nep-cna New Economics Papers
on China
Issue of 2016‒02‒23
nine papers chosen by
Zheng Fang
Ohio State University

  1. Heterogeneous Impacts of a Change in Chinese FDI Regulations on Domestic Market Outcomes: Empirical Evidence from Taiwanese Plant Data By Mitsuo Inada; Yung-Hsing Guo
  2. Economic Cycles in Ancient China By Zhang, Yaguang; Fan, Guo; Whalley, John
  3. Can Africa Compete with China in Manufacturing? The Role of Relative Unit Labor Costs By Janet Ceglowski; Stephen Golub; Aly Mbaye; Varun Prasad
  4. Determining Minimum Wages in China: Do Economic Factors Dominate? By Christian Dreger; Reinhold Kosfeld; Yanqun Zhang
  5. Inter-industry relatedness and industrial-policy efficiency: Evidence from China's Export Processing Zones By Zhao Chen; Sandra Poncet; Ruixiang Xiong
  6. Regional Housing Supply Elasticity in China 1999-2013: A Spatial Equilibrium Analysis By Dan S. Rickman; Hongbo Wang
  7. With a Little Help from My Friends: Multinational Retailers and China's consumer Market Penetration By Charlotte Emlinger; Sandra Poncet
  8. China¡¯s regional energy efficiency: Results based on three-stage DEA model By Bin Lu; Ke Wang; Zhiqiang Xu
  9. Measuring the instability of China's financial system: Indices construction and an early warning system By Sun, Lixin; Huang, Yuqin

  1. By: Mitsuo Inada (Division of Natural Resource Economics, Graduate School of Agriculture, Kyoto University, and Research Fellow of Japan Society for the Promotion of Science); Yung-Hsing Guo (Department of International Business, National Taichung University of Science and Technology)
    Abstract: The domestic market outcomes of firms investing abroad have attracted the attention of both economists and policymakers. In particular, accelerating the relocation of domestic production abroad has raised public concern about the hollowing out of domestic technologies and employment. This study investigates the impact of foreign direct investment (FDI) policies toward China on plant productivity and employment, using Taiwanese manufacturing plant-level data and exploiting an FDI regulation change in China in 2002 as a significant variation. Our difference-in-differences estimates reveal the heterogeneous responses of Taiwanese plants to this regulation change: plants in deregulated industries that newly invested in China after 2000 experienced an increase in their productivity, employment, and sales, while plants in those industries that had already invested in China in 2000 decreased both employment and sales. We do not find any differential trends between plants in deregulated industries and those in other industries before the regulation change. We also check our crucial assumption of whether the regulation change expanded Taiwanese firms’ activities in China. We find that the regulation change increased the capital inflows and net sales generated by new entrant subsidiaries in the Chinese market. Furthermore, we do not find statistical evidence of the hollowing out effects on domestic market outcomes in deregulated industries.
    Date: 2016–02
  2. By: Zhang, Yaguang (Peking University); Fan, Guo (Peking University); Whalley, John (University of Western Ontario, Canada)
    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 deepin 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.
    Keywords: JEL Classification:
    Date: 2016
  3. By: Janet Ceglowski; Stephen Golub; Aly Mbaye; Varun Prasad (Université Cheikh anta Diop de Dakar; Professor of Economics)
    Abstract: In this paper we examine Sub-Saharan Africa’s (SSA) bilateral trade and cost competitiveness with China. We review patterns of bilateral trade between SSA and China, showing an extraordinary imbalance in the structure of trade, in that China overwhelmingly exports manufactured products to SSA and almost exclusively imports primary products in return. Our principal means of assessing the competitiveness of SSA’s manufacturing sector, vis-à-vis China, are measures of relative unit labor costs (RULC). We find that African RULC levels have generally been very high relative to China, but declined over the 2000s as China’s wages have risen faster than Chinese productivity, while the reverse is true for the SSA countries in our sample. Nevertheless, RULC vis-à-vis China remained elevated for many SSA countries as of 2010. Generally high RULC along with weaknesses in the business climate suggest that most SSA countries are unlikely to be competitive in labor-intensive manufacturing any time soon.
    Keywords: Sub-Saharan Africa, China, relative unit labor costs, trade, manufacturing
    JEL: J08 J20 J21 J30 J38
    Date: 2015–10
  4. By: Christian Dreger; Reinhold Kosfeld; Yanqun Zhang
    Abstract: Minimum wages may be an important instrument to reduce income inequality in a society and to promote socially inclusive economic growth. While higher minimum wages can support the Chinese transformation towards consumption driven growth, they can worsen the price competitiveness in export markets. As they differ throughout the country, this paper investigates their determinants at the regional level. In addition to a broad set of economic determinants, such as per capita income and consumption, consumer prices, unemployment and industrial structures, spatial effects are taken into account. They might arise for different reasons, including competition of local policymakers. The results show that the impact of economic variables declines, once spatial spillovers are considered. Although the minimum wage regulation pursues the relevance of economic factors in the determination of the appropriate levels, the actual development is largely driven by regional dependencies. As minimum wage standards set by local officials do not fully reflect the regional economic development, further reforms should be on the agenda.
    Keywords: Chinese transformation, minimum wages, spatial effects
    JEL: J30 R23 C23
    Date: 2016
  5. By: Zhao Chen; Sandra Poncet; Ruixiang Xiong
    Abstract: In this paper, we evaluate whether the efficiency of industrial policies depends on the consistency of their focus with the local productive structure. We use sector-level data from Chinese manufacturing surveys over the 1998-2007 period to show that the efficiency of the export-promoting policies implemented in Export Processing Zones depends on whether they target activities for which the necessary capabilities and resources are available. We find export benefits from the EPZ policy which are greater for sectors with denser links with the local productive structure. Our results suggest that industrial-policy effectiveness is magnified by pre-existing productive knowledge.
    Keywords: Export Processing Zones;Industrial Policy;Export Promotion Effectiveness;China
    JEL: F13 F14 O25 R11
    Date: 2016–02
  6. By: Dan S. Rickman (Oklahoma State University); Hongbo Wang (Oklahoma State University)
    Abstract: In this paper, we apply a spatial equilibrium growth model (Glaeser and Tobio, 2008) to examine relative housing price growth across the provinces and municipalities of mainland China for 1999-2013. The spatial equilibrium growth model is built upon the traditional static Rosen- Roback spatial equilibrium model. A distinguishing feature is the addition of a regionally- varying elasticity of housing supply. A primary finding is the significant geographical differences in housing price growth and the importance of differences in regional housing supply in explaining the differences in housing price growth. Regions in the East had the most inelastic housing supply, while northern regions had the most elastic housing supply.
    Keywords: Chinese housing markets, Housing supply elasticity, Urban economics, Economic geography,
    JEL: R00
    Date: 2016–02
  7. By: Charlotte Emlinger; Sandra Poncet
    Abstract: We study the growing presence of multinational retailers and its role for imports in China. To identify the causal effect of foreign retailers entry on the local import intensity, we use sector and origin country level import data for a panel of Chinese cities between 1997 and 2012 and differentiate between retailer and non retailer goods, and, in a second step, we exploit information on the multinational retailers' headquarters countries. We find that a relative rise in retail imports in cities where multinational retailers settle, which is sharper for imports from the country of origin of the retailer. Our results suggest that a 20% higher multinational retailer presence, amounting to one additional hypermarket in 2012, induces a relative rise in imports in retail goods of 2.8% compared to non retail goods. The import relative gains rise to 5.6% for the multinational retailers' headquarters countries. We find that the observed effect is mainly driven by the food products, which is consistent with the appeal of Western gastronomy and with the structuring role of retail branded products. Our results suggest that global retailers bridgehead for the penetration of the Chinese market by producers from their home base.
    Keywords: Multinational retailers;China;Imports
    JEL: L81 F14 F23
    Date: 2016–01
  8. By: Bin Lu; Ke Wang; Zhiqiang Xu
    Abstract: Traditional DEA models ignore the influence of environmental variables and statistical noise which may result in biased efficiency estimates. To solve this problem, three-stage DEA model was proposed and has been widely applied in many areas. This study evaluates China¡¯s regional energy efficiency by using three-stage DEA model based on the statistical data of 2010, and discusses the divergence of three different efficiency assessment methods. The empirical results show that the environmental factors indeed influence the regional energy efficiency performance. After the adjustment of environmental variables, the national average technical efficiency by adopting three-stage DEA model decreased significantly than by using traditional DEA model, but the influences to regions are different due to diverse features, some regions were overestimated by using BCC-DEA model, and some regions were underestimated. Three-stage DEA model is able to reflect the true efficiency by eliminating environmental effects compared with other methods.
    Keywords: Evaluation; Three-stage DEA Model; SFA; Environmental Influence; Regional Energy Efficiency
    JEL: Q54 Q40
    Date: 2016–02–05
  9. By: Sun, Lixin; Huang, Yuqin
    Abstract: In this paper, employing several econometric techniques, the authors construct a financial stress index (CNFSI) and a financial conditions index (CNFCI) to measure the instability of China's financial system. The indices are based on the monthly data collected from China's inter-bank markets, stock markets, foreign exchange markets and debt markets. Using these two indices, they identify the episodes of systemic financial stress, and then evaluate the indices. The empirical results suggest that the CNFSI performs better than the CNFCI. Furthermore, the authors propose four leading indicators for monitoring China's financial instability, and provide a primary early warning system for China's macroprudential regulations.
    Keywords: financial stress index,financial conditions index,China's financial system,leading indicators,early warning system
    JEL: G18 C43 E44
    Date: 2016

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