nep-cna New Economics Papers
on China
Issue of 2016‒04‒23
nine papers chosen by
Zheng Fang
Ohio State University

  1. International technology transfer and domestic innovation: evidence from the high-speed rail sector in China By Yatang Lin; Yu Qin; Zhuan Xie
  2. European Green Tech FDI in China: The Role of Culture By Katiuscia Vaccarini; Francesca Spigarelli; Ernesto Tavoletti
  3. The International Use of the Renminbi: Evidence from Japanese firm-level data By SATO Kiyotaka; SHIMIZU Junko
  4. Rising Wages, Yuan Appreciation and China’s Processing Exports By Yuqing Xing
  5. How Fast Can China Grow? The Middle Kingdom’s Prospects to 2030 By Jeannine Bailliu; Mark Kruger; Argyn Toktamyssov; Wheaton Welbourn
  6. Employment and Starting Wages of New Graduates in China: Using the latest available survey data By LIU Yang
  7. Chinese Households’ Recycling Behavior – Analysis of Resident Survey in Harbin, China By Zhujie Chu; Laura Meriluoto; Ying Li; Bolin Chen
  8. Family Size and the Demand for Sex Selection: Evidence From China By Samuel Marden
  9. How to Make The Fiscal policies Greener in China?——Based on The Perspective of Environmental Macroeconomics By Lu, Hongyou; Xu, Wenli; Xu, Kun

  1. By: Yatang Lin; Yu Qin; Zhuan Xie
    Abstract: How does the transfer of advanced technology spur innovation in developing countries? This paper exploits the large-scale introduction of high-speed railway (HSR) technology into China in 2004 as a natural experiment to address this question. The experiment is unique in the sense that this wave of technology transfer is large, abrupt and arguably exogenous in timing, covering a variety of technology classes and a large number of geographically-dispersed railway-related firms. With detailed information on the types of technology transferred and the identities of the receiving firms, as well as their product market specializations, we are able to depict a clear picture of how foreign technology is digested and spurs follow up innovation in and out of directly receiving firms. Our findings suggest that technology transfer leads to significant growth in HSR-related patents in cities with direct receivers of imported technology after 2004 in a triple-difference estimation. We also observe sizable spill overs to firms that are not directly related to the railway industry. Technology similarity plays an important role in technology diffusion, but we do not observe any significant impacts of geographic proximity. Previous university research strength in relevant fields is also conducive to stronger technology spill overs.
    Keywords: Innovation; foreign technology transfer; knowledge spill over; China
    JEL: J1
    Date: 2015–12
  2. By: Katiuscia Vaccarini (University of Macerata); Francesca Spigarelli (University of Macerata); Ernesto Tavoletti
    Abstract: The purpose of this paper is to investigate to what extent culture and language affect European foreign direct investments (FDI) in mainland-China. It provides an in-depth analysis on the perception of European and Chinese identity and the role played by language in fostering or hampering FDI, along with culture. Design/methodology/approach: our research questions are contextualized and timely/spacely bound through a multiple case study panel of six European companies, which entered the Chinese green tech market through FDI. We used quantitative and qualitative approaches and a three-phase data collection process, based on a specific protocol. Findings: findings suggest that European investors emphasize "intra-Europe" differences rather than a "European collective (id)entity". They have more awareness of the intra-China differences in the post-entry rather than the pre-entry period. The cultural factor goes along with the language dimension, which, in specific cases, is perceived as a higher hurdle than culture. However, by adopting a cognitive and social psychological viewpoint, language and culture are not stand-alone dimensions and intersect with each other. They both contribute to the concept of identity. Research limitation/implication: the analytical generalisation out of our multiple case study is limited to a specific industry and to specific home and target economic areas. Practical implications: our research offers an in-depth insight about the role and the perception of culture of European companies investing in China mainland. This study is not only addressed to academics and scholars, but also to managers who want to approach the market and policy makers.
    Keywords: green tech FDI, Europe, China, cultural distance, psychic distance
    Date: 2016–01
  3. By: SATO Kiyotaka; SHIMIZU Junko
    Abstract: The use of the Chinese renminbi (RMB) is said to have been increasing in recent years for trade invoicing, due to active promotion policies by the Chinese government. However, only patchy information has been presented in the literature on the use of the RMB in Chinese trade. Since China plays the role of a regional and global manufacturing hub and foreign multinational companies (MNCs) actively operate there, it is necessary to investigate to what extent MNCs use the RMB for trade invoicing especially in their intra-firm trade, but no empirical evidence has been presented. Utilizing firm-level information obtained from large-scale questionnaire surveys, this study presents new evidence of the use of the RMB by Japanese MNCs operating in China and other Asian countries along their regional and global production network. We find that although the RMB is extensively used for local sales and procurement in China, Japanese MNCs in China mainly use the U.S. dollar and, to a lesser extent, the yen in trade with other countries. However, we also observe that Japanese MNCs in China increased the use of RMB in intra-firm trade with Japan. RMB transactions will be growing further if it becomes easier for MNCs to conduct marry and netting for their trade settlements.
    Date: 2016–03
  4. By: Yuqing Xing (National Graduate Institute for Policy Studies)
    Abstract: This study investigates the impacts of rising wages and the appreciation of the yuan on the structure of China’s exports. China’s exports are classified here as ordinary exports (OE) and two distinctive groups of processing exports, pure assembly exports (PAE) and mixed assembly exports (MAE). The data analyzed here are derived from panel data covering China’s bilateral PAE and MAE trade with more than 100 trading partners from 1993 to 2013. Estimates of fixed effect models show that wage increases and the appreciation of the yuan reduced the proportion of assembly exports in China’s bilateral exports. Specifically, for a 1% increase in Chinese manufacturing wages, the share of PAE in China’s bilateral exports is expected to fall 1.6 percentage points and that of MAE to decrease by 1.1 percentage points; a 1% nominal appreciation of the yuan against the US dollar would be expected to lower PAE and MAE trade volume by 2.4 and 2.1 percentage points, respectively. The empirical results imply that rising wages and cumulative appreciation of the yuan have eroded China’s comparative advantage in the assembly of products for international markets, resulting in substantial contraction of processing exports. The analysis provides a supply-side explanation for the fall of China’s export growth.
    Date: 2016–04
  5. By: Jeannine Bailliu; Mark Kruger; Argyn Toktamyssov; Wheaton Welbourn
    Abstract: Given its size and importance for global commodity markets, the question of how fast the Chinese economy can grow over the medium term is an important one. This paper addresses this question by examining the evolution of the supply side of the Chinese economy over history and projecting how it will evolve over the next 15 years. Using a Cobb-Douglas production function, we decompose the growth of trend GDP into those of the capital stock, labour, human capital and total factor productivity (TFP) and then forecast trend output growth out to 2030 using a bottom-up approach based on forecasts that we build for each one of these factors. Our paper distinguishes itself from existing work in that we construct a forecast of Chinese TFP growth based on the aggregation of forecasts of its key determinants. Moreover, our analysis is based on a carefully constructed estimate of the Chinese productive capital stock and a measure of human capital – based on Chinese wage survey data – that better reflects the returns to education in China. Our results suggest that Chinese trend output growth will decelerate from around 7% currently to about 5% by 2030, and are consistent with a gradual rebalancing of the Chinese economy characterized by a decline in the investment rate.
    Keywords: Development economics, International topics, Potential output, Productivity
    JEL: E32 E22 E23
    Date: 2016
  6. By: LIU Yang
    Abstract: We examined the determinants of labor market outcomes of new graduates in China based on an original survey. Data were collected in recent years following the new reform of the household registration system ( hukou in the literature). We found that search effort, measured by the number of job applications sent by graduates, has a significant positive effect on employment. Furthermore, parents' income contributes significantly to starting wage, but has no significant effect on finding a job. This could be because parents' income is considered a major unemployment benefit for new graduates, theoretically contributing to wages but not affecting job-labor match. Moreover, contrary to previous studies using data before the new hukou reform, there was no significant wage gap between urban-born and rural-born graduates in our sample. Even though parents' income of rural-born graduates is much lower than that of urban-born graduates, the results suggest a significant advantage for the former compared to the latter in the labor market. We argue this could be the result of China's hukou -based university admissions system, which sets starkly different qualifying scores for different birthplaces, and, thus, the quality of students at the same university could differ by birthplace.
    Date: 2016–03
  7. By: Zhujie Chu; Laura Meriluoto (University of Canterbury); Ying Li; Bolin Chen
    Abstract: China’s rapid rates of urbanization and income growth have led to skyrocketing of the accumulation of domestic solid waste in landfills. Various policies have been adopted by the municipal governments, including the city of Harbin, to improve incentives for recycling in an attempt to reduce solid waste accumulation, but the effects of these efforts appear to have been mixed. The aim of this paper is to gain further understanding of the factors that influence households’ recycling behavior. We administered a survey to residents of Harbin city to measure their recycling frequency as well as their understanding of and attitudes towards household solid waste management. We apply ordered logistic regression analysis to study the impact of the survey variables and socioeconomic factors on the frequency of recycling. We find that knowledge, attitudes about sorting and reuse, attitudes about government involvement in recycling programs, and understanding of the environmental effects of recycling have positive effects on recycling frequency. Education plays a significant positive role while gender, income and age play no significant role in recycling frequency.
    Keywords: Solid waste; recycling; survey; peer pressure; China
    Date: 2016–04–14
  8. By: Samuel Marden (Department of Economics, University of Sussex)
    Abstract: In China, many fewer girls are born than would be expected given natural birth rates. This imbalance has worsened dramatically over the last 40 years. The roughly contemporaneous fall in fertility per woman is often mooted as a source of this apparent increased demand for sex selection: fewer births make it harder to have a son by chance. Despite this, causal evidence is limited. This paper exploits geographic variation in changes in fertility, arising as a consequence of China’s agricultural reforms (1978-84), to provide this evidence. Specifically, I show that households living in counties that benefitted more from the reforms, increased their fertility relative to households elsewhere. I then show that these households are also less likely to engage in sex selection. These changes appear to have been due to higher local incomes interacting with the enforcement of the One Child Policy. The timing of the changes in fertility and sex selection are informative: while fertility increased almost immediately, the decline in sex selection only emerged from the mid 1980s— contemporaneous with the widespread availability of ultrasound. These results suggest that the dramatic decline in fertility in 1970s China, as well as the smaller decline due to the One Child Policy in the 1980s, may have had an important role in fuelling the demand for sex selection.
    JEL: J11 J13 J16
    Date: 2016–03
  9. By: Lu, Hongyou; Xu, Wenli; Xu, Kun
    Abstract: From the perspective of environmental macroeconomics, in addition to environmental equilibrium effected by environmental policies, the fiscal policy have an impact on the environment equilibrium. On this basis, this paper constructs a RBC model with environmental equilibrium, that contains different financing mode of government environmental expenditure, within which incorporating fiscal spending shocks, labor income tax rate shock, capital income tax rate shock and environmental tax shock. Utilizing the historically macroeconomic data during 1978 to 2014, this paper estimate the long-run steady-state of macroeconomic and environmental variables, then simulate short-run fluctuation of these macro-variables. The results show that:(1) government environmental expenditure being arranged in the general budget, taxing emission achieve the "double dividend" that output increase by 0.13%, and the stock of carbon dioxide fall by 1.1%; (2) changes of environmental tax rates is one important source of volatility in the stock of carbon dioxide, volatility contribution rate of 87%; (3) changes in fiscal policy have a significant impact on short-term fluctuations of carbon dioxide, and the environmental effects of direction caused by expansionary fiscal policy depend on the fiscal policy type. Based on the above conclusions, this paper suggests the introduction of environmental taxes as quickly as possible, government environmental expenditure take the general tax financing mode, and a combination of modest increase in fiscal expenditure, reducing labor income tax rate and inceasing capital income tax rate in order to promote green development during "Thirteen Five Plan" period.
    Keywords: environmental tax; finacing mode; fiscal policies; business cycle
    JEL: E62 H23 H3 Q5
    Date: 2016–03–23

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