nep-cna New Economics Papers
on China
Issue of 2016‒10‒16
four papers chosen by
Zheng Fang
Ohio State University

  1. Intellectual Property Rights Protection, Ownership, and Innovation: Evidence from China By Lily Fang; Josh Lerner; Chaopeng Wu
  2. Mirror trade statistics between China and Latin America By Benita, Francisco; Urzúa, Carlos M.
  3. The European Union and China: The Need for a More Politicised Relationship By Kerry Brown and Sam Beatson
  4. What consequences would a post-Brexit China-UK trade deal have for the EU? By Alicia García-Herrero; Jianwei Xu

  1. By: Lily Fang; Josh Lerner; Chaopeng Wu
    Abstract: Using a difference-in-difference approach, we study how intellectual property right (IPR) protection affects innovation in China in the years around the privatizations of state-owned enterprises (SOEs). Innovation increases after SOE privatizations, and this increase is larger in cities with strong IPR protection. Our results support theoretical arguments that IPR protection strengthens firms’ incentives to innovate and that private sector firms are more sensitive to IPR protection than SOEs.
    JEL: G24 J33 L26
    Date: 2016–09
  2. By: Benita, Francisco (Tecnológico de Monterrey); Urzúa, Carlos M. (Tecnológico de Monterrey)
    Abstract: This paper contrasts the mirror trade statistics between China and twenty Latin American countries during the 2009-2014 years, after adding to the Chinese side the trade figures corresponding to Hong Kong, and adjusting for some valuation issues. Using the resulting panel data, the paper then explores some of the possible explanatory variables, in the case of Latin America, which can account for the significant trade misinvoicing that is found among most of the countries involved.
    Keywords: China, Latin America, mirror statistics, trade misinvoicing, statistical capacity, financial openness
    JEL: F14 H83 O53 O54
    Date: 2016–01
  3. By: Kerry Brown and Sam Beatson
    Abstract: China and the European Union (EU) in 2016 have one of the largest economic relationships to the world, with a network of strategic dialogues covering areas from environment to agriculture. Despite this, their relationship is a hard one to encapsulate. President Xi Jinping's idea of a ‘civilisational’ partnership seem abstract, but at least opens up the possibility of the EU conceptualizing its relationship with China as not solely transactional, but something more political. This paper argues that conferring Market Economy Status on China will be a key issue in marking this transition between the EU seeing its link with China solely in economic terms, and looking for a stronger political dimension. The conclusion is that both sides can no longer pretend they are simply trade blocks interacting with each other.
    Date: 2016–10–10
  4. By: Alicia García-Herrero; Jianwei Xu
    Abstract: Brexit means that the United Kingdom could be able to run its own trade policy, which opens the door for the potential negotiation of a free trade agreement between the UK and China. Alicia Garcia-Herrero and Hianwei Xu show that a UK-China FTA will be neither easy nor clearly advantageous for the UK - It will be difficult for the UK to reach an agreement with China without first establishing a new post-Brexit partnership with the EU. Negotiating tariffs with other WTO members will be a pre-condition if the UK exits the EU customs union, and this process will require time and effort. Even if the UK reaches an agreement with China, the UK cannot serve as a back door for Chinese products to enter the EU, because the EU is very likely use rules of origin to close any such loopholes. The UK and the other EU economies differ in most of their exports to China, so there would be very limited substitution between them. It therefore seems that establishing a new trade relationship with the EU would be a more urgent task for the UK in the post-Brexit world, rather than an FTA with China. Under such circumstances, the UK might need to postpone its trade negotiations with other economies outside of EU, including China. This goes beyond the current discussion of the illegality of the UK starting to negotiate trade deals before it leaves the EU. The issue is whether it makes economic sense for the UK to do so, and the answer is no. In fact, the more the UK reaches an independent favourable trade agreement with China after Brexit, the harder it will be for the UK to strike a good deal with EU. In the meantime, it is also urgent for the UK to negotiate with the main WTO members on tariffs, because outside the EU, the UK might not participate in the EU schedule of concessions. The best strategy for the UK would be to negotiate with the other WTO members with the EU-based tariffs as a starting point, to avoid negotiating over terms separately and also to maintain a close relationship with the EU.
    Date: 2016–10

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