nep-cna New Economics Papers
on China
Issue of 2017‒04‒16
sixteen papers chosen by
Zheng Fang
Ohio State University

  1. Forced off Farm? Labor Allocation Response to Land Requisition in Rural China By Ma, Shuang; Mu, Ren
  2. What Matters for Life Satisfaction among the Oldest-Old? Evidence from China By Ng, Sor Tho; Tey, Nai Peng; Asadullah, Niaz
  3. Smog in our brains: Gender differences in the impact of exposure to air pollution on cognitive performance in China: By Chen, Xi; Zhang, Xiaobo; Zhang, Xin
  4. The Impact of Social Pensions on Intergenerational Relationships: Comparative Evidence from China By Chen, Xi; Eggleston, Karen; Ang, Sun
  5. Happiness in the Air: How Does a Dirty Sky Affect Mental Health and Subjective Well-being? By Zhang, Xin; Zhang, Xiaobo; Chen, Xi
  6. A Quantitative Assessment of the Proposed China-Georgia Free Trade Agreement By Fuenfzig, Michael
  7. Forced gifts: The burden of being a friend: By Bulte, Erwin; Wang, Ruixin; Zhang, Xiaobo
  8. A multi-period power generation planning model incorporating the non-carbon external costs: A case study of China By Hao Chen; Bao-Jun Tang; Hua Liao; Yi-Ming Wei
  9. A Review on Korea, China and Japan's Comparative Advantage in the IT Services Sector: Focusing on Productivity Analysis By Na , Seung Kwon; Bang , Ho-Kyung; Lee, Boram
  10. Wellbeing of the Elderly in East Asia: China, Korea, and Japan By ICHIMURA Hidehiko; Xiaoyan LEI; Chulhee LEE; Jinkook LEE; Albert PARK; SAWADA Yasuyuki
  11. Air emissions perspective on energy efficiency: An empirical analysis of China's coastal areas By Quande Qin; Xin Li; Li Li; Wei Zhen; Yi-Ming Wei
  12. Where is the Excess Capacity in the World Iron and Steel Industry? –A focus on East Asia and China– By KAWABATA Nozomu
  13. Operational and environmental performance in China¡¯s thermal power industry: Taking an effectiveness measure as complement to an efficiency measure By Ke Wang; Jieming Zhang; Yi-Ming Wei
  14. Racing to the bottom? Chinese development projects and trade union involvement in Africa By Isaksson, Ann-Sofie; Kotsadam, Andreas
  15. The Effect of Changes in the U.S. Monetary Policy on China's Capital Market Stability and Trade between China and Korea By Gang , Jianhua; Qian , Zongxin; Zhang , Chao; Zhang , Jiarui
  16. One Belt One Road and the reconfiguration of China-EU relations By Xieshu Wang; Joel Ruet; Xavier Richet

  1. By: Ma, Shuang (Southwestern University of Finance and Economics); Mu, Ren (Texas A&M University)
    Abstract: Land requisition has been an important process by which Chinese local governments promote urbanization and generate revenue. This study investigates the impacts of land requisition on farmers' decisions of labor allocation between agricultural and non-agricultural sectors. We argue that, conditional on village fixed effects, land requisition can be explored as a quasi-natural experiment to identify the relationship between land rights and labor allocation of farmers. We find that young farmers (age 16-44) are not affected in their migration decisions by land loss through requisition, while some older farmers (age 45-55) are affected. In response to land loss through requisition, the probability that older farmers living beyond the mean distance from the county seat migrates to cities increases by 8.5 percentage points. An econometric test confirms that the finding is unlikely to be driven by unobserved variables associated with household experience of land loss. This finding raises concerns about the wellbeing of the farmers who may not be competitive in the urban labor market and therefore unlikely to leave farming unless they have to.
    Keywords: land institution, land requisition, migration, urbanization, farmers, China
    JEL: O12 O15 J61 Q15 R28
    Date: 2017–03
  2. By: Ng, Sor Tho (University of Malaya); Tey, Nai Peng (University of Malaya); Asadullah, Niaz (University of Malaya)
    Abstract: This study investigates the determinants of life satisfaction among the oldest-old (i.e. individuals aged 80 or over) in China. We use the 2011/2012 Chinese Longitudinal Healthy Longevity Survey data (n = 6530) for this paper. Logistic regression is used to analyse the effects of socio-demographic, economic, health, instrumental activities of daily living, family and community factors on life satisfaction and depression among the oldest-old in China. Our analysis confirms the significance of many factors affecting life satisfaction among the oldest-old in China. Factors that are correlated with life satisfaction include respondent's sex, education, place of residence, self-rated health status, cognitive ability (using mini mental state examination), regular physical examination, perceived relative economic status, access to social security provisions, commercialized insurances, living arrangements, and number of social services available in the community (p
    Keywords: ageing, depression, happiness, health, inequality, well-being, China
    JEL: O12 I30 I31
    Date: 2017–03
  3. By: Chen, Xi; Zhang, Xiaobo; Zhang, Xin
    Abstract: While there is a large body of literature on the negative health effects of air pollution, there is much less written about its effects on cognitive performance for the whole population. This paper studies the effects of contemporaneous and cumulative exposure to air pollution on cognitive performance based on a nationally representative survey in China. By merging a longitudinal sample at the individual level with local air-quality data according to the exact dates and counties of interviews, we find that contemporaneous and cumulative exposure to air pollution impedes both verbal and math scores of survey subjects. Interestingly, the negative effect is stronger for men than for women. Specifically, the gender difference is more salient among the old and less educated in both verbal and math tests.
    Keywords: CHINA; EAST ASIA; ASIA, gender; pollution; air pollution, cognitive performance; gender difference; human capital, I24 Education and Inequality; Q53 Air Pollution, Water Pollution, Noise, Hazardous Waste, Solid Waste, Recycling; Q51 Valuation of Environmental Effects; J16 Economics of Gender, Non-labor Discrimination,
    Date: 2017
  4. By: Chen, Xi; Eggleston, Karen; Ang, Sun
    Abstract: China launched a new rural pension scheme (hereafter NRPS) for rural residents in 2009, now covering almost all counties with over 400 million people enrolled. This implementation of the largest social pension program in the world offers a unique setting for studying the economics of intergenerational relationships during development, given the rapidity of China’s population aging, traditions of filial piety and co-residence, decreasing number of children, and dearth of formal social security, at a relatively low income level. We draw on rich household surveys from two provinces at distinct development stages – impoverished Guizhou and relatively well-off Shandong – to better understand heterogeneity in the impact of pension benefits. Employing a fuzzy regression discontinuity design, we find that around the pension eligibility age cut-off, the NRPS significantly reduces intergenerational co-residence, especially between elderly parents and their adults sons; promotes pensioners’ healthcare service consumption; and weakens (but does not supplant) non-pecuniary and pecuniary transfers across three generations. These effects are much larger in less developed Guizhou province.
    Keywords: Social pensions,intergenerational relationships,regional comparisons,co-residence,old-age care,service consumption,transfers
    Date: 2017
  5. By: Zhang, Xin; Zhang, Xiaobo; Chen, Xi
    Abstract: Previous studies evaluating the welfare cost of air pollution have not paid much attention to its potential effect on mental health and subjective well-being (SWB). This paper attempts to fill the gap by investigating the impact of air pollution on several key dimensions, including mental health status, depressive symptoms, moment-to-moment happiness, and evaluative happiness. We match a nationwide longitudinal survey in China with local air quality and rich weather conditions according to the exact time and place of survey. By making use of variations in exposure to air pollution for the same individuals over time, we show that air pollution reduces hedonic happiness and increases the rate of depressive symptoms, while life satisfaction has little to do with the immediate air quality. Our results shed light on air pollution as an important contributor to the Easterlin paradox that economic growth may not bring more happiness.
    Keywords: mental health,depression,hedonic happiness,life satisfaction,air pollution,Easterlin paradox
    JEL: I31 Q53 Q51
    Date: 2017
  6. By: Fuenfzig, Michael
    Abstract: This paper discusses the proposed China-Georgia free trade agreement and provides quantitative estimates of its economic effects. The proposed free trade agreement would more than double trade flows between China and Georgia over a time horizon of ten to fifteen years, and would increase Georgian GDP per capita by about 1.5 percent. Chinese exports to Georgia would increase by about 20 to 30 percent, and Chinese GDP per capita would remain virtually unchanged. While these estimates have to be treated with extreme caution, they should serve as a motivation to continue negotiations on the free trade agreement.
    Keywords: Free trade agreement; impact assessment; gravity equation
    JEL: F1 F14 F15 F17
    Date: 2016–02
  7. By: Bulte, Erwin; Wang, Ruixin; Zhang, Xiaobo
    Abstract: In many developing countries, gift expenses account for a substantial share of total household expenditures. As incomes rise, gift expenses are escalating in several developing countries. We develop a theoretical model to demonstrate how (unequal) income growth may trigger “gift competition†and drive up the financial burden associated with gift exchange. We use unique census-type panel data from rural China to test our model predictions and demonstrate that (1) the value of gifts responds to the average gift in the community, (2) the escalation of gift giving may have adverse welfare implications (especially for the poor), and (3) escalating gift expenses crowd out expenditures on other consumption items.
    Keywords: CHINA; EAST ASIA; ASIA, household expenditure; developing countries; income; rural communities; welfare, gift competition; reciprocity; subjective well-being; inequality, O10 Economic Development: General; I30 Welfare, Well-Being, and Poverty: General; D10 Household Behavior: General,
    Date: 2017
  8. By: Hao Chen; Bao-Jun Tang; Hua Liao; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: The negative externalities apart from carbon emissions are often neglected in most power generation planning models, which will affect the human health, biodiversity, crop yield and land use greatly. To achieve a sustainable development of China's power industry, this paper develops a deterministic linear programming model with consideration of the non-carbon externalities. This model has been applied for the case study of China for the period from 2015 to 2030, through which some interesting results have been drawn. Firstly, most of the new capacity additions are from the non-fossil fuel power plants in this planning horizon, which account for 84% of the total new capacity additions. Secondly, the power generation priority would better be given to the non-fossil fuel power plants in this horizon under the cost-effectiveness criteria. Thirdly, the minimum total cost of China's power planning is 34.48 trillion yuan, which equals to 2% of China's GDP during the planning horizon. Finally, neglecting of non-carbon externalities does have a significant influence on the power planning results, which will lead to a higher power generation share of technology with bigger negative externalities.
    Keywords: Power planning; Investing strategy; Operating strategy; Externalities; Linear programming
    JEL: Q54 Q40
    Date: 2016–10–02
  9. By: Na , Seung Kwon (Korea Institute for International Economic Policy); Bang , Ho-Kyung (Korea Institute for International Economic Policy); Lee, Boram (Korea Institute for International Economic Policy)
    Abstract: This research attempts to draw the policy implication of cooperative activities among Korea, China and Japan based on an analysis on a comparative advantage of the IT service industry, focusing on productivity analysis. The results of the productivity (efficiency) analysis show that productivity gap exists between the three countries, but the gap is narrowing. The changing gap seems to result from a catch-up effect between countries and companies rather than technical advancement across the industry. In addition, a close look into the institutional framework which affects the productivity of IT services sector in Korea, China and Japan revealed five areas (introduction and enforcement of regulations, existing legal and regulatory frameworks, transparency of IT related policies, preferential treatment of home-grown technologies in the public sector, bureaucracy) that can prove to be excessive regulations on IT service companies. Based on the study results, this paper draws the policy implications for further cooperation among three countries. First, the three countries could cooperate in building a common data set for a more concrete productivity analysis. Second, the three countries could further cooperate in the industry level and lower the entry barriers for instance. Finally, the three countries could cooperate to upgrade the expertise of middle management and foster human resource development.
    Keywords: IT Service; Productivity Analysis (DEA)
    Date: 2015–04–10
  10. By: ICHIMURA Hidehiko; Xiaoyan LEI; Chulhee LEE; Jinkook LEE; Albert PARK; SAWADA Yasuyuki
    Abstract: East Asia is undergoing a rapid demographic transition and "super" aging. As a result of steadily decreasing fertility and increasing life expectancy, the elderly proportion of the population and the old-age dependency ratio are rising across all countries in East Asia, particularly China, Republic of Korea, and Japan. In this paper, we empirically investigate the wellbeing of the elderly in these three countries, using comparable micro-level data from the China Health and Retirement Longitudinal Study (CHARLS), the Korean Longitudinal Study on Aging (KLoSA), and the Japanese Study of Aging and Retirement (JSTAR). Specifically, we examine the depressive symptom scale as a measure of wellbeing and estimate the impact of four broad categories: demographic, economic, family-social, and health. The decomposition and simulation analysis reveals that although much of the difference in mean depression rates among countries can be explained in differences in the characteristics of the elderly in the three countries, there remain significant differences across countries that cannot be explained. In particular, even after accounting for a multitude of factors, the elderly in Korea are more likely to be depressed than in China or Japan.
    Date: 2017–03
  11. By: Quande Qin; Xin Li; Li Li; Wei Zhen; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: Improving energy efficiency has been recognized as the most effective way to reduce the greenhouse effect and achieve sustainable development. From the perspective of air emissions, this paper adopts data envelopment analysis approach to evaluate the energy efficiency in China's coastal areas over the period of 2000-2012. Carbon dioxide, sulfur dioxide and nitrogen oxide are treated as undesirable outputs of energy consumptions. The proposed global Epsilon-based measure is used to estimate the static energy efficiency with an annual cross-section of data. The weights of the three undesirable outputs are determined according to their treatment costs. A global Malmquist-Luenberger productivity index based on directional distance function is employed to dynamically evaluate the energy efficiency. The results indicate the following in China's coastal areas: 1) the level of economic development is positively related to energy efficiency scores; 2) energy efficiency scores decrease when considering undesirable outputs except Beijing and Hainan; 3) the Circum-Bohai Sea Economic Region greatly improved energy efficiency and has great potential of air emission; 4) the annual growth rate of Malmquist-Luenberger productivity index change is overestimated; 5) energy efficiency improvement is mainly driven by technological improvement, and scale efficiency and management level are the main obstacles.
    Keywords: Energy efficiency; Data envelopment analysis; China's Coastal areas; Air emissions
    JEL: Q54 Q40
    Date: 2017–01–01
  12. By: KAWABATA Nozomu
    Abstract: The purpose of this study is to identify the location of excess capacity in the world iron and steel industry. Excess capacity is a production capacity that is inferior in competition, surviving due to factors other than competitive advantages, under the condition that world production capacity exceeds demand. As a result of analysis, China was found to have the highest scale of excess capacity, while NAFTA (North American Free Trade Agreement) members, Europe, CIS (Commonwealth of Independent States) members, Japan, South Korea, and ASEAN (Association of Southeast Asian Nations) members were found to have a moderate scale of excess capacity. In China, Russia, Ukraine, Japan, and South Korea, excess capacity coexists with large-scale steel exports. However, excess capacity is considered to promote the exports of low value-added steel products only in China, Russia, and Ukraine. The iron and steel industry in China is not necessarily export-oriented, and its capacity utilization rate is not low compared with other regions. However, the production scale in China is outstanding among all economies. As a result, the scale of excess capacity and steel exports are the largest in the world. Moreover, low value-added products occupy a high share in the total iron and steel exports from China. In the cases of Russia and Ukraine, iron and steel industries are export-oriented. Furthermore, compared with China, low-value added products constitute a higher proportion in their export mix. However, the scale of excess capacity and exports are lower than China, in parallel with their production scale. In the cases of Japan and South Korea, iron and steel industries are export-oriented. However, the most exported products are high-grade flat products and high-grade host materials for business partners and subsidiaries abroad. In other words, the steel exports from Japan and South Korea are not commodity-based. An increasing number of construction projects involving steelworks is in progress or being planned worldwide, especially in Asia. Thus, reduction of excess capacity would become difficult. Furthermore, as state-of-the-art technologies will be embodied in newly installed steelworks, the competition for survival in the iron and steel industry will intensify in the future.
    Date: 2017–03
  13. By: Ke Wang; Jieming Zhang; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: The trend toward a more fiercely competitive and strictly environmentally regulated electricity market in several countries, including China has led to efforts by both industry and government to develop advanced performance evaluation models that adapt to new evaluation requirements. Traditional operational and environmental efficiency measures do not fully consider the influence of market competition and environmental regulations and, thus, are not sufficient for the thermal power industry to evaluate its operational performance with respect to specific marketing goals (operational effectiveness) and its environmental performance with respect to specific emissions reduction targets (environmental effectiveness). As a complement to an operational efficiency measure, an operational effectiveness measure not only reflects the capacity of an electricity production system to increase its electricity generation through the improvement of operational efficiency, but it also reflects the system¡¯s capability to adjust its electricity generation activities to match electricity demand. In addition, as a complement to an environmental efficiency measure, an environmental effectiveness measure not only reflects the capacity of an electricity production system to decrease its pollutant emissions through the improvement of environmental efficiency, but it also reflects the system¡¯s capability to adjust its emissions abatement activities to fulfill environmental regulations. Furthermore, an environmental effectiveness measure helps the government regulator to verify the rationality of its emissions reduction targets assigned to the thermal power industry. Several newly developed effectiveness measurements based on data envelopment analysis (DEA) were utilized in this study to evaluate the operational and environmental performance of the thermal power industry in China during 2006-2013. Both efficiency and effectiveness were evaluated from the three perspectives of operational, environmental, and joint adjustments to each electricity production system. The operational and environmental performance changes over time were also captured through an effectiveness measure based on the global Malmquist productivity index. Our empirical results indicated that the performance of China¡¯s thermal power industry experienced significant progress during the study period and that policies regarding the development and regulation of the thermal power industry yielded the expected effects. However, the emissions reduction targets assigned to China¡¯s thermal power industry are loose and conservative.
    Keywords: Efficiency; Environmental effectiveness; Joint performance; Operational effectiveness
    JEL: Q54 Q40
    Date: 2017–01–03
  14. By: Isaksson, Ann-Sofie (Department of Economics, School of Business, Economics and Law, Göteborg University); Kotsadam, Andreas (The Frisch Centre; University of Oslo, Department of Economics)
    Abstract: Chinese firms operating in Africa are often accused of violating international labour standards and not adhering with national labour laws. Considering China’s tendency to maintain control over development projects throughout the entire implementation phase, using Chinese contractors for work performed in the recipient countries, the present paper investigates whether China impacts African labour practices in their capacity as a donor. Specifically, we use a new data material allowing for systematic quantitative analysis of Chinese development finance to investigate whether Chinese development projects affect trade union involvement. Matching geo-referenced data on the subnational allocation of Chinese development projects to Africa over the 2000-2012 period with 41,902 survey respondents across 18 African countries, our estimation strategy relies on comparing the trade union involvement of individuals who live near a site where a Chinese project is being implemented at the time of the interview to those of individuals living near a site where a Chinese project will appear in the future, but where implementation had yet to be initiated at the time of the survey. The results consistently indicate that Chinese development projects – unlike the projects of other major donors – discourage trade union involvement in the local area.
    Keywords: China; aid; trade unions; Africa
    JEL: D71 F35 O10 O55
    Date: 2017–04
  15. By: Gang , Jianhua (Renmin University of China); Qian , Zongxin (Renmin University of China - School of Finance); Zhang , Chao (Renmin University of China); Zhang , Jiarui (China Europe International Business School (CEIBS))
    Abstract: This paper first reviews the trade structure between China and the Republic of Korea (hereafter referred as Korea) and the two countries’ international capital flow. Then it discusses the effect of the Federal Reserve rate on UIP in both China and Korea, which turns out to be uninfluential through our analysis. Then we use VAR model and the extended model, the multivariate GARCH-DCC model to examine interaction between different factors. The result shows that positive-legged equity return would induce outflow and flow positively affects equity return. Sharp offshore RMB devaluation would cause domestic market plummets and higher legged spread means higher carry trade return. Besides, in the respect of capital control effects, offshore RMB devaluation would cause spread to be wider because of inelasticity of the onshore RMB rate. Carry trade return has positive and significant intercept. Finally, we argue that although the appreciation of USD has little impact on bilateral trade between China and Korea in short time, in long run, currency risk exists and it may cause significant fluctuations in the trade. We suggest that China and Korea should gradually use local currency to price their trade.
    Keywords: Monetary Policy; Capital Market; Trade; China; Trade; Korea; Korea
    Date: 2015–12–30
  16. By: Xieshu Wang (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Joel Ruet (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique); Xavier Richet (Université Sorbonne Nouvelle - Paris 3)
    Abstract: The context of EU-China relations has dramatically changed over the past five years. China's interest in Europe has expanded geographically and substantially. At the broader diplomatic and strategic level, the OBOR initiative has come to symbolize China's growing significance in international affairs, reshaping regional dynamics. The European Commission and the Chinese government have agreed to enhance synergies in connectivity platforms. However, new investment trends and trade relations with China are highly differentiated across Europe and across sectors. The lack of a clearly defined OBOR plan in most European countries is weakening their bargaining power. In the meantime, China is following its flexible foreign policy approach when dealing with the EU. So far, the OBOR projects in Europe are mainly focusing on transport and infrastructure in Central, Eastern and Southern Europe. We are witnessing the reconfiguration of international institutions and the emergence of a more multi-polar global order.
    Keywords: One Belt One Road,connectivity,infrastructure,investment,governance
    Date: 2017–03

This nep-cna issue is ©2017 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.