nep-cna New Economics Papers
on China
Issue of 2016‒08‒21
seven papers chosen by
Zheng Fang
Ohio State University

  1. Charitable Donations by China's Private Enterprises By Gustafsson, Björn Anders; Yang, Xiuna; Shuge, Gang; Jianzhong, Dai
  2. Does female labor scarcity encourage innovation?: Evidence from China’s gender imbalance By Tan, Zhibo; Zhang, Xiaobo
  3. Roads to innovation: Firm-level evidence from China By Wang, Xu; Zhang, Xiaobo; Xie, Zhuan; Huang, Yiping
  4. Saving China's Stock Market By Yi Huang; Jianjun Miao; Pengfei Wang
  5. The Consequences of Spatially Differentiated Water Pollution Regulation in China By Zhao Chen; Matthew E. Kahn; Yu Liu; Zhi Wang
  6. International Technology Diffusion via Goods Trade: Theory and Evidence from China By Eugene Beaulieu; Shan Wan
  7. Regulatory Incentives for a Low-Carbon Electricity Sector in China By Flavio Menezes; Xuemei Zhang

  1. By: Gustafsson, Björn Anders (University of Gothenburg); Yang, Xiuna; Shuge, Gang (Beijing Academy of Social Sciences); Jianzhong, Dai (Beijing Academy of Social Sciences)
    Abstract: The number of private enterprises in China has grown rapidly, and donations from them are an important source of philanthropy in China today. This paper investigates donations given in 2011 by private enterprises using a survey of data covering all 31 provincial-level units of China. The data show that philanthropy practised by Chinese private enterprises is widespread, but the amounts of donations are unequally distributed. Furthermore, donations are positively related to a company's profit and in most cases also to the owner's political participation as expressed in membership in the People's Congress (PC) as well as the Chinese People's Political Consultative Conference (CPPCC) at different levels. Donating is also positively related to the presence of a branch of the Communist Party of China and a trade union within the firm. In contrast, there is little support for donations being related to the characteristics of the major owner in the business, such as their gender, age, previous employment experience, party membership or to the governance structure or location of the private firms.
    Keywords: China, philanthropy, donations, private enterprises
    JEL: D64 H84 L26
    Date: 2016–08
  2. By: Tan, Zhibo; Zhang, Xiaobo
    Abstract: Facing scarcity of a production factor, a firm can develop technologies to either substitute the scarce factor (price effect) or complement the more abundant factors (market size effect). Whether the market size effect or the price effect dominates largely depends on the elasticity of substitution among factors according to the theory of directed technical change. However, it is a great challenge to empirically test the theory because factor prices are often endogenously determined. In this paper, we use imbalanced sex ratios across Chinese provinces as a source of identification strategy to test how female labor scarcity affects corporate innovation based on the matched dataset of annual surveys of industrial firms in China and the national patent database. In regions with a large male population, female-intensive industries face more serious problems finding female workers than their male-intensive counterparts. We find that such female shortages have spurred firms in female-intensive industries to innovate more. The pattern is much more evident in industries with low substitution between female and male workers than in those with high substitution, consistent with the predictions of directed technical change theory.
    Keywords: CHINA, EAST ASIA, ASIA, prices, markets, labor, technology, innovation, gender, factor endowment, directed technical change, price effect, market size effect, elasticity of substitution, O31 Innovation and Invention: Processes and Incentives, O32 Management of Technological Innovation and R&, D, J21 Labor Force and Employment, Size, and Structure,
    Date: 2016
  3. By: Wang, Xu; Zhang, Xiaobo; Xie, Zhuan; Huang, Yiping
    Abstract: Although both infrastructure and innovation play an important role in fostering a country’s economic growth, discussion in the literature about how the two are connected is limited. This paper examines the impact of road density on firm innovation in China using a matched patent database at the firm level and road information at the city level. Regional variation in the difficulty of constructing roads is used as an instrumental variable to address the potential endogeneity problem of the road variable. The empirical results show that a 10 percent improvement in road density increases the average number of approved patents per firm by 0.71 percent. Road development spurs innovation by enlarging market size and facilitating knowledge spillover.
    Keywords: CHINA, EAST ASIA, ASIA, infrastructure, innovation, transportation, technology transfer, knowledge diffusion, O31 Innovation and Invention: Processes and Incentives, O33 Technological Change: Choices and Consequences, Diffusion Processes, R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes, R40 Transportation Economics: General,
    Date: 2016
  4. By: Yi Huang (IHEID, The Graduate Institute of International and Development Studies, Geneva); Jianjun Miao (Boston University); Pengfei Wang (The Hong Kong University of Science and Technology)
    Abstract: What were the economic benefits and costs of preventing a stock market meltdown during the summer of 2015 by the Chinese government intervention? We answer this question by estimating the value creation for the stocks purchased by the government between the period starting with the market crash in mid-June and the market recovery in September. We find that the government intervention increased the value of the rescued firms with a net benefit between RMB 5,697 and 6,635 billion, which is about 10% of the Chinese GDP in 2014. The value creation came from the increased stock demand by the government, the reduced default probabilities, and the increased liquidity.
    Keywords: China, Stock Market Crash, Government intervention
    JEL: G14 G15 G18
    Date: 2016–08
  5. By: Zhao Chen; Matthew E. Kahn; Yu Liu; Zhi Wang
    Abstract: China’s environmental regulators have sought to reduce the Yangtze River’s water pollution. We document that this regulatory effort has had two unintended consequences. First, the regulation’s spatial differential stringency has displaced economic activity upstream. As polluting activity agglomerates upstream, more Pigouvian damage is caused downstream. Second, the regulation has focused on reducing one dimension of water pollution called chemical oxygen demand (COD). Thus, local officials face weak incentives to engage in costly effort to reduce other non-targeted but more harmful water pollutants such as petroleum, lead, mercury, and phenol.
    JEL: Q25 Q52
    Date: 2016–08
  6. By: Eugene Beaulieu (University of Calgary); Shan Wan (University of Calgary)
    Abstract: This paper develops a multi-product firm model of international trade with the endoge- nous decisions on export and import to study technology diffusion via goods trade. In our model, a firm’s productivity in a product is a combination of its general ability which applies to all the goods the firm produces and product expertise which applies only to a particular good. Within each firm, the decisions of export and import are based on product expertise. Technology diffuses via goods trade, therefore a firm can improve its productivity by reverse-engineering the imported advanced foreign prod- ucts. We use Chinese trade data to empirically analyze our theory. The results show that a firm will import the product in the category where it already has higher expertise, which is consistent with the theoretical prediction. We find that a firm’s productivity in a category gets improved when it imports in the same category, but only product expertise gets accumulated, not the firm ability.
    Date: 2016–08–12
  7. By: Flavio Menezes (School of Economics, University of Queensland); Xuemei Zhang (School of Economics, Southwestern University of Finance and Economics)
    Abstract: This paper reviews the incentives for pursuing a low-carbon electricity sector that are embedded in China’s regulatory and policy framework. To do so, we first describe the industry structure and the regulatory framework. Second, we explicitly review the policies that were developed to promote energy efficiency and renewable energy. These policies range from the introduction of legal requirements to undertake particular actions to pricing mechanism and financial incentives. The paper reviews evidence that the various programs designed to replace less efficient with more efficient power generation units have already produced impressive results. In addition, there has been steady progress in reducing line losses. Thus, supply-side energy efficient initiatives have been, at least, moderately successful. In contrast, we show that demand-side energy efficiency initiatives seem to have gone nowhere. Finally, we tease out the challenges faced by a sector governed by a myriad of complex arrangements, different institutions and agents who face different and often conflicting incentives for pursuing environmental and energy efficiency objectives.
    Keywords: Regulatory Incentives, Energy Efficiency, Renewable Energy, Electricity Sector
    Date: 2016–08–08

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