nep-cna New Economics Papers
on China
Issue of 2017‒01‒01
thirteen papers chosen by
Zheng Fang
Ohio State University

  1. Effect of Internal Migration on Air and Water Pollution in China By Shuddhasattwa Rafiq; Ingrid Nielsen; Russell Smyth
  2. The Increasing Inequality of Wealth in China, 2002-2013 By John Knight; LI Shi
  3. Evaluating the Impacts of Traditional Biomass Energy Use on Agricultural Production in Sichuan, China By Chen, Qiu; Mirzabaev, Alisher
  4. The Persistence of Trade Policy in China After WTO Accession By Jason Garred
  5. Fiscal Decentralisation, the Knowledge Economy and School Teachers’ Wages in Urban China By Yi Long; Chris Nyland; Russell Smyth
  6. The Effect of House Price on Stock Market Participation in China: Evidence from the CHFS Micro-Data By Xiaoyu Chen; Xiaohao Ji
  7. Language, Health Outcomes and Health Inequality By Haining Wang; Zhiming Cheng; Russell Smyth
  8. Housing System and Urbanization in the People’s Republic of China By Chen, Jie
  9. Effect of Particulate Air Pollution on Coronary Heart Disease in China: Evidence from Threshold GAM and Bayesian Hierarchical Model By Xiaoyu Chen;
  10. Stock Market Development and Economic Growth: Empirical Evidence from China By Lei Pan; Vinod Mishra
  11. Human Capital and Urbanization in the People’s Republic of China By Xing, Chunbing
  12. Basis for Bank Credit Allocation in China’s Private Sector: Political Connection or Firm Performance? By Wenli Cheng; Yongzheng Wu
  13. Tariff Scares: Trade policy uncertainty and foreign market entry by Chinese firms By Crowley, M.; Song, H.; Meng, N.

  1. By: Shuddhasattwa Rafiq; Ingrid Nielsen; Russell Smyth
    Abstract: We examine the effect of inter-provincial migration on air and water pollution for a panel of Chinese provinces over the period 2000-2013. To do so, we employ linear and non-linear panel data models in a Stochastic Impacts by Regression on Population, Affluence and Technology (STIRPAT) framework. Our findings from both the linear and non-linear models suggest that inter-provincial migration has contributed to air and water pollution. Results from the second-generation linear panel data models suggest that for every additional 10,000 inter-provincial migrants, chemical oxygen demand (COD) increases 0.33-0.58 per cent and sulphur dioxide (SO2) increases 0.15-0.33 per cent. Our results from the non-linear threshold panel model are that for every additional 10,000 inter-provincial migrants, COD increases 0.2-0.5 per cent and SO2 increases 0.10-0.20 per cent. These estimates mean that over the period 2000-2013 average interprovincial migration was responsible for 7-12.4 per cent of wastewater discharge and 3.2-7 per cent of SO2 emissions in China based on the second-generation linear panel data models and 4.3-10.7 per cent of wastewater discharge and 2.1-4.3 per cent of SO2 emissions based on the non-linear threshold panel model.
    Keywords: China, internal migration, air pollution, water pollution.
    JEL: J10 Q20 Q25 R11 R23
    Date: 2016–11
  2. By: John Knight; LI Shi
    Abstract: The inequality of wealth in China has increased rapidly in recent years. Prior to 1978 all Chinese households possessed negligible wealth. China therefore presents a fascinating case study of how inequality of household wealth increases as economic reform takes place, marketisation occurs, and capital accumulates. Wealth inequality and its growth are measured and decomposed using data from two national sample surveys of the China Household Income Project (CHIP) relating to 2002 and 2013. Techniques are devised and applied to measure the sensitivity of wealth inequality to plausible assumptions about under-representation of and under-reporting by the wealthy. An attempt is made to explain the rising wealth inequality in terms of the relationships between income and wealth, house price inflation, differential saving, and income from wealth.
    Keywords: China; wealth inequality and its decomposition; top-tail income correction; relationships between income and wealth; house price inflation; differential saving; income from wealth
    JEL: C80 D31
    Date: 2016–12–20
  3. By: Chen, Qiu; Mirzabaev, Alisher
    Abstract: As crop straw and firewood are generated as by-products of food production systems, they are perceived to be sustainable energy sources that do not threaten food security by Chinese government for a long time. However, the time spent on collecting straw and firewood may create a burden on rural household, as it could reduce the available labor inputs for agricultural production, which in turn, possibly brings negative impact on food security. Building on an integrated agriculture-energy production system, a Symmetric Normalized Quadratic (SNQ) multi-output profit function (which includes labor allocations as quasi-fixed factors) is estimated to investigate the impacts of traditional biomass energy use on agricultural production in this paper. The negative signs of the calculated cross-price elasticities of supply (agricultural products and biomass energy) confirm that the relationship between biomass collection and agricultural production is competition. Moreover, the cross-price elasticities of biomass collection with respect to inputs are positive, implying that indirect link between biomass collection and agricultural production perhaps lies in household consumption decisions. The important implication of this study is that potential policy interventions for developing biomass energy in rural China could aim at enhancing food security by improving household motivation of engaging in agricultural production and slowing down the competition between biomass collection and agricultural production. It is suggested that government should attach more importance to simultaneously promote the prices of agricultural products and control the prices of intermediate inputs.
    Keywords: biomass collection, agricultural production, labor allocation, China, Demand and Price Analysis, Farm Management, Resource /Energy Economics and Policy, O13, Q01, Q12, Q41,
    Date: 2016–12
  4. By: Jason Garred (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: Import tariffs have fallen steeply worldwide over the last several decades, but has trade policy persisted through a rise in the use of other instruments? I study this question in the context of China's 2001 accession to the World Trade Organization, using panel data on Chinese export policies. I find that after its entry into WTO, the distribution of China's export restrictions across industries increasingly resembles the inverse of its pre-WTO import tariff schedule. The evidence suggests that increases in export restrictions are likely to have partly restored China's pre-WTO pattern of industrial protection.
    JEL: F13 F14 O13 O24
    Date: 2016
  5. By: Yi Long; Chris Nyland; Russell Smyth
    Abstract: We examine how fiscal decentralisation and progress towards the development of a knowledge-intensive economy has impacted on teachers’ wages in China, utilising a panel dataset of 31 provincial administrations from 2001 to 2013. We find that fiscal decentralisation has a negative impact on teachers’ wages and this effect is further enhanced by a deepening of the knowledge intensity of the economy, while knowledge economy itself has no significant impact on teachers’ wages. The findings suggest that incentives being offered to local administrators need to be revisited if the national government is convinced of the need to increase teacher quality in ways suited to the knowledge economy China wishes to construct.
    Keywords: fiscal decentralisation, knowledge economy, teachers, wages, human capital, China
    JEL: H73 J31 J45
    Date: 2016–11
  6. By: Xiaoyu Chen; Xiaohao Ji
    Abstract: This is an empirical study on the effect of house price on stock-market participation and its depths based on unique China Household Finance Survey (CHFS) data in 2011 and 2013 including 36213 sample households. We mainly found that, with an increase of one thousand RMB per square meter in macro house price, the probability to participate in the stock market will increase by 5.4% before controlling for wealth effect and 2.84% afterwards, indicating the existence of wealth effect. The participation depths of the stock-total asset ratio is expected to decrease by 0.23% and absolute stock asset is observed to decrease by 5.8 thousand RMB in response to one thousand RMB increase of per square meter house price. The effect of house price on participation decision is also related to housing area, and the negative effect of house price on stock market participation depths gets more intense with the increase of the stock-total asset ratio.
    Date: 2016–12
  7. By: Haining Wang; Zhiming Cheng; Russell Smyth
    Abstract: We examine the health returns to proficiency in Mandarin in urban China using longitudinal data from the China Family Panel Studies. We find that greater proficiency in Mandarin improves self-reported health, mental health and capacity to perform activities of daily living. While we find that Mandarin proficiency increases incidence of chronic disease, Mandarin proficiency lagged two years is associated with reduced incidence of chronic disease. We also examine the relationship between Mandarin proficiency and health inequality and find that differences in Mandarin proficiency contribute to inequalities in health outcomes at the community level, district level and within a gender-age-education defined reference group. The decomposition results show that differences in Mandarin proficiency account for between 12 per cent and 28 per cent of health inequality, depending on the health indicator. Our results suggest that promoting ‘standard Mandarin’ can serve as a vehicle to improve health outcomes and reduce health inequality.
    Keywords: China; Mandarin proficiency; health outcomes; health inequalities; human capital
    JEL: I12 I14 I24 I26
    Date: 2016–11
  8. By: Chen, Jie (Asian Development Bank Institute)
    Abstract: This paper examines how transformations in the housing system in the People’s Republic of China (PRC) influence the PRC pattern of urbanization. It first discusses how housing policies determine the supply and demand of housing in urban PRC and subsequently analyzes how the changes in the mode of housing provision have affected rural–urban migration, intercity labor mobility, the financing of urban infrastructure, and general urban economic activities in the PRC. The PRC experience of the interaction between the housing system and urbanization is unique, but it clearly indicates that an effective housing system that can responsively provide adequate and affordable housing is crucial to the success of inclusive and equitable urbanization.
    Keywords: housing policy; rural-urban migration; intercity labor mobility; urban infrastructure; urbanization; inclusive urbanization; equitable urbanization
    JEL: R30 R38
    Date: 2016–12–22
  9. By: Xiaoyu Chen;
    Abstract: There are few multicity studies to address the effect of short-term effect of particulate matter air pollution on daily Coronary Heart Disease (CHD) mortality in developing countries, much fewer to further discuss its threshold and seasonal effect. This study investigates the season-varying association between particulate matter less than or equal to 10 μm in aerodynamic diameter (PM10) and daily CHD mortality in seven cities of China. Time series threshold Poisson regression model is specified to estimate the health effect for four cities with the threshold effect, and conventional linear Poisson model is used to analyze the effect for three cities without threshold. We apply the Bayesian hierarchical model to pool the city-specific estimates into overall level. On average, a 10μg/m3 increase of the moving average concentrations of current-day and previous-day PM10 is associated with an increase of 0.81% (95% Posterior Interval, PI: -0.04%, 1.67%) in daily CHD mortality for all the cities as a whole. The associations are smaller than reported in developed countries or regions with lower polluted level, which is consistent to the findings in the literature. The hazardous effect are higher in hot summer and cold winter (1.15% and 0.89%) but lower in relative warm spring and fall (0.85% and 0.69%). In summary, we found significant associations between short-term exposure to PM10 and CHD mortality in China. The sensitivity analyses in the study support the robustness of our results.
    Date: 2016–12
  10. By: Lei Pan; Vinod Mishra
    Abstract: It is important to understand the interplay between stock market and real economy to figure out the various channels through which financial markets drive economic growth. In the current study we investigate this relationship for Chinese economy, the fastest growing and largest emerging economy in the world. Using the methodology of unit root testing in the presence of structural breaks and using an ARDL model, we find that Global Financial Crises had a significant impact on both China’s real sector and financial sector. Our findings also suggest that Shanghai A share market has a long run negative association with the real sector of the economy, however the magnitude of impact is tiny and can be ignored. We conjecture that this negative relationship is the proof of so called existence of irrational prosperity on the stock market and the bubbles in China’s financial sector. We do not find any evidence of a relationship between stock market and real economy in the short run. Toda Yamamoto causality test supports the demand-driven hypothesis that economic growth spurs development of stock markets for China’s B share market.
    Keywords: China, Stock Market, Unit Root, Cointegration, Economic Growth
    JEL: O40 G10
    Date: 2016–11
  11. By: Xing, Chunbing (Asian Development Bank Institute)
    Abstract: The relationship between human capital development and urbanization in the People’s Republic of China (PRC) is explored, highlighting the institutional factors of the hukou system and a decentralized fiscal system. Educated workers disproportionately reside in urban areas and in large cities. Returns to education are significantly higher in urban areas relative to those in rural areas, as well as in large, educated cities relative to small, less-educated cities. In addition, the external returns to education in urban areas are at least comparable to the magnitude of private returns. Rural areas are the major reservoir for urban population growth, and the more educated have a higher chance of moving to cities and obtaining urban hukou. Relaxing the hukou restriction, increasing education levels of rural residents, providing training for rural–urban migrants, and guaranteeing equal opportunity for all residents are necessary for a sustainable urbanization process in the PRC. In terms of health, rural–urban migration is selective in that healthy rural residents choose to migrate. Occupational choices and living conditions are detrimental to migrants’ health, however. While migration has a positive effect on migrant children, its effect on “left-behind” children is unclear.
    Keywords: Human capital; health; education; development; hukou system; urbanization
    JEL: I12 J24 R23
    Date: 2016–12–22
  12. By: Wenli Cheng; Yongzheng Wu
    Abstract: We study the roles of political connection and firm performance in bank credit allocation in China’s private sector. Based on data from the 9th Nationwide Survey of Privately Owned Enterprises in China conducted in 2010, we find that: (1) Politically connected firms were more likely to gain access to bank credit, but good firm performance did not seem to have improved firms’ chances of obtaining bank loans; (2) Good performance did help firms get more loans - of the firms that had access to bank credit, those with better performance in the previous year had larger amounts of bank loans; and (3) politically connected firms performed better; and better performance had a small effect of helping the owner establish political connection. These suggest that political connection was used as a signal for credit worthiness that entails not only good performance, but also some other intangible assets unrelated to firm performance (e.g., ability to obtain government bailouts) which would protect the firm from financial ruin.
    Keywords: political connection, firm performance, access to bank credit, private firms in China
    JEL: G21
    Date: 2016–11
  13. By: Crowley, M.; Song, H.; Meng, N.
    Abstract: We estimate how a rise in uncertainty about future tariff rates impacts firm decisions to enter into and exit from export markets. Using Chinese customs transactions between 2000-2009, we exploit time-variation in product-level trade policy and find that Chinese firms are less likely to enter new foreign markets and more likely to exit from established foreign markets when their products are subject to increased trade policy uncertainty. Our analysis is based on the phenomenon of “tariff echoing" - after a tariff hike in one country, another country is likely to raise its tariff on the same product. Overall, we find that if there had been no trade policy uncertainty created by the use of contingent tariffs, Chinese entry into foreign markets would have been roughly 2 percent higher per year. We use our model to counterfactually estimate how much entry by Chinese firms over 2001-2009 was due to future trade policy certainty provided by membership in the WTO.
    Keywords: Trade policy uncertainty, trade agreements, China shock, Chinese exporters, antidumping, information spillovers
    JEL: F12 F13 F14
    Date: 2016–12–16

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