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on China |
| By: | Serkan Arslanalp; Wei Liao; Shi Piao; Dulani Seneviratne |
| Abstract: | This paper finds that financial spillovers from China to regional markets are on the rise. The main transmission channel appears to be trade linkages, although direct financial linkages are playing an increasing role. Without an impact on global risk premiums, China’s influence on regional markets is not yet to the level of the United States, but comparable to that of Japan. If China-related shocks are coupled with a rise in global risk premiums, as in August 2015 and January 2016, spillovers to the region could be significantly larger. Over the medium term, China’s financial spillovers could rise further with tighter financial linkages with the region, including through the ongoing internationalization of the renminbi and China’s capital account liberalization. |
| Keywords: | Financial markets;China;Asia;Regional shocks;Spillovers;Risk premium;Trade integration;Regional integration;China, Spillovers, Equity markets, Foreign Exchange Markets |
| Date: | 2016–08–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/173&r=cna |
| By: | Paul Cashin; Kamiar Mohaddes; Mehdi Raissi |
| Abstract: | China's GDP growth slowdown and a surge in global financial market volatility could both adversely affect an already weak global economic recovery. To quantify the global macroeconomic consequences of these shocks, we employ a GVAR model estimated for 26 countries/regions over the period 1981Q1 to 2013Q1. Our results indicate that (i) a one percent permanent negative GDP shock in China (equivalent to a one-off one percent growth shock) could have significant global macroeconomic repercussions, with world growth reducing by 0.23 percentage points in the short-run; and (ii) a surge in global financial market volatility could translate into a fall in world economic growth of around 0.29 percentage points, but it could also have negative short-run impacts on global equity markets, oil prices and long-term interest rates. |
| Keywords: | China’s slowdown, global financial market volatility, international business cycle, and Global VAR |
| JEL: | C32 E32 F44 O53 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2016-57&r=cna |
| By: | Fengming Chen; Hiroshi Yoshida |
| Abstract: | This study examines the effects of the number of children on the living arrangements of married and widowed individuals using data from the 2008 wave of the Chinese Longitudinal Healthy Longevity Survey. While the literature offers mixed results owing to the endogeneity bias from the number of children, we use sex dummy variables of the first and second parity as instrumental variables to correct the bias and find that the number of children has a statistically significant and positive effect on the probability of cohabitation for both subsamples. The magnitude of this effect in the widowed subsample is about 1.64 times that in the married subsample, indicating that children play a more important role in the case of widowed individuals. |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:toh:tergaa:352&r=cna |
| By: | Allan Dizioli; Jaime Guajardo; Vladimir Klyuev; Rui Mano; Mehdi Raissi |
| Abstract: | After many years of rapid expansion, China’s growth is slowing to more sustainable levels and is rebalancing, with consumption becoming the main growth driver. This transition is likely to have negative effects on its trading partners in the near term. This paper studies the potential spillovers to the ASEAN-5 economies through trade, commodity prices, and financial markets. It finds that countries with closer trade linkages with China (Malaysia, Singapore, and Thailand) and net commodity exporters (Indonesia and Malaysia) would suffer the largest impact, with growth falling between 0.2 and 0.5 percentage points in response to a decline in China’s growth by 1 percentage point depending on the model used and the nature of the shock. The impact could be larger if China’s slowdown and rebalancing coincides with bouts of global financial volatility. There are also opportunities from China’s rebalancing, both in merchandise and services trade, and there is preliminary evidence that some ASEAN-5 economies are already benefiting from these trends. |
| Keywords: | Economic growth;China;Indonesia;Malaysia;Philippines;Singapore;Thailand;Association of Southeast Asian Nations;Spillovers;Regional trade;China’s slowdown and rebalancing, international business cycle, spillovers, Global VAR, Flexible System of Global Models (FSGM), ASEAN-5. |
| Date: | 2016–08–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/170&r=cna |
| By: | Gee Hee Hong; Jaewoo Lee; Wei Liao; Dulani Seneviratne |
| Abstract: | Asia and China made disproportionate contributions to the slowdown of global trade growth in 2015. China’s import growth slowed starkly, driven by both external and domestic factors, including a rebalancing of demand. Econometric results point to weak investment and rebalancing as the main causes of the import slowdown. Spillover effects from China’s rebalancing are estimated for some 60 countries using value-added trade data, and are found to be more negative on Asia and commodity exporters than others. |
| Keywords: | International trade;China;Asia;Imports;Goods;Demand;Consumption;External shocks;Spillovers;Trade integration;trade linkages, trade elasticities, spillovers Author’s E-Mail Address: ghong@imf.org, jlee3@imf.org, wliao@imf.org, dseneviratne@imf.org |
| Date: | 2016–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/105&r=cna |
| By: | Joong Shik Kang; Wei Liao |
| Abstract: | Real imports in China have decelerated significantly over the last two years to below 4 percent (yoy) from double-digit growth in previous years. Weaker investment, partly due to progress in rebalancing from investment to consumption, has been the main factor accounting for about 40–50 percent of slowdown during this period. Weaker exports also account for about 40 percent of slowdown, of which about a quarter is due to stronger RMB. Onshoring—substitution of imported intermediate inputs with domestic production—has not been an additional drag over this period but it continues to slow import growth at a similar pace as previous periods. There is large uncertainty about the impact of rebalancing on the import slowdown due to difficulties in identifying the counterfactual nonrebalancing path. |
| Keywords: | Imports;China;Goods;Services;Demand;Consumption;Exports;Production;Imports; Rebalancing; Exchange Rate; Onshoring |
| Date: | 2016–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/106&r=cna |
| By: | Debin Ma; Weipeng Yuan |
| Abstract: | The Tong Taisheng (统泰升) merchant account books in Ningjin county of northern China in 1800-1850 constitute the most complete and integrated surviving archive of a family business for pre-modern China. They contain unusually detailed and high-quality statistics on exchange rates, commodity prices and other information. Utilized once in the 1950s, the archive has been left largely untouched until our recent, almost accidental rediscovery. This article introduces this unique set of archives and traces the personal history of the original owner and donor. Our story of an archive encapsulates the history of modern China and how the preservation and interpretation of evidence and records of Chinese economic statistics were profoundly impacted by the development of political ideology and in modern and contemporary China. We briefly discuss the historiographical and epistemological implication of our finding in the current Great Divergence debate. |
| Keywords: | Tong Taisheng; Ningjin; Rong Mengyuan; merchant account books; economic statistics. |
| JEL: | C1 N0 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:67552&r=cna |
| By: | Atif Ansar; Bent Flyvbjerg; Alexander Budzier; Daniel Lunn |
| Abstract: | The prevalent view in the economics literature is that a high level of infrastructure investment is a precursor to economic growth. China is especially held up as a model to emulate. Based on the largest dataset of its kind, this paper punctures the twin myths that, first, infrastructure creates economic value, and, second, China has a distinct advantage in its delivery. Far from being an engine of economic growth, the typical infrastructure investment fails to deliver a positive risk adjusted return. Moreover, China's track record in delivering infrastructure is no better than that of rich democracies. Where investments are debt-financed, overinvesting in unproductive projects results in the buildup of debt, monetary expansion, instability in financial markets, and economic fragility, exactly as we see in China today. We conclude that poorly managed infrastructure investments are a main explanation of surfacing economic and financial problems in China. We predict that, unless China shifts to a lower level of higher-quality infrastructure investments, the country is headed for an infrastructure-led national financial and economic crisis, which is likely also to be a crisis for the international economy. China's infrastructure investment model is not one to follow for other countries but one to avoid. |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1609.00415&r=cna |
| By: | Wai-Yip Alex Ho; Chun-Yu Ho |
| Abstract: | We find that from 1995 to 2002 in China, the dispersion of wealth decreased, the moneywealth ratio increased for all wealth levels and the aggregate money-output ratio increased. We develop a two-asset dynamic general equilibrium model in which households face a portfolio adjustment cost and a borrowing constraint. We find that financial development lowers the dispersion of wealth by reducing the precautionary motive of households. In addition, tight monetary policies increase the value of money and thus increase the moneywealth ratio for all wealth levels and the aggregate money-output ratio. |
| Keywords: | Inflation;China;Financial markets;Income distribution;Transition economies;Econometric models;Inflation, Borrowing Constraint, Adjustment Cost, Heterogeneous Agents, Wealth Distribution |
| Date: | 2016–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/132&r=cna |
| By: | Ian W.H. Parry; Baoping Shang; Philippe Wingender; Nate Vernon; Tarun Narasimhan |
| Abstract: | For the 2015 Paris Agreement on climate change, China pledged to reduce the carbon dioxide (CO2) intensity of GDP by 60–65 percent below 2005 levels by 2030. This paper develops a practical spreadsheet tool for evaluating a wide range of national level fiscal and regulatory policy options for reducing CO2 emissions in China in terms of their impacts on emissions, revenue, premature deaths from local air pollution, household and industry groups, and overall economic welfare. By far, carbon and coal taxes are the most effective policies for meeting environmental and fiscal objectives as they comprehensively cover emissions and have the largest tax base. |
| Keywords: | Climatic changes;China;Greenhouse gas emissions;Trading systems;Fiscal policy;Climate policy;Paris Agreement, carbon tax, China, air pollution, coal tax, emissions trading, incidence, welfare effects |
| Date: | 2016–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/148&r=cna |
| By: | Min Liao; Tao Sun; Jinfan Zhang |
| Abstract: | China’s financial system has become very large, diversified, and interconnected. This changing financial landscape could potentially produce systemic risks, arising primarily from growing financial interconnectedness. The paper argues that, to address the potential systemic risks, Chinese authorities should further strengthen internal coordination, notably by institutionalizing better information collection and sharing among regulators, as well as enhancing coordinated and comprehensive analysis of systemic risk. |
| Keywords: | Financial sector;China;Stock markets;Housing;Markets;Shadow banking;Financial institutions;Economic integration;Systemic risk assessment;financial landscape, risks, policy coordination |
| Date: | 2016–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/181&r=cna |