nep-cna New Economics Papers
on China
Issue of 2017‒02‒26
six papers chosen by
Zheng Fang
Ohio State University

  1. China’s Dual Export Sector By Fabrice Defever; Alejandro Riaño
  2. What is the Price of Tea in China? Towards the Relative Cost of Living in Chinese and U.S. Cities By Robert C. Feenstra; Mingzhi Xu; Alexis Antoniades
  3. Effects of Intermediate Input Tariff Reduction on Innovations in China By Qing Liu; Larry D QiuAuthor-Workplace-Name: The University of Hong Kong
  4. The Long Shadow of the Chinese Cultural Revolution: The Intergenerational Transmission of Education By Meng, Xin; Zhao, Guochang
  5. On the Functional Orientation and Path Choice of China?s Real Estate Tax Reform By Tao Jin; Huang Xiaoyu; Jin Chao; Zheng Siqi
  6. Efficiency of township hospitals in China in the context of the drug policy reform: Progress should not get bogged in midstream - A case study from a survey in Weifang prefecture. By Laurène PETITFOUR; Xiezhe HUANGFU; Martine AUDIBERT; Jacky MATHONNAT

  1. By: Fabrice Defever; Alejandro Riaño
    Abstract: China has transitioned from being an almost autarkic economy to become the world's largest exporter in less than three decades. Given this unique transformation, this paper investigates if the key stylized facts that characterize the behavior of firms' exports around the world, can also describe China's experience after joining the World Trade Organization. We find that, consistent with received wisdom, relatively few Chinese firms engage in exporting, and those doing so, are on average, larger and more productive than their domestic counterparts. However, unlike other large and developed countries, a substantial share of Chinese exporters sell the majority of their output abroad. In fact, the distribution of Chinese exporters according to their export intensity - the share of their revenues accounted for by exports - is strikingly bimodal. In contrast to recent work that has focused on the technological factors that explain the prevalence of high-intensity exporters, we instead concentrate on the role played by China's heterodox trade policy regime in promoting pure exporters. Our empirical analysis suggests that trade policy has played an instrumental role in fostering a dual export sector. Notably, nine out of ten manufacturing exporters in China are eligible to enjoy fiscal incentives contingent on export performance.
    Keywords: China; Firm-level exports; Export Intensity; Free Trade Zones; Export Processing Regimes
    Date: 2017
  2. By: Robert C. Feenstra; Mingzhi Xu; Alexis Antoniades
    Abstract: We examine the price and variety of products at the barcode level in cities within China and the United States. In both countries, there is a greater variety of products in larger cities. But in China, unlike the United States, the prices of products tend to be lower in larger cities. We attribute the lower prices to a pro-competitive effect, whereby large cities attract more firms which leads to lower markups and prices. Combining the effect of greater variety and lower prices, it follows that the cost of living for grocery-store products in China is lower in larger cities. We further compare the cost-of-living indexes for particular product categories between China and the United States. In product categories with a significant presence of U.S. brands in the Chinese market, the availability of additional Chinese brands leads to greater variety than in the United States, and therefore lower Chinese price indexes for that reason. In product categories with much less presence of U.S. brands in the Chinese market, however, the observed prices differences between the countries (usually lower prices in China) are partially or fully offset by the variety differences (less variety in China), so that the cost of living in China is not as low as the price differences suggest, especially in smaller cities.
    JEL: E01 F11 L1
    Date: 2017–02
  3. By: Qing Liu (University of International Business and Economics); Larry D QiuAuthor-Workplace-Name: The University of Hong Kong
    Abstract: Innovation plays a key role in economic growth. In this paper, we investigate the effects of intermediate input tariff reduction on the innovation activities of domestic firms. Input tariff reduction has two opposite effects on the innovation decision of a firm: it may promote innovation because the cost of innovation activities decreases, but it may also result in a decrease in innovation because foreign technologies become cheaper. We use Chinese firm-level data from 1998 to 2007, which features a drastic input tariff cut in 2002 because of China's WTO accession, and find that input tariff cut results in less innovation undertaken by Chinese firms. The findings are obtained using the difference-in-differences technique and are robust to various specifications checks of the model. We also provide a theoretical framework to generate insights to the empirical findings.
    JEL: F13 F15 O14
    Date: 2017–02
  4. By: Meng, Xin (Australian National University); Zhao, Guochang (Southwest University of Finance and Economics, Chengdu)
    Abstract: Between 1966 and 1976, China experienced a Cultural Revolution (CR). During this period, the education of around 17 birth cohorts was interrupted by between 1 and 8 years. In this paper we examine whether, and by how much, this large-scale schooling interruption affected their children's education. We find a strong effect: more interrupted education for parents, less completed education for their children. On average the CR cohort had 2.9 years interrupted education. If they failed to catch up after the CR, this translates to a reduction of 0.87 years of schooling and a 9 percentage points (or 50%) reduction in the probability of completing a university degree for their children relative to the children whose parents did not have interrupted schooling. Our results have strong implications for developing countries prone to long-term conflicts which often adversely affect children's education. As human capital accumulation is one of the main drivers of economic development, these negative schooling shocks affecting current generation education levels will have an impact far beyond the immediate economic development of these war-torn economies and extend to the next generation.
    Keywords: Chinese Cultural Revolution, human capital, intergenerational education transmission
    JEL: I24 I25 N3
    Date: 2016–12
  5. By: Tao Jin; Huang Xiaoyu; Jin Chao; Zheng Siqi
    Abstract: The booming real estate industry and rapidly increasing housing prices give birth to heated debates on real estate tax reform in China. As the fiscal reform that replaces business taxes with value-added taxes will be expanded nationwide, it is imperative to further promote the real estate tax reform. This paper analyzes the effects of real estate taxes on reducing enterprises? tax burden, improving fiscal and taxation systems of local government, transformation of government responsibilities, and income redistribution. We also point out that during the process of real estate tax reform, much importance should be attached to coordination with existing real estate tax systems, reinforcement of pilot reform, and potential financial stability risks.
    Date: 2016–01
  6. By: Laurène PETITFOUR (FERDI); Xiezhe HUANGFU (FERDI); Martine AUDIBERT (FERDI); Jacky MATHONNAT (Cerdi - University of Auvergne)
    Abstract: Since the early 2000s, China has embarked on a major reform program in the field of health. Three are essential and linked: rebuilding a new health insurance system in rural areas, restructuring the organization and management of hospitals, halting the sharp rise in drug prices. To cope with the rising price of drugs, in 2009 the Chinese government launched a large pharmaceutical reform. Its key element is the implementation of a National Essential Medicine List (NEML), leading to a reorientation of incentives for health services financing. Health facilities are no longer allowed to make any profit on drug sales (“zero mark-up policy”), while this used to be their main source of revenue. Authorities have implemented different compensation schemes. In the context of redesigning the financing structure of health care facilities, it is crucial to understand how the NEML reform has affected—or not—the activity and efficiency of health care facilities, since the search for greater efficiency in the health system is a transversal and underlying objective of the three reforms mentioned above.This study relies on survey data from a sample of 30 randomly selected Township Hospitals (TH) in rural area from the prefecture of Weifang, in the Shandong province. Using a two-stage procedure, the study aims at assessing the technical efficiency scores of Township Hospitals and then at identifying the determinants of this efficiency. The first stage is realized with a non-parametric frontier approach, “partial frontier” method (order-m), to deal with the problem of dimensionality of the sample. The identification of the determinants of efficiency is made with fractional regressions (Ramalho, 2011). Results show that the average efficiency remains constant from 2006 to 2009 and 2010 to 2012, at around 0.65. The most significant and robust factors of technical efficiency are the share of subsidies in the TH incomes (negative effect) and the number of covered inhabitants per bed (positive effect). The study suggests that even after the implementation of the drug reform, a “soft budget constraint” effect remains, as well as financial barriers to universal access to healthcare (importance of demand-side determinants) and a phenomenon of oversizing of some THs.
    Date: 2017–02

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