary Trade With Financial Frictions By Kalina Manova; Zhihong Yu
  8. Risk Attitudes and Household Migration Decisions By Christian Dustmann; Francesco Fasani; Xin Meng; Luigi Minale

  1. By: Liang Chen (Economics and Management School, Wuhan University, Luojia Hill, Wuhan, China, 430072); Garrett Johnson (Simon Business School, University of Rochester, 3-206 Carol Simon Hall, Box 270100, Rochester, NY 14627); Yao Luo (Department of Economics, University of Toronto, Max Gluskin House 322, 150 St. George Street, Toronto)
    Abstract: Alibaba’s Taobao is China’s dominant C2C e-commerce platform. Relying on novel transaction level data from its electronics category, this paper examines the roles of distance as well as seller and buyer experience in Chinese e-commerce. Our estimate of a gravity model shows that the distance elasticity in our data is greater than US C2C e-commerce but smaller than that of South America. In addition, we document greater home bias in China than either of the US or South American Settings. Moreover, by estimating a “new-new” trade model using seller-level transaction data, this paper studies the link between seller experience and distance. Our results show that more experienced sellers tend to sell more and export their goods farther into the marketplace.
    Keywords: e-commmerce, China, gravity, distance, domestic trade, Internet marketing
    JEL: F10 F14 L86
    Date: 2015–09
  2. By: Maddaremmeng A. Panennungi (Department of Economics, Faculty of Economics and Business, University of Indonesia)
    Abstract: Based on the geography analysis, It is found that the closer relation of China with GMS countries (Mainland Corridors) compared to Malacca Straits countries (Maritime Corridors) during several past decades has potential to marginalize Indonesia, Malaysia, and Singapore in ASEAN (Fau et. al, 2014). This paper is aimed at deepening the analysis of the development in both corridors by emphasizing economic analysis. There are several methods used in this paper: simple statistics, GTAP (Global Trade Analysis Project), and qualitative analysis. This study find out: (1) China economic relation with GMS countries tends to have better progress than with the Malacca Straits Countries. (2) The potential gains from economic integration of China-GMS are higher than China-Malacca Straits Countries. (3) The competition of Malacca Straits countries with the development of alternative trade routes and coupled with the undermining Malacca Straits role in ASEAN under ASEAN-China FTA have potential to isolate Malacca Straits countries in the future.
    Keywords: Malacca Straits, Greater Mekong Sub Region (GMS), ASEAN, China
    JEL: F15
    Date: 2015–07
  3. By: Samantha B. Rawlings (University of Aberdeen)
    Abstract: This paper investigates the impact of parental education on child health, exploiting a compulsory schooling law implemented in China in 1986 that extended schooling from 6 to 9 years. It finds that it is maternal, rather than paternal, education that matters most for child health. There are also important differences in the effect according to child gender. An additional year of mother’s education raises boys height-for-age by 0.163 standard deviations, whilst there is no statistically significant effect on girls height. Parental education appears to have little effect on weight-for-age of children. Estimated effects on height are driven by the rural sample, where an additional year of mother’s education raises boys height for age by 0.228 standard deviations and lowers the probability of a boy being classified as stunted by 6.6 percentage points. Results therefore suggest that - at least in rural areas - son preference in China has additional impacts beyond the sex-ratio at birth.
    Keywords: Intergenerational Mobility, Health, China
    JEL: C21 I12 I21
    Date: 2015–08
  4. By: Daniel Bernhofen; Markus Eberhardt; Jianan Li; Stephen Morgan
    Abstract: This paper challenges established claims of comparable degrees of market integration in Europe and China on the eve of industrialization. Our empirical strategy focuses on the dynamics of price convergence and accounts for general equilibrium effects arising from common shocks and network effects. Using monthly grain prices for 1740-1820 our analysis uncovers a secular process of market disintegration in 221 prefectures of Qing China. Comparing our results with those for grain price panels from Western Europe we conclude that in terms of market integration the Great Divergence was well under way decades before the start of the 19th century.
    Keywords: Comparison of Chinese and western European market integration, price convergence, common factor model, cross-section dependence.
    Date: 2015
  5. By: Lili Yan ING (Economic Research Institute for ASEAN and East Asia (ERIA) and University of Indonesia); Miaojie YU (CCER, Peking University)
    Abstract: The main value added of our paper is twofold. First, we construct a theoretical framework on how South–South trade will affect productivity cut-offs. Second, we present empirical exercises using highly disaggregated data. Our model is based on the South–South–North trade framework. Using a vertical integration among Southern countries (Indonesia and China) and testing it by employing merged Chinese firms and customs trade data, we find that three types of tariff reductions—foreign tariff reductions, home output tariff reductions, and home input tariff reductions—significantly increase home country firm productivity and exports via extensive and intensive margins. Our findings are robust using ex-ante and expost productivity.
    Keywords: China, Indonesia, Tariff, Exports, Manufacturing
    JEL: F1 F13 F14
    Date: 2015–09
  6. By: Giorgia Giovannetti (Dipartimento di Scienze per l'Economia e l'Impresa); Marco Sanfilippo,; Margherita Velucchi
    Abstract: Germany and Italy are two major manufacturing producers and export a substantial part of their products – over 70 per cent- to OECD countries. While they share many characteristics, in term of specialization and destination markets, they are also “diverse twins”. Italy has a productive structure still largely based on so-called “traditional” sectors, while Germany specialized mainly in high tech goods. Italy is therefore more likely to be more vulnerable to the competitive pressure by emerging economies, and especially China, which experienced a strong increase in its export market share during the last decades. This paper addresses the issue of the impact of China on the export performance of Italy and Germany to their main trading partners to assess how well they withstood competition. Using data for the period 1995-2009, we implement a longitudinal multilevel model on quantiles to take into account two very important data characteristics: their hierarchical hidden structure (captured by a multilevel model) and the heterogeneity of the export shares (captured by a quantile approach). This innovative estimation method, together with the introduction of Chinese export shares as explanatory variable to account for the potential Chinese competition, allows us to estimate the impact of China on Italy and Germany’s market shares. Results show that China has affected Italy’s and Germany’s market shares in different ways, in different sectors, characterized by different market shares. However, Italy does not seem to have been “more at risk”. These results are relevant also for their policy implications and for an ex post analysis of the “response” to the Chinese competition.
    Keywords: China; Longitudinal multilevel, Quantile analysis, Market Shares, export competition
    JEL: F10 F14
    Date: 2015
  7. By: Kalina Manova; Zhihong Yu
    Abstract: The fragmentation of production across borders allows firms to make and export final goods, or to perform only intermediate stages of production by processing imported inputs for re-exporting. We examine how financial frictions affect companies' choice between processing and ordinary trade - implicitly a choice of production technology and position in global supply chains - and how this decision affects performance. We exploit matched customs and balance-sheet data from China, where exports are classified as ordinary trade, import-and-assembly processing trade (processing firm sources and pays for imported inputs), and pure-assembly processing trade (processing firm receives foreign inputs for free). Value added, profits and profitability rise from pure assembly to processing with imports to ordinary trade. However, more profitable trade regimes require more working capital because they entail higher up-front costs. As a result, credit constraints induce firms to conduct more processing trade and pure assembly in particular, and preclude them from pursuing higher value-added, more profitable activities. Financial market imperfections thus impact the organization of production across firms and countries, and inform optimal trade and development policy in the presence of global production networks.
    Keywords: China, trade regime, processing trade, global value chain, credit constraints, heterogeneous firms
    JEL: F10 F13 F14 F23 F34 G32
    Date: 2015–10
  8. By: Christian Dustmann (University College London); Francesco Fasani (Queen Mary University); Xin Meng (Australian National University); Luigi Minale (Universidad Carlos III de Madrid)
    Abstract: This paper analyses the relation between individual migrations and the risk attitudes of other household members when migration is a household decision. We develop a simple model that implies that which members migrate depends on the distribution of risk attitudes among all household members, and that the risk diversification gain to other household members may induce migrations that would not take place in an individual framework. Using unique data for China on risk attitudes of internal (rural-urban) migrants and the families left behind, we empirically test three key implications of the model: (i) that conditional on migration gains, less risk averse individuals are more likely to migrate; (ii) that within households, the least risk averse individual is more likely to emigrate; and (iii) that across households, the most risk averse households are more likely to send migrants as long as they have at least one family member with sufficiently low risk version. Our results not only provide strong evidence that migration decisions are taken on a household level but also that the distribution of risk attitudes within the household affects whether a migration takes place and who will emigrate.
    Keywords: risk aversion, internal migration, risk diversification, China
    JEL: J61 R23 D81
    Date: 2015–10

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