nep-cna New Economics Papers
on China
Issue of 2016‒11‒20
five papers chosen by
Zheng Fang
Ohio State University

  1. How Does the Minimum Wage Affect Firm Investments in Fixed and Human Capital? Evidence from China By Haepp, Tobias; Lin, Carl
  2. The Determinants of the Benchmark Interest Rates in China: A Discrete Choice Model Approach By Hyeongwoo Kim; Wen Shi
  3. Trade liberalisation and child labour in China By Zhao, Liqui; Wang, Fei; Zhao, Zhong
  4. A Real Estate Boom with Chinese Characteristics By Edward Glaeser; Wei Huang; Yueran Ma; Andrei Shleifer
  5. Concepts and realities of family farming in Asia and the Pacific By Jingzhong Ye; Lu Pan

  1. By: Haepp, Tobias (Peking University); Lin, Carl (Bucknell University)
    Abstract: This paper empirically analyzes the impact of Chinese minimum wage regulations on the firm decision to invest in physical and human capital. We exploit the geographical and inter-temporal variations of county-level minimum wages in a panel data set of all state-owned and all above-scale non-state-owned Chinese firms covering the introduction of the new Chinese minimum wage regulations in 2004. In our basic regressions including all Chinese firms, we find significant negative effects of the minimum wage on human capital investment rates and no overall effects on fixed capital investment rates. When grouping firms by their ownership structure, we find that these results hold for most firms. Foreign-owned firms are an exception to some extent, because the likelihood that they invest in human capital has not decreased in response to the policy.
    Keywords: minimum wage, firm investment, fixed capital, human capital
    JEL: J31 J38
    Date: 2016–10
  2. By: Hyeongwoo Kim; Wen Shi
    Abstract: This paper empirically investigates the determinants of the two key benchmark interest rates in China using an array of constrained ordered probit models for quarterly frequency data from 1987 to 2013. Specifically, we estimate the behavioral equation of the People's Bank of China that models its decision-making process for revisions of the benchmark deposit rate and the lending rate. Our findings imply that the PBC's policy decisions are better understood as responses to changes in inflation and money growth, while output gaps and the exchange rate play negligible roles. We also implement in-sample fit analyses and out-of-sample forecast exercises. Our empirical findings show robust and reasonably good performances of our models in understanding dynamics of these benchmark interest rates.
    Keywords: Monetary Policy; People's Bank of China; Ordered Probit Model; Deposit Rate; Lending Rate; In-Sample Fit; Out-of-Sample Forecast
    JEL: E52 E58
    Date: 2016–11
  3. By: Zhao, Liqui (Renmin University); Wang, Fei (Renmin University); Zhao, Zhong (UNU-MERIT, IZA Bonn, and Renmin University)
    Abstract: This paper exploits a quasi-natural experiment-the U.S. granting of Permanent Normal Trade Relations (PNTR) to China after China's accession to the World Trade Organization-to examine whether trade liberalisation affects the incidence of child labour in China. PNTR permanently set U.S. duties on Chinese imports at low Normal Trade Relations (NTR) levels and removed the uncertainty associated with annual renewals of China's NTR status. We find that the PNTR was significantly associated with the rising incidence of child labour in China. A one percentage point decrease in average export tariffs raises the odds of child labour by a 1.3 percentage point. The effects are greater for girls, older children, rural children, and children with less-educated parents. The effect of trade liberalisation on the incidence of child labour, however, disappears in the long run, because trade liberalisation can induce exporters to upgrade technology and thus have less demand for unskilled workers.
    Keywords: Child labour, Trade liberalisation, Trade policy uncertainty, Difference-in-differences, China
    JEL: F14 F16
    Date: 2016–10–10
  4. By: Edward Glaeser; Wei Huang; Yueran Ma; Andrei Shleifer
    Abstract: Chinese housing prices rose by over 10 percent per year in real terms between 2003 and 2014, and are now between two and ten times higher than the construction cost of apartments. At the same time, Chinese developers built 100 billion square feet of residential real estate. This boom has been accompanied by a large increase in the number of vacant homes, held by both developers and households. This boom may turn out to be a housing bubble followed by a crash, yet that future is far from certain. The demand for real estate in China is so strong that current prices might be sustainable, especially given the sparse alternative investments for Chinese households, so long as the level of new supply is radically curtailed. Whether that happens depends on the policies of the Chinese government, which must weigh the benefits of price stability against the costs of restricting urban growth.
  5. By: Jingzhong Ye (IPC-IG); Lu Pan (IPC-IG)
    Abstract: "The Asia and the Pacific region has the largest number of family farms in the world. It is home to 60 per cent of the worlds population and to 74 per cent of the world's family farmers, with China alone representing 35 per cent and India 24 per cent of the estimated 570 million farms worldwide (Lowder et al. 2014). Though generally working in small plots of less than 2 hectares on average, family farmers in Asia and the Pacific produce 80 per cent of the total food needed to ensure food security in the region (AFA 2014). It is undeniable that family farming has played a central role in the socio-economic development and well-being of the entire population of Asia and the Pacific. As the reports for the Food and Agriculture Organization of the United Nations (FAO) Regional Conference for Asia and the Pacific stated, 'family farming is essential for the sustainability of agricultural, forestry and fishery production systems... [family farms] are the context in which important decisions on natural resource management are made. They hold the key to achieving food security not only for themselves, but also for the increasingly large number of families that have left the farm sector for employment in other occupations'". (?)
    Keywords: Concepts, realities, family farming, Asia, Pacific
    Date: 2016–11

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