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on China |
| By: | Li, Wenchao (National University of Singapore); Song, Changcheng (National University of Singapore); Xu, Shu (Southwestern University of Finance and Economics); Yi, Junjian (National University of Singapore) |
| Abstract: | This paper bridges the financial market and the marriage market using a reference-dependent mechanism. Male-biased sex ratios induce families with sons to hold more risky assets, since competitive marital payment in a tight market raises the reference level of marriage expenditure for such families. Using the 2013 China Household Finance Survey data, we find that a 0.1 increase in the sex ratio raises the probability of participating in the stock market by 25.7 percent, or the stock share of liquid wealth by 42.7 percent for families with a son; there appears no effect for families with a daughter. |
| Keywords: | household portfolio choice, reference dependence, prospect theory, sex-ratio imbalance, difference-in-differences estimate |
| JEL: | D03 G02 G11 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10528&r=cna |
| By: | Hongyi Chen (Hong Kong Institute for Monetary Research); Kenneth ChowAuthor-Workplace-Name: Hong Kong Monetary Authority; Peter Tillmann (Justus Liebig University Giessen) |
| Abstract: | Analyzing monetary policy in China is not straightforward because the People¡¯s Bank of China (PBoC) implements policy by using more than one instrument. In this paper we use a Qual VAR, a conventional VAR system augmented with binary policy announcements, to extract a latent indicator of tightening and easing pressure, respectively, for China. The model acknowledges that policy announcements are endogenous and summarizes policy by a single indicator. The Qual VAR allows us to study the impact of monetary policy in terms of unexpected changes in these latent variables, which we identify using sign restrictions. We show that the transmission of monetary policy impulses to the rest of the economy is remarkably similar to the transmission process in advanced economies in terms of both output growth and inflation despite a very different monetary policy framework. We find that bank loans are not sensitive to policy changes, which implies that window guidance is still a necessary policy tool. We also find that the impact of monetary policy shocks is asymmetric in terms of asset prices, that is, the asset price reactions differ in their sensitivity to tightening shocks and easing shocks, respectively. In particular, an easing of monetary conditions boosts stock prices while a tightening shock leaves stock prices unaffected. This shows that monetary policy is not a suitable tool to stabilize asset prices, which raises implications for financial stability and macroprudential policy. |
| Keywords: | China, monetary policy, Qual VAR, transmission mechanism, asset prices, financial stability |
| JEL: | E4 E5 C3 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:062016&r=cna |
| By: | Hongyi Chen (Hong Kong Institute for Monetary Research); Michael Funke (Hamburg University Department of Economics and CESifo Munich); Andrew Tsang (Hong Kong Institute for Monetary Research) |
| Abstract: | The ongoing producer price deflation in China and other Asian economies is a genuine concern. In particular, China¡¯s producer prices are down a cumulative 12.7 percent from their peak in 2011, extending the stretch of negative producer price readings for 52 months in a row. Given the problem of overcapacity and heavy debt burden, this persistent decline in the producer price index could hurt corporate revenue, which limits fixed investments and the country's overall growth. Against this background, the paper analyses the determinants of the producer price decline across 11 Asian economies, and finds that the recent synchronous and protracted producer price deflation is driven by weak production growth, sharp declines in commodity prices, spillover effects from China¡¯s producer price deflation and policy uncertainty and, to a lesser extent, exchange rate pass-through. Since China is at the heart of the region¡¯s producer price deflation challenge, we also discuss the necessary structural adjustments in China to cope with the decline and head off deflationary threats. |
| Keywords: | Producer prices, international spillovers, deflation, Asia, structural adjustments, China |
| JEL: | C23 C32 E31 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:152016&r=cna |
| By: | Kou, Kou; Kroll, Henning |
| Abstract: | China has experienced a surge in innovation output in which state-owned enterprises (SOE) play an essential role. Using panel data of Chinese listed firms, this paper examines the influence of the state ownership on innovation output at the firm level. Controlling for size, we analyse the effects of central and local government control on the number of firms' patent applications in different time periods. Doing so, standard assumptions on state ownership's inhibiting character are confirmed. However, we then qualify these finding by running separate models for different regions and sectors find that the impact of state-control on innovation performance depends on a number of conditions. More precisely, state control of firms has a negative impact on innovation output in particular in China's Northeast region and in mid-tech sectors whereas under other circumstances it does either not matter or can even exert a positive influence. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisidp:55&r=cna |
| By: | Michael, Bryane; Goo, Say-Hak |
| Abstract: | Hong Kong contributes to poor corporate governance on the Mainland. Could regulatory reform in Hong Kong help improve corporate governance standards/practices (and thus firm value) on the Mainland? In this paper, we discuss ways to incentivize Mainland firms to improve their corporate governance by adopting numerous market-value increasing reforms in Hong Kong. These include the limited extra-territorial application of corporate governance provisions, changes to the Listing Rules to ‘contract’ for better corporate governance, and incentives to collect better corporate governance data. Other reforms include increasing financial transparency (particularly about corporate ownership and control), reducing financial firms’ incentives to trade in shell corporations, regulating relationships with tax havens, and encouraging the redrafting of China’s 2002 Code of Corporate Governance. We provide 31 recommendations and estimate that these recommendations can increase market values on the Mainland by 7% (or in value of roughly $330 billion), while improving the value-added of Hong Kong’s own incorporation/corporate services companies. |
| Keywords: | Chinese corporate governance,extra-territoriality,Hong Kong,Listing Rules |
| JEL: | G34 N25 M14 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:149992&r=cna |
| By: | Scheffel, Juliane; Zhang, Yiwei |
| Abstract: | The ageing population resulting from the one-child policy and the massive internal migration in China pose major challenges to elderly care in rural areas where elderly support is based on a traditional inter-generational family support mechanism. We use data from the first two waves of the China Health and Retirement Longitudinal Study to examine how migration of an adult child affects the emotional health of elderly parents left-behind. We identify the effects by applying fixed-effects and instrumental variable regressions which both identify the effect based on different sources of variation. We find that migration significantly reduces overall life-satisfaction by 8.8 percent and leads to an 8.7 (12 percent) percent higher probability of suffering from depressive symptoms (loneliness). Emotional health outcomes drastically deteriorate with reduced emotional support. In contrast to other developing countries, remittances cannot buffer the negative effects of emotional health. As emotional health is a key determinant of the overall health status, our findings have significant impacts for rural areas. |
| JEL: | I15 J14 O15 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145663&r=cna |
| By: | Wang, Qingtao; Chen, Kevin Z.; Chiang, Longwen; Xie, Xuanli |
| Abstract: | Industrial wages have increased significantly in China in recent years. At the same time, there have been widening gaps in wages across provinces. These trends are likely to prompt company headquarters to relocate. The relocation choices of headquarters are likely to change under different ownership, as a result of variations in their internal capabilities as well as the distinctive nature of their businesses. This paper is the first attempt to examine the effects of rising wages on headquarters’ relocation by ownership. Data were obtained from the China Statistical Yearbook and the Annual Survey of Industrial Enterprises for the period 1998 through 2008. These data allow for differentiation among companies with regard to five types of enterprises: foreign owned, Sino-foreign owned, state owned, domestically joint owned, and privately owned. We use a conditional logit model to identify factors to determine which province headquarters chose to relocate. In addition, we consider the impact of these choices on the “minimum wage standard†introduced in 2004. Results indicate that wages insignificantly affected the relocation choice of all types of headquarters before 2004. After 2004, on average, headquarters were more likely to relocate to low-wage provinces, as predicted by “overall cost leadership.†However, we also find that relocation choices are significantly affected by ownership type. While privately owned and state-owned enterprises are likely to relocate to areas with lower wages, foreign-owned headquarters tend to relocate to high-wage areas, as predicted by the “efficiency wage theory.†Wages did not affect the relocation choices of Sino-foreign-owned companies, but had a negative effect on those of domestically joint-owned headquarters. |
| Keywords: | wages, industrialization, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1593&r=cna |
| By: | Daoju Peng (Capital University of Economics and Business); Kang ShiAuthor-Workplace-Name: Chinese University of Hong Kong; Juanyi XuAuthor-Workplace-Name: Hong Kong University of Science and Technology |
| Abstract: | Chinese real business cycle (RBC) exhibits a unique pattern, which is characterized by moderate consumption volatility, substantially low investment volatility, and acyclical trade balance. These features are quite different from business cycles in other emerging markets and cannot be explained by existing emerging market RBC theories. Motivated by the facts that China undertook dramatic and persistent reform on state-owned enterprises (SOE) in the last 30 years, we construct a full-fledged general equilibrium model with SOE sector and show that the model does a fairly good job in accounting for the above features. The two main driving forces are: (1) shock to the share of downstream SOE in manufacturing sectors and (2) shock to upstream SOE's monopolistic position. These two shocks can explain 85 percent of output volatility, 79 percent of consumption volatility, 72 percent of investment volatility, and 57 percent of the volatility of trade balance-to-output ratio. Relatively speaking, standard shocks such as permanent productivity shock, credit shocks, country risk premium shocks, and preference shocks are less important in explaining Chinese economic fluctuations. Our results show that Chinese RBC may be affected substantially by domestic policies. |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:022016&r=cna |
| By: | Alfred Wong (Hong Kong Monetary Authority); David Leung (Hong Kong Monetary Authority); Calvin Ng (Hong Kong Monetary Authority) |
| Abstract: | The rapid rise in the price of housing in Mainland China in the past decade raised concerns over the potential risks to the economy, leading to the implementation of a policy that placed a limit on housing purchases in many cities in 2010 and 2011. This paper, by using the difference-in-difference method, investigates the effect of the policy on firm default risks. It shows that the impact of housing purchase limits is not homogeneous across cities. While the policy has significantly lowered firm default risks in big cities (especially those cities caught in the first two rounds of policy implementation), it is ineffective in relatively small cities and, in some cases, even caused firm default risks to rise. Furthermore, the effectiveness of the purchase limit on firm default risks becomes weaker when sectors those firms belong to have limited links to the real estate sector. While the purchase limit focuses on default risks arising from the demand side, the risk arising from the housing supply side remains under the current fiscal system and land sales mechanism. Therefore, the housing purchasing limit should be supplemented by fiscal reforms that could mitigate land price increase and hence lower default risks in the long run. |
| Keywords: | Purchase Limit; Real Estate; Default Risk; Difference in Difference |
| JEL: | C23 G32 R38 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:172016&r=cna |
| By: | Owen, John M. |
| Abstract: | How may we best understand the effects of the ongoing rise of China on the future of liberal democracy in East Asia? Scholars who stress hegemony tend to predict a less democratic region, while those who stress diffusion tend to predict more democracy. This paper does not attempt to resolve the question, but argues for the use of evolutionary logic to help us with general questions concerning the regional and global waxing and waning of domestic regime types. Evolution's claims about the variety, selection, and retention of traits (in this case, democracy), rightly understood, can accommodate not only the standard international diffusion mechanisms of competition, learning, and emulation, but also that of coercion. The concepts of co-evolution and niche construction are crucial: an agent may modify its environment such that one or more traits of that agent enjoy a greater reproductive advantage. Agency, then, may be not an escape from evolution but a participation in co-evolution. Intentionally or not, rulers of states may construct niches that affect the longevity of the regime through which they rule. Intentional niche constructors may promote their domestic regime, or block the advance of a threatening regime, in their own state or their neighbors via various means. I consider phenomena to which evolutionary logic would direct us concerning China and Asia today, and suggest that China's leaders are engaging in domestic and regional niche construction to preserve the power monopoly of the Chinese Communist Party. |
| Keywords: | regime type,evolution,co-evolution,niche,China,Regimetyp,Evolution,Koevolution,Nische,China |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbtci:spiv2016108&r=cna |
| By: | Ronald Busse (Fresenius University of Applied Sciences); Malcolm (Cambridge Judge Business School, University of Cambridge); Shuming (Nanjing University) |
| Abstract: | The main thrust of this article is to trace the roots of US-driven 'Human Resource Management' (HRM) school of thought which now become widely institutionalized in China, up to the present day. It examines the diffusion of management knowledge over the period to Chinese business, which involved in turn, Scientific Management (SM), Human Relations (HR) and Human Resource Management (HRM) respectively, from the interwar years onwards, by using a bibliometric analysis of Chinese- language sources, searching a number of data-bases now available. We scanned the international, as well as Chinese, literature in order to support a conjecture of a HR route toward China and how it morphed into HRM and go on to conclude that there was by the end of the year 2015 still a significant output of academic publications with references to both HR and HRM respectively but that we must be cautious in putting forward a firm conclusion. |
| Keywords: | China, human relations, human resource management, people-management, scientific management, workplace |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:jbs:wpaper:201602&r=cna |
| By: | Li, Xin (Delft University of Technology); Kleinhans, Reinout (Delft University of Technology); van Ham, Maarten (Delft University of Technology) |
| Abstract: | This paper investigates the place attachment of residents in declining neighbourhoods that are facing demolition in Shenyang, China. Through in-depth interviews with homeowners living in danwei communities, or urban villages, at the pre-demolition phase, this paper reveals the strong connection between place attachment and both positive and negative lived experiences. The homeowners cleverly mobilise stable neighbourhood features and the challenges brought by neighbourhood changes to relieve their life constrains, such as the form of dwellings, low living costs and the place identity, which contributes to the development of place attachment. However, various forms of neighbourhood decline have negative effects on their place attachment. Urban redevelopment, therefore, confronts residents with a dilemma concerning the relative importance of their sense of rootedness in the neighbourhood and the desire to relocate to achieve better living conditions. By exploring this ambivalence, this paper displays how neighbourhood decline, and the impending demolition, affect residents' lived experiences and how residents in turn reconstruct their place attachment. |
| Keywords: | place attachment, ambivalence, lived experiences, declining neighbourhoods, urban redevelopment, China |
| JEL: | O18 R23 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10515&r=cna |
| By: | Raymond Fisman; Jing Shi; Yongxiang Wang; Rong Xu |
| Abstract: | We study favoritism via hometown ties, a common source of favor exchange in China, in fellow selection of the Chinese Academies of Sciences and Engineering. Hometown ties to fellow selection committee members increase candidates' election probability by 39 percent, coming entirely from the selection stage involving an in-person meeting. Elected hometown-connected candidates are half as likely to have a high-impact publication as elected fellows without connections. CAS/CAE membership increases the probability of university leadership appointments and is associated with a US$9.5 million increase in annual funding for fellows' institutions, indicating that hometown favoritism has potentially large effects on resource allocation. |
| JEL: | J71 O3 P16 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23130&r=cna |
| By: | Li, Zihan; Gong, Yazhen; Chen, Kevin Z. |
| Abstract: | Rising energy expenditures due to more intensive use of energy in modern agriculture and increasing energy prices may affect rural households’ agricultural incomes, particularly the incomes of the rural poor in developing countries. However, the exact link between energy costs and income among the rural poor needs further empirical investigation. This paper aims to gain a deeper understanding of the relationship between energy use and family income, using household-level panel data collected from 500 potato farmers in a poor region of Northern China, where eliminating poverty by 2020 is now the top government priority. The findings indicate that potato plays an important role in the surveyed families’ incomes, and the energy costs of potato production have a significant negative relationship with family income. However, the significance of the negative relationship is robust only for farmers with low economic standing, such as those living below the poverty line or just above it. Energy costs also have a significant negative relationship with the family incomes of those cultivating a certain size of potato-sown area, but this relationship becomes insignificant when farmers have too small of a potato-sown area. These findings indicate that in general, reducing energy costs helps the poor increase their income but is not necessarily helpful to those with high economic standing or a relatively small potato-sown area. If rural development policies are to support poverty reduction and energy savings (at least in major potato production regions), interventions aimed at energy cost reduction may be effective only for the poor whose family income depends, to a relatively high degree, on potato production. |
| Keywords: | energy, potatoes, poverty, smallholders, intensification, income, households, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1577&r=cna |