nep-cna New Economics Papers
on China
Issue of 2016‒05‒21
thirteen papers chosen by
Zheng Fang
Ohio State University

  1. Maternal Education, Parental Investment and Non-Cognitive Skills in Rural China By Jessica Leight; Elaine M. Liu
  2. Does Trade Liberalization with China Influence U.S. Elections? By Yi Che; Yi Lu; Justin R. Pierce; Peter K. Schott; Zhigang Tao
  3. How Did the Introduction of Deposit Insurance Affect Chinese Banks? An Investigation of Its Wealth Effect By Jianjun Sun; Nobuyoshi Yamori
  4. Demographics, Societal Aging, and Meat Consumption in China By Min, Shi; Bai, Junfei; Seale, James L. Jr.; Wahl, Thomas
  5. Housing Policies in Hong Kong, China and the People’s Republic of China By Jing Li, Victor
  6. A provincial view of global imbalances: regional capital flows in China By Samuel Cudre; Mathias Hoffmann
  7. The sheer scale of China’s urban renewal and CO2 emissions: Multiple structural breaks, long-run relationship and short-run dynamics By Ahmed, Khalid
  8. The agricultural roots of industrial development: ‘forward linkages’ in reform era China By Samuel Marden
  9. Environmental Policy and China’s Macroeconomic Dynamics Under Uncertainty---Based on The NK Model with Distortionary Taxation By Xu, Wenli; Xu, Kun; Lu, Hongyou
  10. Participation in farmer's cooperatives and its effects on agricultural incomes : evidence from vegetable-producing areas in China By Hoken, Hisatoshi
  11. Income and Health Choices Physical Activity Evidence from China By Hu, Xiaowen; Stowe, C. Jill
  12. The Role of China, Japan, and Korea in Machinery Production Networks By OBASHI Ayako; KIMURA Fukunari
  13. On Relationship between Income Poverty and Multidimensional Poverty in China By Sabina Alkire and Suman Seth

  1. By: Jessica Leight; Elaine M. Liu
    Abstract: The importance of non-cognitive skills in determining long-term human capital and labor market outcomes is widely acknowledged, but relatively little is known about how educational investments by parents may respond to non-cognitive skills early in life. This paper evaluates the parental response to variation in non-cognitive skills among their children in rural Gansu province, China, employing a household fixed effects specification; non-cognitive skills are defined as the inverse of both externalizing challenges (behavioral problems and aggression) and internalizing challenges (anxiety and withdrawal). The results suggest that on average, parents invest no more in terms of educational expenditure in children who have better non-cognitive skills relative to their siblings. However, there is significant heterogeneity with respect to maternal education; less educated mothers appear to reinforce differences in non-cognitive skills between their children, while more educated mothers compensate for these differences. Most importantly, there is evidence that these compensatory investments lead to catch-up in non-cognitive skills over time for children of more educated mothers.
    JEL: D13 I24 O15
    Date: 2016–05
  2. By: Yi Che; Yi Lu; Justin R. Pierce; Peter K. Schott; Zhigang Tao
    Abstract: This paper examines the impact of trade liberalization on U.S. Congressional elections. We find that U.S. counties subject to greater competition from China via a change in U.S. trade policy exhibit relative increases in turnout, the share of votes cast for Democrats and the probability that the county is represented by a Democrat. We find that these changes are consistent with Democrats in office during the period examined being more likely than Republicans to support legislation limiting import competition or favoring economic assistance.
    JEL: D72 F13 F16
    Date: 2016–04
  3. By: Jianjun Sun (School of Economics and Management, Hainan University and College of Tourism, Hainan University); Nobuyoshi Yamori (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: Existing papers analyzing the link between deposit insurance and bank market values have usually been confined to investigating incremental regulatory shifts in the banking sector. The latest case on the introduction of deposit insurance occurred in China, and therefore it gives us a chance to explore the stock market reaction to the major regulatory policy change in banking. Although the introduction of deposit insurance is usually expected to be favorable news for banks, our results show that the average abnormal returns of all listed banks in China are statistically significantly negative on the announcement day. They indicate that investors believe the introduction of deposit insurance has an adverse effect on the banking industry in China. We also find that among bank characteristics such as asset size, z-score, and ROE, only size has a statistically significant positive impact on the abnormal returns of the Chinese listed banks on the announcement day. These results mean that although compulsory deposit insurance certainly enhances small banks’ credibility, China’s capital markets think that the adverse influence is lower for big banks than for small banks. Our results, which are not fully consistent with those previously found in the United States and Denmark, indicates that the difference in the financial regulatory environment prior to the introduction of deposit insurance leads to differential wealth transfer.
    Keywords: Deposit insurance, Announcement, Wealth effect, Event study, China
    JEL: G18 G21 G28 G38
    Date: 2016–05
  4. By: Min, Shi; Bai, Junfei; Seale, James L. Jr.; Wahl, Thomas
    Abstract: Drawn on the data collected by surveying 1,340 urban households from 6 cities in China, this paper estimates the impacts of demographic structure and population aging on household meat consumption, by jointly considering meat consumed at-home and away-from-home. Based on the trajectories of population, a simple simulation on meat demand trend in China is conducted subsequently. The results suggest: 1) Meat consumed away-from-home averagely accounts for near 30% of household total meat consumption in terms of quantity, so that its omission likely leads to a significant underestimate of total meat consumption and misunderstanding the driving forces; 2) Population aging significantly and negatively affects per capita meat consumption, suggesting that the expected meat demand in China without considering population aging will be overestimated. The findings from this study have important implications for better understanding the relative issues on China’s meat consumption under the situation of population aging.
    Keywords: Food away from home, Meat consumption, Aging, China, International Development, Public Economics,
    Date: 2015
  5. By: Jing Li, Victor (Asian Development Bank Institute)
    Abstract: This paper analyzes the housing markets and housing policies in Hong Kong, China and the People’s Republic of China (PRC). Both markets face housing affordability problems due to limited land supply, for which the solutions vary considerably. Hong Kong, China has adopted a railway and property development model, which involves close collaboration between the government and property developers in compact urban areas, while leaving most greenbelts and surrounding islands underdeveloped. Although the PRC has pledged to maintain a minimum level of basic farmland to feed its large population, this target has often been compromised due to local governments’ fiscal constraints and growth concerns.
    Keywords: PRC housing market; Hong Kong; China; housing affordability; housing subsidies
    JEL: H11 H72 P25 P26 R21 R28 R31 R38 R52
    Date: 2016–04–21
  6. By: Samuel Cudre; Mathias Hoffmann
    Abstract: We model capital flows among Chinese provinces using a theory-based variance decomposition that allows us to gauge the importance of various channels of external adjustments at the regional level: variation in intertemporal prices - domestic and international interest rates and the real exchange rate - and intertemporal variation in quantities (cash flows of output, investment and government spending). We find that our simple framework can account for around 85 percent of the variation in regional capital flows over the 1985-2010 period. Our results suggest that the relative importance of private and state-owned enterprises, a province's level of integration into the world economy and its sectoral composition play an important role for external adjustment vis-`a-vis the rest of China and the world. Specifically, we find strong empirical support for the view that differential access of private and state-owned enterprises to finance is a key driver of China's surpluses. We discuss implications of our results for global imbalances in capital flows.
    Keywords: China, Chinese Provinces, Capital Flows, Current Account, Global Imbalances, External Adjustment, Present-Value Models, Regional Business Cycles.
    JEL: F30 F32 F40
    Date: 2016–04
  7. By: Ahmed, Khalid
    Abstract: In the light of urban environmental transition (UET) theory, this study explores the relationship between carbon dioxide (CO2) emissions, economic growth, urbanization and trade openness using updated Chinese data over the extended period (1971-2013). After confirming that all the underlying series are stationary and adjusted with single structural break point, the results of auto-regressive distributed lag (ARDL) bounds test approach to cointegration confirms the cointegration between the variables. The long- and short-run dynamics reveal that urbanization reduces the CO2 emissions both in short- and long-run, but statistically insignificant. These findings contrast with previous literature and sounds the validation of urban environmental transition theory (UET). However, economic growth and trade openness contribute environmental degradation both in long- and short-run paths. The causality analysis reports bi-directional causal link between trade openness and urbanization in the short-run. However, in the long-run, economic growth ranger cause carbon dioxide emissions, urbanization and trade openness. Similarly, trade openness Granger cause carbon dioxide emissions, economic growth and urbanization in the long-run. The overall results imply that rural to urban immigration is still mostly driven by exports related manufacturing sectors. In addition, the higher GDP also contributes to urbanization as a feedback effect. In the end, stability of the model is also checked, model found stable and findings are suitable for environmental policy control use.
    Keywords: Carbon dioxide; Urbanization; Long-run dynamics; Multiple structural breaks; Bounds test; China.
    JEL: Q5 Q54 Q56
    Date: 2015
  8. By: Samuel Marden (Department of Economics, University of Sussex)
    Abstract: A classic literature argues that improvements in agricultural productivity result in higher non-agricultural output, particularly at low levels of development. The proposed mechanisms for these ‘forward linkages’ centre on increases in the supply of factors—usually labour or capital—or demand externalities in product markets. Regardless of the mechanism, empirical evidence for substantial linkages from agriculture is limited. In this paper, I show that improvements in agricultural productivity were an important factor in the growth of the non-agricultural sector in early reform-era China. I obtain plausibly exogenous variation in agricultural productivity growth by exploiting the fact that reforms between 1978 and 1984 were more beneficial to farmers endowed with land suited to cash crops. Then, using a newly digitised panel of economic data for 561 counties, I trace the growth of agricultural and non-agricultural output over forty years. Over the 15 or 25 year periods following the reforms, I estimate elasticities of county level non-agricultural output with respect to agricultural output of 1.2 or 0.8. Several pieces of additional evidence indicate that the linkages identified were primarily due to higher agricultural surpluses increasing the supply of capital to local non-state firms.
    JEL: O11 O13 O43 P32
    Date: 2016–03
  9. By: Xu, Wenli; Xu, Kun; Lu, Hongyou
    Abstract: This paper, by building a New Keynesian dynamic general equilibrium model that combines with distortionary taxation, pollution decision of firms, and environmental quality evolution under uncertainty, analyzes shocks from markets and taxation policies on macro-economy and environmental quality under different environmental policies circumstance theoretically. Further, parameters are calibrated on the basis of macroeconomic and pollution data from 1978 to 2014 in China as well as results from completed researches of others, and accordingly simulates differentiated response of macro-economy and environment to altering policy circumstance. Empirical results indicate that: (1) carrying out various environmental policies indeed causes economic loss, for which economic costs in average reach 0.1950% with 1% reduction of pollution elimination while change of economic costs (0.11149) under implement of pollution-discharge-permit system; (2) various environment polices play the role as automatic stabilizers for halting aggregate fluctuation, the most magnificently effect of decreasing instability relatively comes from Discharge Permit System in particular; (3) rising obstacles on price transmission lead to decreasing pollution-cut struggle from enterprises and increasing pollution emission; (4) taxation polices play effective roles for encouraging firms to participate on emission-cut activities. Potential suggestions, hence, root in: (1) putting environment regulation into effect fast, in which Discharge Permit police should be dominant and others be complementary; (2) carrying out marketization reforms by removing price intervention and posing fundamental effect of markets; (3) putting leading function of fiscal and taxation polices into effect by realizing green taxation institution.
    Keywords: Environmental Policy; Macroeconomic Dynamics; New Keynesian Model
    JEL: E32 E62 H3 Q58
    Date: 2016–05–15
  10. By: Hoken, Hisatoshi
    Abstract: Chinese agricultural cooperatives, called Farmer's Professional Cooperatives (FPCs), are expected to become a major tool to facilitate agro-industrialization for small farmers through the diffusion of new technologies, the supply of high-quality agricultural inputs and the marketing of their products. This study compares FPC participants with vegetable-producing non-participants and grain farmers in vegetable-producing areas in rural China to investigate the treatment effect of participation in FPCs as well as implementation of vegetable cultivation. I adopt parametric and nonparametric approaches to precisely estimate the treatment effects. Estimated results indicate no significant difference between participants and non-participants of FPCs on agricultural net income in both parametric and non-parametric estimations. In contrast, the comparison between vegetable and grain farmers using propensity score matching (PSM) reveals that the treatment effect of vegetable cultivation is significantly positive for total and agricultural incomes, although vegetable cultivation involves more labor-intensive efforts. These results indicate that it is the implementation of vegetable cultivation rather than the participation in an FPC that enhances the economic welfare of farmers, due to the non-excludability of FPCs' services as well as the risks involved in vegetable cultivation.
    Keywords: Farmers, Agricultural cooperative, Agricultural economies, Agriculture, Small farmers, Propensity score matching, Treatment effect
    JEL: O13 Q12 Q13
    Date: 2016–03
  11. By: Hu, Xiaowen; Stowe, C. Jill
    Abstract: This paper investigates the relationship between household income level and individual physical activity participation behavior. We investigate this issue through the lens of time preference. Our model considers income as a budget constraint of today as well as a component of future utility, and those with lower income discount future utility more heavily. Data from China Health and Nutrition Survey (CHNS) are tested utilizing a random effects method. The results show that both the likelihood to participate in physical activity and the time spent on physical activity are positively correlated with income. In general, these findings support the hypothesis that low-income individuals are more likely to make poor choices with regard to future health, since they discount future utility relatively heavily.
    Keywords: health choices, income, physical activity participation, time preference., Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Institutional and Behavioral Economics,
    Date: 2016
  12. By: OBASHI Ayako (University of Wisconsin and Keio University); KIMURA Fukunari (Keio Univeristy and Economic Research Institute for ASEAN and East Asia)
    Abstract: China, Japan, and Korea have been the three largest players in East Asian machinery production networks. This paper employs a new method of analysing finely disaggregated international trade data that applies the concept of zero trade flows, least-traded goods, and intensive/extensive margins of trade growth and scrutinises changes in the roles of China, Japan, and Korea in machinery production networks between 2007 and 2013. We find, first, that China became a dominant player in global machinery production networks in terms of both export values and the diversity and density of product-destination pairs. Second, the growth of Korea as machinery parts and components supplier was also salient and Korea’s dependency on China rose sharply. Third, Japan continued to stagnate and machinery production links between Korea and Japan weakened substantially.Length: 33 pages.
    Keywords: zero trade; intensive and extensive margins; least-traded goods; productdestination pairs; machinery industry; parts and components trade
    JEL: F14 F23
    Date: 2016–03
  13. By: Sabina Alkire and Suman Seth
    Abstract: This paper attempts to examine the theoretical relationship between income poverty and multidimensional poverty, and to explore the empirical linkages and discrepancies between these two types of poverty using the Alkire-Foster (AF) multidimensional poverty measurement method with 2011 China Health and Nutrition Survey (CHNS) data. Regarding the relationship between income poverty and multidimensional poverty, poverty can be summarised as not the mere lack of income but the deprivation of human basic capability, covering both monetary and non-monetary poverty. The statistical analysis on income poverty and multidimensional poverty measurement shows that the coincidence of income poverty and multidimensional poverty is 31%. In other words, 69% of multidimensionally poor households are not considered poor in terms of income poverty. The econometric results indicate that an increase in income can significantly reduce the incidence of multidimensional poverty in each dimension, but the impact is limite. Creation-Date: 2016-02

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