nep-cna New Economics Papers
on China
Issue of 2017‒04‒30
four papers chosen by
Zheng Fang
Ohio State University

  1. The Recent Drop and Recovery of Korean Exports: Structural and Cyclical Aspects By Lee , Sooyoung
  2. To Migrate With or Without Ones’ Children in China - That is the Question By Yiwen Chen; Vincent Fromentin; Ioana Salagean; Benteng Zou
  3. Exchange rate movements and export market dynamics: Evidence from China By Huang, Xiaobing
  4. China's GDP Growth May be Understated By Hunter Clark; Maxim Pinkovskiy; Xavier Sala-i-Martin

  1. By: Lee , Sooyoung (Korea Institute for International Economic Policy)
    Abstract: Since late last year, Korean exports seem to be recovering from the long tunnel of negative growth that continued for 20 consecutive months. It might be, however, too early to predict whether Korean exports will sustain the growth in the future. The long-run trend of Korean exports has been unusually eventful in the last decade and both cyclical and structural components lie behind it. The trade drop in 2015 has strong cyclical aspects. The exceptionally low oil prices drove down export prices and total exports while the quantity of exports kept growing. But, there is evidence that the overall slowdown of Korean exports has structural aspects: (1) the so-called 'China factor' is found in the analysis of trade-income elasticity of the world and China for imports from Korea. (2) The number of protectionism measures has surged since 2012. (3) The bilateral trade barriers between Korea and its important trading partners are universally tightening. Trade slowdown brings up concerns because Korea's revealed comparative advantages of most manufacturing industries are falling as well. It is advisable to diversify main export products to lower the effect of oil prices on export prices and to strengthen the cooperation with ASEAN countries, whose trade barriers have exceptionally diminished throughout the last decade.
    Keywords: Trade Slowdown; Exports; Korea; Structural; Cyclical
    Date: 2017–04–26
  2. By: Yiwen Chen (CREA, Université du Luxembourg); Vincent Fromentin (Université de Lorraine, Nancy et CREA, Luxembourg); Ioana Salagean (STATEC, Luxembourg); Benteng Zou (CREA, Université du Luxembourg)
    Abstract: Where should Chinese internal migrant parents locate their school-aged children: migrate with them or leave them behind? And should they invest in private education of their children? Empirical evidence based on the 2009 wave of the Rural-Urban Migration Survey in China (RUMiC) data is inconclusive. We use an overlapping generations model to find a theoretical optimum that maximizes parents’ utility which includes the children’s educational performance. Depending on the educational investment parents make and the relocation cost of children, we provide necessary and sufficient conditions for migrant parents to take their children to migrate and whether they should provide their children with private education. As the choices of migrant parents affect not only their children’s human capital accumulation, but also on the economic potential of their descendants, we present both short- and long-term consequences of the parents decision.
    Keywords: Migrant children; left-behind children; hukou; China; educational performance
    JEL: O15 I31 J13 R23
    Date: 2017
  3. By: Huang, Xiaobing
    Abstract: This paper highlights the relationship between foreign exchange rate fluctuations and firms' export market dynamics using a Chinese firm-level production data and a firm-level trade data over the period of 2000-2006. The author adopts a discrete-time survival model in his empirical investigation and further executes several extensions and robustness checks to the baseline results. The main results of the paper can be summarized as follows: First, an exchange rate appreciation increases the likelihood of export market exit, reduces the capability of export market survival and decreases the probability of export market entry. Second, high productivity firms are less likely to exit from export markets and more likely to enter and survive in export markets in the period of exchange rate appreciation. Third, exchange rate appreciation decreases the likelihood of export market entering and increases the likelihood of export market exiting more for private-owned firms, young firms and non-eastern firms. Finally, other sources of heterogeneity, such as extensive margins, import demand elasticity, different destinations, U.S. dollar peg, and the liberalization of trading rights also matter regarding the effect of exchange rate changes.
    Keywords: exchange rate movements,export market dynamics,firm heterogeneity,China
    JEL: F14 F31 F32 F41
    Date: 2017
  4. By: Hunter Clark; Maxim Pinkovskiy; Xavier Sala-i-Martin
    Abstract: Concerns about the quality of China’s official GDP statistics have been a perennial question in understanding its economic dynamics. We use data on satellite-recorded nighttime lights as an independent benchmark for comparing various published indicators of the state of the Chinese economy. Using the methodology of Pinkovskiy and Sala-i-Martin (2016a and b), we exploit nighttime lights to compute the optimal weights for various Chinese economic indicators in a best unbiased predictor of Chinese growth rates. Our computations of Chinese growth based on optimal weightings of various combinations of economic indicators provide evidence against the hypothesis that the Chinese economy contracted precipitously in late 2015, and are consistent with the rate of Chinese growth being higher than is reported in the official statistics.
    JEL: F0
    Date: 2017–04

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