nep-cna New Economics Papers
on China
Issue of 2015‒11‒15
eleven papers chosen by
Zheng Fang
Ohio State University

  1. Old-Age Pension and Intergenerational Living Arrangements By Chen, Xi
  2. Analyzing the TFP Performance of Chinese Industrial Enterprises By Li, Kui-Wai
  3. Overconfidence and Health Insurance Participation among the Elderly By Huang, Wei; Luo, Mi
  4. One State, Many Regions: China's Fragmented Industrial Takeover By Myrto Kalouptsidi
  5. Diversity of Firm Sizes, Complexity, and Industry Structure in the Chinese Economy By Heinrich, Torsten; Dai, Shuanping
  6. Business failure research By Amankwah-Amoah, Joseph; Zhang, Hongxu
  7. Chinese Divisia Monetary Index and GDP Nowcasting By William Barnett; Biyan Tang
  8. Change and continuity in Chinese foreign policy: China’s engagement in the Libyan civil war as a case study. By Jian Junbo; Álvaro Méndez
  9. China’s Growing Energy Demand: Implications for the United States: Working Paper 2015-05 By Andrew Stocking; Terry Dinan
  10. Differential Treatment in the Chinese Labor Market. Is Hukou Type the Only Problem? By Vahan Sargsyan
  11. Sino-African relations: some solutions and strategies to the policy syndromes By Asongu, Simplice; Ssozi, John

  1. By: Chen, Xi (Yale University)
    Abstract: China launched a pension program for rural residents in 2009, now covering more than 300 million Chinese. This program offers a unique setting for studying the ageing population, given the rapidity of China's population ageing, traditions of filial piety and co-residence, decreasing number of children, and dearth of formal social security, at a relatively low income level. This paper examines whether receipt of the old-age pension payment equips elderly parents and their adult children to live apart and whether parents substitute children's time involved in instrumental support to them with service consumption. Employing a regression discontinuity (hereafter RD) design to a primary longitudinal survey conducted in Guizhou province of China, this paper overcomes challenges in the literature that households eligible for pension payment might be systematically different from ineligible households and that it is difficult to separate the effect of pension from that of age or cohort heterogeneity. Around the pension eligibility age cut-off, results reveal large and significant reduction in intergenerational co-residence of the extended family and increase in service consumption among elderly parents.
    Keywords: rural pension, RD Design, living arrangement, service consumption
    JEL: H55 I38 J14 J22
    Date: 2015–11
  2. By: Li, Kui-Wai
    Abstract: After nearly four decades of rapid growth, the China economy is faced with various challenges. The 2008 crisis would have served as the last straw as China experienced falls and volatilities in industrial output, export and foreign direct investment. The new policy focuses on expansion of domestic consumption and rebalancing. Given the unreliability of Chinese products, there is a need to rebuild product acceptability and market confidence. The structure of industrial enterprises, especially the small- and medium-sized enterprises, will play a crucial role in the next phase of development in the China economy. This paper uses the data on Chinese industrial enterprises to estimate the productivity performance of enterprises across region and industries. The discussion is placed on the impact of the 2008 financial crisis on the China economy and industries enterprises. By using a simple methodology and OLS regression analysis on the estimation of total factor productivity, the empirical results show that SMEs and non-SMEs do perform differently in different industries and across regions, but SMEs suffered more than non-SMEs since the 2008 crisis.
    Keywords: China regions, small- and medium-sized enterprises, total factor productivity, industrial enterprises
    JEL: O4 O53
    Date: 2015–11–21
  3. By: Huang, Wei (Harvard University); Luo, Mi (New York University)
    Abstract: People may have imperfect information about their health status and thus make suboptimal decisions in insurance participation. Using national representative samples of the elderly in US and China, we find that people with lower socio-economic status and poorer health are relatively less likely to realize how unhealthy they are and this overconfidence is associated with no insurance participation. Accurate health information provided through physical examinations induces relatively higher participation among the overconfident people afterwards. These findings contribute a new explanation for the insufficient participation and advantageous selection in health insurance, and provide new insights on the insurance market and policy suggestions.
    Keywords: overconfidence, health, health insurance participation
    JEL: I12 I13 J14
    Date: 2015–11
  4. By: Myrto Kalouptsidi (Princeton University)
    Abstract: In recent years, Chinese firms have rapidly dominated a number of capital intensive industries (steel, solar panels, shipbuilding) in world markets. At the same time, China's domestic industries are fragmented: on one hand, there is substantial regional industrial duplication due to China's decentralized bureaucracy; on the other hand, even within provinces, these industries tend to be characterized by a large number of small firms. In this paper, we study the role that industrial policy has played in China's (fragmented) industrial takeover. We first document and measure the support provided by Chinese provincial governments. We then ask what their impact is on global (mis)allocation and welfare. We explore the unintended consequences of provincial competition driven by non-market based policy instruments, such as excess capital expansion. Finally, we study the consequences of consolidation policies brought forward by the central government.
    Date: 2015
  5. By: Heinrich, Torsten; Dai, Shuanping
    Abstract: Among the phenomena in economics that are not yet well-understood is the fat-tailed (power-law) distribution of firm sizes in the world's economies. Different mechanisms suggested in the literature to explain this distribution of firm sizes are discussed in the present paper. The paper uses the China Industrial Enterprises Database to study the distribution (firm size in terms of the number of employees, capital, and gross profit) for the provinces of China for the years 1998-2008. We estimate the power-law distribution and confirm its plausibility using the KS test and the log-likelihood ratio vs. lognormal and exponential distributions. The analysis on regional levels allows an assessment of regional effects on differences in the distribution; we discuss possible explanations for the observed patterns in the light of the recent regional economic development in the PRC.
    Keywords: Firm size distribution; Evolutionary industry dynamics; Power-law distribution; China
    JEL: C14 C46 L11 N15
    Date: 2014–12–15
  6. By: Amankwah-Amoah, Joseph; Zhang, Hongxu
    Abstract: In spite of a growing body of literature on business failures in China and effects of government policy, our understanding of the current state of knowledge remains unclear. The study advances research on the subject by developing the “four-parties” framework to review and synthesise the literature. The paper lays the groundwork for an integrated understanding of the causes and consequences of business failure. In sharp contrast with the evolution and development of Western-based business failure research, much of the literature on China and Chinese firms has focused largely on business failure prediction models by bypassing the traditional evolution from qualitative case study/story approaches to quantitative-based approaches. The study outlines the important implications and promising avenues for future research.
    Keywords: Business failure; China; emerging issues
    JEL: M0 M2 O2 O25
    Date: 2015
  7. By: William Barnett (Department of Economics, The University of Kansas; Center for Financial Stability, New York City; IC2 Institute, University of Texas at Austin); Biyan Tang (Department of Economics, The University of Kansas;)
    Abstract: Since China’s enactment of the Reform and Opening-Up policy in 1978, China has become one of the world’s fastest growing economies, with an annual GDP growth rate exceeding 10% between 1978 and 2008. But in 2015, Chinese GDP grew at 7 %, the lowest rate in five years. Many corporations complain that the borrowing cost of capital is too high. This paper constructs Chinese Divisia monetary aggregates M1 and M2, and, for the first time, constructs the broader Chinese monetary aggregates, M3 and M4. Those broader aggregates have never before been constructed for China, either as simple-sum or Divisia. The results shed light on the current Chinese monetary situation and the increased borrowing cost of money. GDP data are published only quarterly and with a substantial lag, while many monetary and financial decisions are made at a higher frequency. GDP nowcasting can evaluate the current month’s GDP growth rate, given the available economic data up to the point at which the nowcasting is conducted. Therefore, nowcasting GDP has become an increasingly important task for central banks. This paper nowcasts Chinese monthly GDP growth rate using a dynamic factor model, incorporating as indicators the Divisia monetary aggregate indexes, Divisia M1 and M2 along with additional information from a large panel of other relevant time series data. The results show that Divisia monetary aggregates contain more indicator information than the simple sum aggregates, and thereby help the factor model produce the best available nowcasting results. In addition, our results demonstrate that China’s economy experienced a regime switch or structure break in 2012, which a Chow test confirmed the regime switch. Before and after the regime switch, the factor models performed differently. We conclude that different nowcasting models should be used during the two regimes.
    Keywords: China, Divisia Monetary Index, Borrowing Cost of Money, Nowcasting, Real GDP Growth Rate, Dynamic Factor Model, Regime Switch
    JEL: C32 C38 C43 E47 E51 O53
    Date: 2015–11
  8. By: Jian Junbo; Álvaro Méndez
    Abstract: With the rapid proliferation of Chinese interests and responsibilities in the world in recent years, the non-interference principle in Chinese diplomacy has in some ways been called into question. �is article will analyse subtle alterations in Chinese foreign policy by exploring the Chinese reaction to Libya Crisis of 2011. It concludes that China will continue to adhere to the non-interference principle in future, but some �flexible and ‘soft’ involvement in the domestic affairs of foreign countries may be deployed to protect national interests.
    JEL: N0
    Date: 2015
  9. By: Andrew Stocking; Terry Dinan
    Abstract: Growing rapidly in recent decades, China’s demand for energy has nearly doubled since 2005—making China the world’s largest consumer of energy. That growth and the energy policies that China pursues increase the level and possibly the volatility of some energy prices, reduce the competitiveness of U.S. manufacturing firms in relation to Chinese firms but provide benefits for U.S. consumers, and increase greenhouse gas emissions. This paper examines trends in China’s energy consumption, the implications of those trends for U.S. households and businesses, and policy options that might help
    JEL: Q41 Q42 Q43 Q47 Q48 Q54
    Date: 2015–06–25
  10. By: Vahan Sargsyan
    Abstract: Differential treatment towards minority groups in labor markets may be both a result of a governmental registration system that foster unequal rights based on the origins of individuals, and a result of a disadvantageous attitude of both local employers and the general population towards non-locals. We test for differential treatment in the Chinese labor market towards rural migrants with and without urban registration, using data from the Rural to Urban Migration Survey in China. The findings indicate that despite its often assumed large impact on the differential treatment towards rural migrants, the type of household registration (hukou) is not entirely responsible for the local-migrant differences in total hourly incomes which are not attributable to personal characteristics. The results suggest that even the complete abolishment of the hukou system may at most eliminate only a portion of the disadvantageous treatment towards rural female migrants which is not attributable to differences in personal characteristics, and may even have no measurable impact on rural male migrants working in the paid-employment sector in Chinese urban labor markets.
    Keywords: rural migrants; hukou registration; hukou conversion; unexplainable treatment; total hourly compensation;
    JEL: J71 J78 O15 R23
    Date: 2015–09
  11. By: Asongu, Simplice; Ssozi, John
    Abstract: We survey about 110 recently published studies on Sino-African relations; put some structure on the documented issues before suggesting some solutions and strategies to the identified policy syndromes. The documented issues classified into eight main strands include, China: targeting nations with abundant natural resources; focusing on countries with bad governance; not hiring local workers; outbidding other countries by flouting environmental and social standards; importing workers that do not integrate into domestic society and living in extremely simple conditions; exhibiting low linkages between her operations and local businesses; exporting low quality products to Africa; and the emergence of China hindering Africa’s development.
    Keywords: : Economic relations; China; Africa
    JEL: F19 F21 O10 O19 O55
    Date: 2015–03

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