nep-cna New Economics Papers
on China
Issue of 2015‒11‒07
sixteen papers chosen by
Zheng Fang
Ohio State University

  1. Measuring Changes in the Bilateral Technology Gaps between China, India and the U.S. 1979 - 2008 By Keting Shen; Jing Wang; John Whalley
  2. Chinese Yellow Dust and Korean Infant Health By Deokrye Baek; Duha T. Altindag; Naci Mocan
  3. Long Term Effects of “Prosperity in Youth” on Consumption: Evidence from China By K. Sudhir; Ishani Tewari
  4. Economic Cycles in Ancient China By Yaguang Zhang; Guo Fan; John Whalley
  5. The Use and Impact of Job Search Procedures by Migrant Workers in China By Fang, Tony; Gunderson, Morley; Lin, Carl
  6. Social Networks, Farm Assets, and Farmers' Perceptions of Climate Change in China By Hou, Lingling; Huang, Jikun; Wang, Jinxia
  7. The Educational Achievement of Pupils with Immigrant and Native Mothers: Evidence from Taiwan By Lin, Eric S.; Lu, Yu-Lung
  8. Credit Distribution and Exports: Microeconomic Evidence from China By Yao Amber Li; Albert Park; Chen Zhao
  9. Expectations, Index Qualities and Basis Risks in Explaining Farmers' Pessimism in Purchasing Weather Index Insurance By Chen, Huang
  10. Hukou Changes and Subjective Well-Being By Tani, Massimiliano
  11. Computer Technology in Education: Evidence from a pooled Study of Computer Assisted Learning Programs among Rural Students in China By Huang, Weiming; Mo, Di; Shi, Yaojiang; Zhang, Linxiu; Boswell, Matthew; Rozelle, Scott
  12. Nutrition transition in two emerging countries: A comparison between China and Russia By Burggraf, Christine; Kuhn, Lena; Zhao, Quiran; Teuber, Ramona; Glauben, Thomas
  13. Assessing the impacts of temperature variations on rice yield in China By Chen, Shuai; Chen, Xiaoguang; Xu, Jintao
  14. Is China fudging its figures? Evidence from trading partner data By Fernald , John; Hsu , Eric; Spiegel , Mark M.
  15. A Study on the Impact of Constraints from Exporters' Exporting Prowess on Source Distribution of China's Soybean Imports By Lin, Dayan; Wu, Guosong; Zhu, Jing; Yang, Fan; Aniah, Dominic
  16. Chinese investments and financial engagement in Hungary By Agnes Szunomar; Katalin Volgyi; Tamas Matura

  1. By: Keting Shen; Jing Wang; John Whalley
    Abstract: Popular literature suggests a rapid narrowing of the technology gap between China and the U.S. based on large percentage increases in Chinese patent applications, and equally large increases in college registrants and completed PhDs (especially in sciences) in China in recent years. Little literature attempts to measure the technology gap directly using estimates of country aggregate technologies. This gap is usually thought to be smaller than differences in GDP per capita since the later reflect both differing factor endowments and technology parameters. This paper assesses changes in China’s technology gaps both with the U.S. and India between 1979 and 2008, comparing the technology level of these economies using a CES production framework in which the technology gap is reflected in the change of technology parameters. Our measure is related to but differs from the Malmquist index. We determine the parameter values for country technology by using calibration procedures. Our calculations suggest that the technology gap between China and the U.S. is significantly larger than that between India and the U.S. for the period before 2008. The pairwise gaps between the U.S. and China, and the U.S. and India remain large while narrowing at a slower rate than GDP per worker. Although China has a higher growth rate of total factor productivity than India over the period, the bilateral technology gap between China and India is still in India’s favor. India had higher income per worker than China in the 1970’s, and China’s much more rapid physical and human capital accumulation has allowed China to move ahead, but a bilateral technology gap remains.
    JEL: O41 O47 O57 P5
    Date: 2015–10
  2. By: Deokrye Baek; Duha T. Altindag; Naci Mocan
    Abstract: Naturally-occurring yellow sand outbreaks, which are produced by winds flowing to Korea from China and Mongolia, create air pollution. Although there is seasonal pattern of this phenomenon, there exists substantial variation in its timing, strength and location from year to year. Thus, exposure to the intensity of air pollution exhibits significant randomness and unpredictability. To warn residents about air pollution in general, and about these dust storms in particular, Korean authorities issue different types of public alerts. Using birth certificate data on more than 1.5 million babies born between 2003 and 2011, we investigate the impact of air pollution, and the avoidance behavior triggered by pollution alerts on various birth outcomes. We find that exposure to air pollution during pregnancy has a significant negative impact on birth weight, the gestation weeks of the baby, and the propensity of the baby being low weight. Public alerts about air quality during pregnancy have a separate positive effect on fetal health. We show that Korean women do not time their pregnancy according to expected yellow dust exposure, and that educated women’s pregnancy timing is not different from those who are less-educated. The results provide evidence for the effectiveness of pollution alert systems in promoting public health. They also underline the importance of taking into account individuals’ avoidance behavior when estimating the impact of air quality on birth outcomes. Specifically, we show that the estimated impact of air pollution on infant health is reduced by half when the preventive effect of public health warnings is not accounted for.
    JEL: H23 I12 Q51 Q53 Q54
    Date: 2015–10
  3. By: K. Sudhir (Cowles Foundation & School of Management, Yale University); Ishani Tewari (School of Management, Yale University)
    Abstract: We test for the long-term impact of experiencing “prosperity in youth” (PIY) on non-traditional category consumption. Using unique twenty-year panel data of individuals from nine Chinese provinces with varying levels of per-capita GDP and rates of per-capita GDP growth, we find robust evidence for the PIY effect. We find both a direct effect of one’s own prosperity and an indirect effect of the prosperity of one’s province during youth on long-term consumption. In particular, the indirect PIY effect is driven more strongly by individuals with low incomes during youth — suggesting that norms and aspirations created by the consumption of non-traditional categories by the rich during one’s youth have significant impact on long-term consumption — almost the same magnitude as the direct effect. The analysis also highlights the importance of separating cohort effects from life cycle effects for taste based products. We highlight the marketing implications for non-traditional categories in emerging markets.
    Keywords: Cohort effects, Lifecycle effects, Emerging markets, China, Prosperity in youth, Impressionable years hypothesis, Long-term effects
    Date: 2015–10
  4. By: Yaguang Zhang; Guo Fan; John Whalley
    Abstract: We discuss business cycles in ancient China. Data on Ancient China business cycles are sparse and incomplete and so our discussion is qualitative rather than quantitative. Essentially, ancient debates focused on two types of cycles: long run political or dynastic cycles of many decades, and short run nature induced cycles. Discussion of the latter show strong parallels to Jevons’ conception of sun spot cycles. The former has no clear contemporary analogue, were often deep in impact and of long duration. The discussion of both focused on agricultural economies. Ancient discussion on intervention focused on counter cyclical measures, including stockpiling, and predated Keynes and the discussion in the 1930s by centuries. Also, a strongly held belief emerged that cycles create their own cycles to follow, and that cycles are part of the inevitable economic order, a view consistent with Mitchell’s view of the business cycle in the 1940s. Current debates on how best to respond to the ongoing global financial crisis draw in part on historical precedents, but these are largely limited to the last 150 years for OECD countries and with major focus on the 1990’s. Here we also probe material on Ancient China to see what is relevant.
    JEL: N1 N15
    Date: 2015–10
  5. By: Fang, Tony (Memorial University of Newfoundland); Gunderson, Morley (University of Toronto); Lin, Carl (Bucknell University)
    Abstract: Job search procedures are a form of human capital investment in that they involve current investments to enhance future returns, analogous to human capital investments in areas such as education, training and mobility that yield future returns. While the theoretical and empirical literature on job search is extensive, most of it involves developed countries. There is less on developing countries and very little on China involving migrant workers in spite of their growing practical and policy importance and the fact that they are constantly engaging in job search. This paper examines the use and impact of job search procedures used by migrant workers in China by taking advantage of a rich data set on migrant workers that has information on their job search procedure as well as a wide array of other personal and human capital characteristics. Our OLS estimates indicate that there is no effect on earnings of using informal versus formal job search procedures for migrant workers in China. However, our IV results suggest that the OLS estimates are subject to severe selection bias from the fact that the choice of job search procedure is endogenous, associated with unobservable factors that affect the choice of informal versus formal procedures and that affect the earnings outcome. Our three different IV estimates designed to deal with this bias indicate that informal procedures (various aspects of family and friends) are associated with earnings that are 33 to 43 percent below the uses of more formal procedures. The decomposition results indicate that the most important variable contributing to pay advantage of those who use formal as opposed to informal procedures is education. In sum, our results suggest that policies to encourage or facilitate migrant workers using more formal job search procedures and reducing barriers that compel them to rely on informal procedures can yield better job matches with higher earnings.
    Keywords: job search methods, migrant workers, labour market outcomes, China
    JEL: J31 J61 J64
    Date: 2015–10
  6. By: Hou, Lingling; Huang, Jikun; Wang, Jinxia
    Abstract: Farmers’ perceptions of the local climate reflect their awareness of climate change 28 and may affect their adaptation behaviors. However, current literature suffers a 29 knowledge gap on understanding farmers’ perceptions of climate change. This study 30 examines farmers’ perceptions of annual mean temperature, the consistency of these 31 perceptions with meteorological record data, and what influences this consistency. 32 The study found that more than 70% of farmers in China perceived an increasing 33 trend of annual mean temperature over the past 10 years, while only 18% of farmers 34 correctly perceived a decreasing trend, which is consistent with the meteorological 35 record data. Econometric analysis shows that social networks can improve a farmer’s 36 ability to correctly perceive temperature changes. Additionally, those with a larger 37 farm size are more likely to be able to consistently perceive temperature. This paper 38 concludes with several policy and research implications.
    Keywords: social networks, farm assets, perception, consistency, climate change, China, Agricultural and Food Policy,
    Date: 2015
  7. By: Lin, Eric S. (National Tsing Hua University); Lu, Yu-Lung (National Tsing Hua University)
    Abstract: This paper takes advantage of the Taiwan Assessment of Student Achievement data set to empirically evaluate whether the test score differentials between pupils with immigrant and native mothers are substantial across subjects, grades and years. Our results show that there exist test score differentials between the two groups after controlling for the students' individual characteristics and family background. The Chinese, Math and English subjects exhibit larger test score gaps relative to Science and Society. We also find that the academic gaps between native students and pupils with mothers from Southeast Asian countries tend to widen, while the students' performance is about the same as that for native students if their mothers are from mainland China, confirming that the language proficiency of immigrant mothers significantly affects pupils' learning. Our empirical results may suggest that remedial teaching (or an equivalent preferential policy) for the lower-grade pupils with immigrant mothers might be required to create a fair environment for learning, and such a policy should take the nationality of those foreign mothers into account.
    Keywords: academic performance, immigrants, foreign spouse
    JEL: A2 I2
    Date: 2015–10
  8. By: Yao Amber Li (Department of Economics, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Albert Park (Department of Economics, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Chen Zhao (Department of Economics, Hong Kong University of Science and Technology)
    Abstract: This paper explores how the distribution of credit supply within an industry affects that industry's export intensity (the export-to-sales ratio) and export propensity (the ratio of the number of exporters to the total number of firms). Using a heterogeneous firm trade model, we derive two opposing hypotheses: for industries with relatively low (high) foreign market penetration costs, a more dispersed credit distribution decreases (increases) the industry's export intensity and the number of exporters. The empirical results using Chinese firm-level data and bank loan data support both hypotheses and confirm the significant heterogeneous impacts of credit distribution on exports across industries.
    Keywords: credit constraints, credit supply, financial development, credit distribution, heterogeneous firms, international trade, liquidity
    JEL: F14 G20 L60
    Date: 2015–11
  9. By: Chen, Huang
    Abstract: This paper attempts to explain why famers exhibit pessimism in purchasing Weather Index Insurance (WII). Three sources of the pessimism are identified: a) if insurers overestimate or farmers underestimate the possibility of future risks, the farmers tend to buy less WII coverage; b) the lower the quality of the index is, the less coverage the famers will purchase; c) the more their productive characteristics deviate from population mean, the higher basis risk they will have, resulting less coverage to be chosen. The second half of this paper empirically compares three kinds of weather indices in measuring long-run yield variation in China’s 26 provinces during 1951 – 2002, and justifies the theoretical findings from releasing the Quality Assumption by simulating hypothesized operations of WII in the last half century in China. The econometric and simulation results corroborate the critical role of the index quality in measuring yield variation and explain the pessimism.
    Keywords: Weather index insurance, Expectation, Index quality, Basis risk, Pessimism, China, Agricultural Finance, Farm Management,
    Date: 2015
  10. By: Tani, Massimiliano (IZA)
    Abstract: The literature on subjective well-being has highlighted the negative effects associated with the restrictions and inequality imposed by the hukou system on China's rural population. However, quantifying the cost of holding a rural hukou has generally been problematic, principally for lack of suitable data or measurements. Thanks to RUMiC, a new longitudinal database on China, this limitation can be overcome by exploiting exogenous changes in hukou status due to expropriation. The results support that granting an urban hukou substantially enhances subjective well-being within the household, especially for the household heads. The results complement a growing literature on subjective well-being focusing on China.
    Keywords: subjective well-being, expropriation, China
    JEL: D19 I31 J61 R20
    Date: 2015–10
  11. By: Huang, Weiming; Mo, Di; Shi, Yaojiang; Zhang, Linxiu; Boswell, Matthew; Rozelle, Scott
    Abstract: There is a great degree of heterogeneity among the studies that investigate whether computer technologies improve education and how students benefit from them – if at all. The overall goal of this study is to assess the effectiveness of computing technologies to raise educational performance and non-cognitive outcomes and identify what program components are most effective in doing so. To achieve this aim we pool the data sets of five separate studies about computer technology programs that include observations of 16,856 students from 148 primary schools across three provinces in China. We find that overall computing technologies have positive and significant impacts on student academic achievement in both math and in Chinese. The programs are found to be more effective if they are implemented out-of-school, avoiding what appear to be substitution effects when programs are run during school. The programs also have heterogeneous effects by gender. Specifically, boys gain more than girls in Chinese. We did not find heterogeneous effects by student initial achievement levels. We also found that the programs that help students learn math—but not Chinese—have positive impacts on student self-efficacy.
    Keywords: Research and Development/Tech Change/Emerging Technologies, Teaching/Communication/Extension/Profession,
    Date: 2015
  12. By: Burggraf, Christine; Kuhn, Lena; Zhao, Quiran; Teuber, Ramona; Glauben, Thomas
    Abstract: This study provides empirical evidence on the link between economic growth, nutrition, and health in two emerging economies, China and Russia. Both countries have experienced rising average incomes, accompanied by an increasing rate of nutrition-related chronic diseases in recent years. Thereby, the higher growth rate of the occurrence of obesity in China suggests a certain catching-up effect and tremendously increasing problems with chronic diseases in the longer run, especially in urban areas of China. Further, our results indicate that with increasing household incomes over time the demand for carbohydrates decreases, while the demand for meat and dairy products, as well as fruits increases. This is a development generally known as nutrition transition. Finally, our estimation results of a Quadratic Almost Ideal Demand System (QUAIDS) underscore the finding that income growth in China and Russia tends to increase the demand for animal-based products much stronger than the demand for carbohydrates.
    Keywords: nutrition transition, food demand, QUAIDS, China, Russia, Food Consumption/Nutrition/Food Safety, International Development,
    Date: 2015
  13. By: Chen, Shuai; Chen, Xiaoguang; Xu, Jintao
    Abstract: Using a unique county-level panel on single-season rice yield and daily weather outcomes from 1996 to 2009, we examined the impacts of temperature variations on rice yield in China. We have five key findings: (i) in contrast to nearly all previous studies focusing on rice production in tropical/subtropical regions, we discovered that higher daily minimum temperature during the vegetative stage increased rice yield; (ii) consistent with previous assessments, we found that increased daily maximum temperature during the vegetative and ripening stages reduced rice yield; (iii) the impacts of solar radiation and rainfall on rice yield differed across the plant’s growth stages; (iv) estimated weather effects on yield differed by rice variety; and (v) weather variations caused a net economic loss of $21.6-88.2 million during the sample period, depending on model specifications and econometric estimation strategies.
    Keywords: agriculture, rice, weather, China, temperature, Crop Production/Industries, Environmental Economics and Policy,
    Date: 2015
  14. By: Fernald , John (BOFIT); Hsu , Eric (BOFIT); Spiegel , Mark M. (BOFIT)
    Abstract: How reliable are China’s GDP and other data? We address this question by using trading partner exports to China as an independent measure of its economic activity from 2000–2014. We find that the information content of Chinese GDP improves markedly after 2008.We also consider a number of plausible, non-GDP indicators of economic activity that have been identified as alternative Chinese output measures. We find that activity factors based on the first principal component of sets of indicators are substantially more informative than GDP alone. The index that best matches activity in-sample uses four indicators: electricity, rail freight, an index of raw materials supply, and retail sales. Adding GDP to this group only modestly improves in-sample performance. Moreover, out of sample, a single activity factor without GDP proves the most reliable measure of economic activity.
    Keywords: China; GDP; principal components; structural break; forecasting
    JEL: C53 C82 E20 F17
    Date: 2015–10–15
  15. By: Lin, Dayan; Wu, Guosong; Zhu, Jing; Yang, Fan; Aniah, Dominic
    Abstract: Over two decades, distribution of China’s soybean import sources changed significantly. Price as is implied in traditional HO theory is unable to justify that change. Instead, the seasonality of agricultural production may contributes more to changes on import source of soybean by seasonal supply constraints. Based on exporters’ decision-making behavior, this paper analyzed the impact of constraints from exporters’ exporting prowess on China's import source distribution from the perspective of seasonality, using monthly data of China and the three major soybean exporters from the year 2010 to 2013. Empirical results show that an exporting country takes up a significantly bigger share in China’s soybean imports in its harvest season than in non-harvest season. Changes on import source result from dynamics of comparative advantage of exporting countries. Taking seasonal complementarities and comparative advantages of exporters into consideration, China may make good use of world resources and stabilize domestic supply of food.
    Keywords: Crop Production/Industries, International Relations/Trade,
    Date: 2015
  16. By: Agnes Szunomar (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Katalin Volgyi (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Tamas Matura (Hungarian Institute of International Affairs)
    Abstract: The paper analyses the partnership between China and Hungary and gives a thorough overview of Chinese investment in Hungary before and after the crisis, with a special focus on Chinese financial engagements and promises in this regard. The authors examine the realized investmentsas well as the reasons for failure or non-realization of Chinese financial involvement in Hungary. Finally, they conclude their investigation by arguing that although Hungary currently receives the majority of Chinese investments within the Visegrad region, it can easily lose this position.
    Keywords: outward foreign direct investment, financial engagement, China, Central and Eastern Europe, Hungary, Chinese OFDI
    JEL: F21 O16 P33
    Date: 2014–07

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