nep-cna New Economics Papers
on China
Issue of 2015‒11‒01
eighteen papers chosen by
Zheng Fang
Ohio State University

  1. Commute time and subjective well-being in urban China By Nie, Peng; Sousa-Poza, Alfonso
  2. The Regional Effects of Macroeconomic Shocks in China By Anping Chen; Nicolaas Groenewold
  3. Provincial Public Expenditure in China: A Tale of Profligacy By Jean-Louis Combes; Mary-Françoise Renard; Sampawende Jules Tapsoba
  4. Are the children of uneducated farmers doubly disadvantaged ? farm, nonfarm and intergenerational educational mobility in rural China By Emran,M. Shahe; Sun,Yan - EAPCE
  5. Measuring the effect of agricultural cooperatives on household income using PSM-DID : a case study of a rice-producing cooperative in China By Hoken, Hisatoshi; Su, Qun
  6. Determinants of new business formation in China: Regional evidence from a panel data model By Martin Borowiecki; Karl-Heinz Leitner
  7. Transport Infrastructure, Urban Growth and Market Access in China By Nathaniel Baum-Snow; J. Vernon Henderson; Matthew Turner; Loren Brandt; Qinghua Zhang
  8. An Increase in the Retirement Age in China: The Regional Economic Effects By Nicolaas Groenewold; Anping Chen
  9. How to Attract More Tourists to Korea? Possible Collaborations with China By Wenjun Zhong; Jinhwan Oh
  10. The Role of Specific Trade Concerns Raised on TBTs in the Import of Products to the EU, USA and China By Mahdi Ghodsi
  11. Exploring the impacts of water resources on economic development in Beijing-Tianjin-Hebei Region By Xiaoxia Lin; Jinghua Sha; Jingjing Yan
  12. FDI Spatial Spillovers in China By Lin, Mi; Kwan, Yum K.
  14. Economic slowdown in China: Current assessment and global implications By Gern, Klaus-Jürgen; Hauber, Philipp; Potjagailo, Galina
  15. Pension coverage for parents and educational investment in children: evidence from urban China By Mu,Ren; Du,Yang
  16. Retail Networks and Real Estate: the case of Swiss luxury watches in China and Southeast By Thierry Theurillat; Pierre-Yves Donzé
  17. Exploring city social interaction ties in the big data era: Evidence based on location-based social media data from China By Wenjie Wu; Jianghao Wang
  18. The EU-China bilateral investment agreement in negotiation: Motivation, conflicts and perspectives By Bickenbach, Frank; Liu, Wan-Hsin; Li, Guoxue

  1. By: Nie, Peng; Sousa-Poza, Alfonso
    Abstract: Using data from the 2010 China Family Panel Studies, this study investigates the association between commute time and subjective well-being in a sample of 16- to 65-year-old employees in urban China. We find evidence that a longer commute time is associated with lower levels of both life satisfaction and happiness, especially when the commute times are extreme (≥ 1 hour per day). A multiple mediation analysis further indicates that the relation between commute time and happiness is partially mediated by time spent on daily activities, particularly sleeping. We calculate the amount of income necessary to compensate an employee's loss in well-being at approximately 82 yuan per hour of commute time, implying that, in urban China, the annual loss of well-being amounts to around 10 billion yuan.
    Keywords: commute time,life satisfaction,happiness,urban China
    JEL: I31 J30 J33 R41
    Date: 2015
  2. By: Anping Chen; Nicolaas Groenewold
    Abstract: The extent and persistence of the inequality of regional output is an important policy issue in China and its sources have been the subject of considerable empirical research. Yet we have relatively little empirical knowledge of the effects on the regional distribution of output of shocks to national macroeconomic variables such as GDP and investment. This is an important gap in the empirical literature since much government macroeconomic policy seeks to influence GDP using instruments such as investment expenditure. It is likely that such national shocks will have differential regional impacts and so affect the regional output distribution. Policy-makers need to know the sign, size and timing of such effects before making policy decisions at the national level. We simulate the effects of aggregate shocks on individual provinces¡¯ GDP within the framework of a vector autoregressive (VAR) model restricted in a manner following Lastrapes (Economics Letters, 2005). We use annual data from 1953 to 2012 to estimate the model which includes 28 of China¡¯s provinces and simulate the effects on provincial outputs of shocks to aggregate output and investment. We find great diversity of effects across the provinces with discernible geographic patterns. There is evidence that output shocks benefit coastal provinces with developed industrial structure, export-exposure and less reliance on SOEs; the opposite is found for the effects of an investment shock and we conjecture that this is likely to have been the result of the strong bias in central government investment policy in favour of the interior provinces during a substantial part of our sample period.
    Keywords: regional output distribution; regional disparities; economic growth; China
    JEL: E61 R50 O53
    Date: 2015–10
  3. By: Jean-Louis Combes (CERDI - Centre d'études et de recherches sur le developpement international - CNRS - Université d'Auvergne - Clermont-Ferrand I); Mary-Françoise Renard (CERDI - Centre d'études et de recherches sur le developpement international - CNRS - Université d'Auvergne - Clermont-Ferrand I); Sampawende Jules Tapsoba (FMI - Fonds monétaire international - FMI [FMI])
    Abstract: This paper examines the cyclicality of provincial expenditure in China during the period 1978-2013. We assess whether provincial expenditure has been pro-cyclical using panel data for our analysis. Profligacy is found to be a regular feature of provincial fiscal policy. This profligacy occurs both in good and bad times and has markedly increased since 1994 with the increased autonomy of provinces. We further find that the profligacy bias is mitigated when financial constraints are relaxed, the remaining political life of the governor is long, government efficiency is strong, corruption incidence is low, and governments are large.
    Keywords: China,Fiscal cyclicality,regional growth
    Date: 2015–10–19
  4. By: Emran,M. Shahe; Sun,Yan - EAPCE
    Abstract: This paper relaxes the single-factor model of intergenerational educational mobility and analyzes heterogeneous effects of family background on children?s education in villages, with a focus on the role of nonfarm occupations. The analysis uses data from rural China that cover three generations, and are not subject to coresident sample selection. Evidence from a battery of econometric approaches shows that the mean effects of parents? education miss substantial heterogeneity across farm-nonfarm occupations. Having nonfarm parents, in general, has positive effects, but children of low educated non-farmer parents (with higher income) do not enjoy any advantages over the children of more educated farmer parents. Estimates of cross-partial effects without imposing functional form show little evidence of complementarity between parental education and nonfarm occupation. The role of family background remains relatively stable across generations for girls, but for boys, family background has become more important after the market reform. The paper explores causality using three approaches: Rosenbaum sensitivity analysis, minimum biased inverse propensity weighted estimator, and heteroscedasticity-based identification. The analysis results suggest that the advantages of having more educated parents, especially with nonfarm occupations, are unlikely to be due solely to selection on genetic transmissions. However, the estimated positive effects of nonfarm over farmer parents among the low educated households may be driven entirely by moderate selection on genetic endowment.
    Keywords: Education For All,Education and Society,Social Inclusion&Institutions,Population&Development,Primary Education
    Date: 2015–10–26
  5. By: Hoken, Hisatoshi; Su, Qun
    Abstract: Agricultural cooperatives in China, known as Farmers' Professional Cooperatives (FPCs), are becoming popular and have been intensely promoted by the Chinese government to improve the economic welfare of small farmers. However, very few studies on Chinese agricultural cooperatives have measured the benefits to farmers who participate in FPCs after controlling for time-invariant attributes of farmers. This paper investigates the treatment effect of participation in a rice-producing cooperative in suburban China using propensity score matching (PSM) and difference-in-differences (DID) method. Estimated results show that no significant difference is observed between participants and non-participants of the cooperative in terms of net income from rice production when controlling for the difference in farmers' rice incomes before the treatment. In addition, there is no significant heterogeneity of the treatment effects between large and small farmers, although the probability of participation in the cooperative is significantly higher when the size of cultivated rice farmland is greater. These results indicate that the benefits of the cooperative appear to be overestimated considering the vigorous policy supports for FPCs from the Chinese government.
    Keywords: China, Agricultural Cooperative, Agricultural Economies, Farm Household, Treatment Effect, PSM, DID
    JEL: O13 Q12 Q13
    Date: 2015–10
  6. By: Martin Borowiecki; Karl-Heinz Leitner
    Abstract: Using a panel data model, we study the effects of regional and industry-level traits on new business formation (NBF) for 164 industries across 266 Chinese prefectures between 1998 and 2007. The objective is to provide empirical estimates on effects of prefecture traits on entry rates, and in particular on effects of prefecture knowledge capital stocks on R&D-intensive new business formation. In line with literature on knowledge spillovers, we find extensive evidence of a positive prefecture knowledge capital stock effect on R&D-intensive NBF rates, whereas knowledge capital stocks do not predict non R&D-intensive entry rates. Among regional and industry-level characteristics, we find that prefecture supplier and customer market strength are strongly linked to higher business entry rates. Our results for China contrast with recent findings on the effects of regional traits on firm entry rates in India and the US, indicating distinct regional patterns of Chinese entrepreneurship.
    Keywords: Entrepreneurship; knowledge spillovers; agglomeration; development; China
    JEL: L26 L60 M13 O10 O14 O33 R00 R10 R12
    Date: 2015–10
  7. By: Nathaniel Baum-Snow; J. Vernon Henderson; Matthew Turner; Loren Brandt; Qinghua Zhang
    Abstract: This paper quantifies the causal effects of various types of investments in the road and railroad networks on economic growth in Chinese cities and regions. We separate out the influences of changes in access to markets that have come through better inter-regional and international transport links from the more direct effects of transport infrastructure on city level productivity, which may operate through various channels. We find strong evidence that improved integration with nearby markets significantly promoted local growth in China since 1990. In particular, expansions of road infrastructure leading to a 10 percent increase in economic activity within a six hours' travel time led to an estimated 1.4 percent more rapid prefecture GDP growth and 1.1 percent more rapid prefecture city GDP growth. Expansions of road infrastructure leading to a 10 percent increase in population within six hours caused an estimated 1.6 percent increase in prefecture GDP growth and an imprecisely estimated 1.3 percent increase in prefecture city GDP growth. Estimated causal effects of more theoretically grounded measures of market access on local growth are consistent with these effects of more reduced form market potential measures. While we find that improved regional integration promoted local GDP growth in China, we find no significant effects of regional integration on prefecture or city population growth. Instead, we find evidence that improved access to international ports promoted population growth. A 10 percent decline in travel time to an international port caused a 0.6 to 0.7 percent increase in prefecture and city population growth. The context of severe migration restrictions in many cities and policies promoting foreign investment in other cities is important for interpreting these results. Our investigation of the effects of highways and railroads serving prefecture cities is less conclusive. While point estimates tend to be positive, they are generally imprecise. This study innovates on the existing literature about the effects of reduced domestic trade costs on local growth in several ways. First, we consider both highways and railroads. Second we primarily examine cities, rather than rural counties or small towns. Third we examine the effects of transport infrastructure on the growth and redistribution output and population simultaneously, rather than on inferred income or the output of specific commodities. Finally, we examine the responses to various measures of the composition of output in the regions surrounding cities in various distance and travel time bands. Critical to this evaluation is the use of pseudo-random variation in the allocation of transport networks to cities and their surrounding regions.
    Keywords: transportation; market access
    JEL: R12
    Date: 2015–10
  8. By: Nicolaas Groenewold; Anping Chen
    Abstract: China?s pension system is in need of comprehensive reform in that it is fragmented in its coverage and significantly under-funded. Attempts to improve the coverage will likely exacerbate the financial strains. Thus it is urgent to improve the financial sustainability of the system and one policy which has been proposed is to increase the retirement age. There have been similar proposals in many other countries and they are in line with improved health and life-expectancy. In China?s case the partial coverage of the system is related to industry structure with much the best coverage being for government and SOE employees. Since this structure differs considerably across the regions in China, it is likely that a change in retirement age will have significantly different effects across China?s regions. Inter-regional disparities are already very substantial in China and it will be important to know whether changes in pension arrangements will widen or narrow these disparities. It is the object of the research reported in this paper to throw light on this question. We construct a small theoretical model of two regions (coast and interior) having some Chinese characteristics. We distinguish between an informal sector in which workers have no pension coverage and a formal sector in which some workers are covered. In addition we distinguish between skilled and unskilled workers. There are two levels of government: a central government and two regional governments. Behaviour is based on utility maximisation by households and profit-maximisation by firms, with governments being exogenous. The model is solved numerically with parameter values based on recent Chinese data. Within this framework we model the effects of various shocks to the retirement age, the initial effects of which are changes in the labour supplied by skilled households. In the base case we find that in the short run an equi-proportionate increase in the retirement age in the two regions elicits substantially different labour supply responses in the two regions. These differences flow through to relative wage changes, output changes and, eventually, welfare changes. Effects through the budgets of the two regional governments are also important transmission channels. We find that welfare increases in both regions, with the improvement being substantially greater in the interior than in the coast, reflecting the greater relative importance of SOE and government employment in inland provinces. In the long run skilled labour is allowed to migrate from one region to another with the result that inter-regional differences are generally ameliorated.
    Keywords: China; pension system; retirement age; regional impacts
    JEL: R10 R23 R28 H70 H75
    Date: 2015–10
  9. By: Wenjun Zhong; Jinhwan Oh
    Abstract: Based on the gravity model, this paper analyzes China and South Korea¡¯s tourism patterns. Using a panel data set of China¡¯s international tourism flows from 32 countries for 1995-2012, and Korea¡¯s international tourism flows from 152 countries for 2005-2013, this study finds that the two countries¡¯ data sets are generally consistent with the predictions of the gravity model. We further investigated the predicted values of tourist flows with actual values to determine under-represented countries. Policy implications follow regarding how to attract more tourists to Korea.
    Keywords: gravity model; China; Korea; tourism
    Date: 2015–10
  10. By: Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract The Specific Trade Concerns (STC) data on Technical Barriers to Trade (TBT) notifications of WTO members report 317 TBT notifications between 1995 and 2011. This contribution provides evidence concerning the impact of TBT STCs on the imports of products at 4-digit level of the Harmonised System to three major economies – the EU, the United States and China – over the period 1995-2011 using an augmented gravity model controlling for the endogenous characteristics of TBTs and tariffs. Robustness checks are provided using Fixed Effect (FE) Estimation, and Poisson FE. Further, since TBTs are generally imposed on non-food products, food and non-food products are analysed in separate specifications. Bootstrapped robust results suggest that these policy measures have negatively influenced trade flows to the EU and China, while they have enhanced the imports of products to the United States. The quality impact of these measures is assessed using unit values of imports. The results suggest that US notifications improve the quality and values of imports, while in the case of the EU notifications this effect is observed only for the high-income trade partners. Lower imports to China due to quality improvement of products, on the other hand, may refer to low preference of Chinese consumers for higher quality.
    Keywords: trade policy, technical barriers to trade, specific trade concerns
    JEL: F13 F14
    Date: 2015–06
  11. By: Xiaoxia Lin; Jinghua Sha; Jingjing Yan
    Abstract: Abstract: Beijing-Tianjin-Hebei region is one of the most developed areas in China with a most rapid rate of economic growth. It is also a well-known region suffering great water scarcity. The water resources per capita is 118.60m³, 99.46 m³, 240.57 m³ respectively in Beijing, Tianjin and Hebei in 2013, all below 500 m³ that is defined as absolute scarcity by the United Nations. Water resources scarcity restricts the economic growth of the region at large and may account to the economic gaps between the three cities/ provinces. Economic growth in return aggravates its water shortage. The coordinated development of Beijing-Tianjin-Hebei region has been emphasized in recent years by the central government and means of solving regional problems and promoting its coordinated development need to be put forward. This study investigates the impacts of water resources factors on the regional economic growth to explore the direct influential factors of water resources, using panel data collected from 2004 to 2013. The main results show that: (1) the share of water for agricultural use and annual domestic water use per capita are statistically significant to the regional GDP per capita, with coefficients of 0.86 and 0.32 and (2) thus the impact of water resources on regional economic development is attributable to regional water use structure and domestic water use efficiency. Integrated regional governance of water resources, especially regional policies towards efficient water use and enhanced economic structure optimizing would be effective options for governments to propel the sustainable development of the region.
    Keywords: water resources;regional economic development;Beijing-Tianjin-Hebei Region
    JEL: R11
    Date: 2015–10
  12. By: Lin, Mi; Kwan, Yum K.
    Abstract: This paper studies FDI spatial spillovers in China. Empirical investigation reveals that, along the spatial dimension, FDI presence tends to generate negative intra-regional spillovers that dominate other potential positive externalities. The direction, magnitude and scope of inter-regional spillovers vary, depending on the spillover channels. Our empirical findings call for a rethinking of policy-driven agglomeration among indigenous firms and MNEs in developing countries.
    Keywords: FDI spillovers; Spatial diffusion; Firm Agglomeration; China
    JEL: F2 F4
    Date: 2014–11–24
  13. By: Komlan Gbongli (University of Electronic Science and Technology of China); Peng Yi (University of Electronic Science and Technology of China); Owusu Ackah (University of Electronic Science and Technology of China)
    Abstract: Industrial clusters over the years has being the engine for growth in most economies accounting for most of national manufacturing sector. This sector turns to be the source of innovation and competitive advantage. It is further responsible for the establishing of new startups and social poverty alleviation in most countries especially in South East Asia but this happens not to be the case in sub-Saharan Africa. Indigenous cluster turns to be less innovative as compared with others in developing countries such as China and others. Therefore this study examines the current state of innovation capabilities of SME cluster and propose a conceptual framework that can aid in how information and technology is diffused. It further investigate the influence of both interaction of various stakeholders and the clustering environment on innovation performance. In addition this study provides a platform for government and major stakeholders to implement and evaluate cluster strategy.
    Date: 2015–10–15
  14. By: Gern, Klaus-Jürgen; Hauber, Philipp; Potjagailo, Galina
    Abstract: After three decades of double digit growth the Chinese economy has become the second largest economy in the world and the most important contributor to global growth. However, in recent years the Chinese economy has slowed substantially. While official numbers for GDP growth report output growth that is still in line with the government's - downwardly adjusted - growth target, alternative indicators of economic activity suggest an even stronger deceleration. In addition, the huge level of debt piled up in recent years in combination with a correction in property prices and - more recently - equity prices have raised fears of a financial meltdown. Against this backdrop, in this note we discuss the current state of the Chinese economy and the risks for the global economy associated with a "hard landing", a sudden pronounced drop in growth rates.
    Date: 2015
  15. By: Mu,Ren; Du,Yang
    Abstract: When social security is established to provide pensions to parents, their reliance upon children for future financial support decreases, and their need to save for retirement also falls. In this study, the expansion of pension coverage from the state sector to the non-state sector in urban China is used as a quasi-experiment to analyze the intergenerational impact of social security on education investments in children. In a difference-in-differences framework, a significant increase in the total education expenditure is found to be attributable to pension expansion. The results are unlikely to be driven by other observable trends. They are robust to the inclusion of a large set of control variables and to different specifications, including one based on the instrumental variable method.
    Keywords: Debt Markets,Youth and Government,Pensions&Retirement Systems,Population&Development,Primary Education
    Date: 2015–10–26
  16. By: Thierry Theurillat (Real Estate and Construction Department, University of Hong Kong); Pierre-Yves Donzé (Graduate School of Economics, Osaka University)
    Abstract: Shopping centers are among the most significant places to sell luxury goods in East Asia. However, the relations between retail networks of luxury companies and access to land and real estate still need to be addressed. On the one hand, an extensive literature highlights how the turn to luxury industry since the 1990s has enabled some European countries to maintain their comparative advantage on the global market and at the same time to keep a significant part of their production non-globalized. Yet, an issue that remains to be addressed is the way European luxury companies are able to enter and expand their sales networks in emerging countries. On the other hand, while real estate has become a major economic circuit in East Asia, there is still a lack of works about the property industry and companiesf concrete strategies and business models. This article is hence an exploratory study that tackles the issue of real estate within the strategies of the main actors of the Swiss watch industry, namely Swatch Group, Richemont and LVMH, which have massively invested in their retail network in China and East Asia since the 1990s. While these three companies went through local retailers until late 1990s, they managed to expand their sales networks by increasingly controlling the retail spaces in China and in some Southeast Asia countries, such as Hong Kong, Singapore, Malaysia, Thailand, and Taiwan, increasingly influenced by Chinese consumers. For these countries which now represent a major part of their respective market shares, the Swiss watch groups rarely invest directly in large-scale real estate projects like shopping malls. They however have various strategies of control and integration between retail and the commercial real estate industry.
    Keywords: Swiss luxury watch companies, China and Southeast Asia, retail real estate
    JEL: L81 L85 N85 R3
    Date: 2015–10
  17. By: Wenjie Wu; Jianghao Wang
    Abstract: Location-based social media data is, increasingly, an important facilitator of exploring the movement of goods and people in and between countries across the globe. Typical examples include Twitter, Facebook, Foursquare. As with all social media data outputs, the fundamental value of location-based social media data is for sensing users? space?time trajectories, and thus, makes social media data a new platform for understanding business and social interactions in the spatial context. In large developing and emerging economies with massive social media users via computers and mobile phones, real-time ?geo-tagged? human mobility information from social media data sources are clearly potentially large. In these settings, cyberspaces are often built and expanded with the explicit aim of stimulating digital socioeconomic activities and balancing regional disparities. However, despite intense policy and public enthusiasms, there is virtually no direct evidence on exploring the configuration of urban network patterns by using social media users? mobility flows within a large developing country context. The scarcity of empirical evidence is not surprising, given that mining location-based social media data faces serious identification challenges. First, location-based social media data, as a type of big data resource, are often featured by the dynamic, massive information generated by billions of users across space. In truth, despite of the recent development of intensive-computational geographic information system (GIS) modeling programs, social media data with precise individual-level location information is still extremely large to proceed by using the GIS techniques at multiple geographical scales. Furthermore, conventional GIS-based computational methods cannot directly read the unstructured social media datasets (e.g. words, pictures, videos). Additional big data mining methods are often needed to transform social media data information from unstructured data formats to structured, and ready-to-use spatial datasets. In this paper, we tackle these problems by analysing the configuration of intercity connection patterns in China to provide new evidence to the applications of location-based social media data in urban and regional studies. Our examination of changes in human mobility patterns by months by city-pairs throughout China by months involves many potential stages of big data mining analysis. We stratify cities by core-periphery urban systems, by regions and by calendar months, finding that human mobility flows are not distributed evenly over time and across space. We find larger human mobility flows around the Chinese New Year month and the summer months. Our evidence suggests the significantly heterogeneity patterns of core-periphery urban systems as reflected from real-time human mobility flows. As a baseline, this paper is?for the first time in the literature?to comprehensively measure urban network patterns at a detailed spatial degree (the city-pair level) based on location-based social media data from a large developing country context.
    Keywords: Big data; Social media; Urban network; China
    JEL: P25
    Date: 2015–10
  18. By: Bickenbach, Frank; Liu, Wan-Hsin; Li, Guoxue
    Abstract: Since January 2014 China and the European Union (EU) have been negotiating a comprehensive bilateral investment agreement. In contrast to the EU-US negotiations on a Transatlantic Trade and Investment Partnership (TTIP), the ongoing negotiations between China and the EU have received little public attention so far. Still, a successful conclusion of these negotiations may be of great importance even beyond the EU-China investment relations. This holds in at least two respects. Firstly, a successfully concluded bilateral investment agreement may pave the way for a future EU-China free trade agreement. And secondly, looking beyond the bilateral relationship, the negotiations between the EU and China may make an important contribution to the establishment of a more liberal global investment framework. Currently, China is also negotiating an investment agreement with the US which is likely to take a similar form as that between China and the EU. In addition, provisions for the future liberalisation of bilateral investment flows are also an important part of the TTIP negotiations between the US and Europe. Rules and provisions, e.g., regarding market access, the prohibition of performance requirements or the transparency with respect to state-owned enterprises, that are part of all three agreements will "be elevated to a de facto global standard" (Berger 2014). Against this background, the present Kiel Policy Brief analyses the key barriers investors from China and the EU currently face in the EU and China, respectively and provides a brief assessment of whether and how these key barriers can be dealt with in the comprehensive EU-China investment agreement currently negotiated.
    Date: 2015

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