|
on China |
| By: | Wang, Chunyang |
| Abstract: | The rise of city commercial banks (CCBs) in Chinese cities provides a unique opportunity to study the finance and growth nexus at the city level. Given the notorious inefficiency of China's “Big Four” state banks, policymakers attempted to correct the situation in 1995 through the creation of a new kind of local bank designed to promote local growth by lending to small and medium-sized enterprises. Using 1990-2009 panel data for 283 prefectural-level cities and four provincial-status municipalities, we find that the establishment of CCBs significantly reduced local economic growth overall. We suggest this outcome stems from the ability of firms to bribe local government officials to obtain credit from their local CCBs. In our proposed model for crony banking relations, large firms spend disproportionately larger amounts of time and bribe money cultivation relations with local officials involved in CCB lending decisions, so we expect large firms to have easier access to credit than small firms even if it results in inefficient lending. Using data on 206,771 firms for 1999-2007, we find that cities with CCBs had significantly lower overall growth rates. Small firms, in particular, were negatively impacted by the presence of CCBs, while large firms benefited from their presence. In the cities with CCBs, large firms, even those with relatively poor return-on-assets ratios, obtained more credit than small firms in aggregate. Using data from the 2005 World Bank Business Environment Survey, we find that an increase in a firm's crony relations with the government, measured in terms of the average number of days a month top managers of the firm spend interacting with government officials, increases the likelihood a firm will be granted bank credit. This effect was quite distinct for cities with CCBs. |
| JEL: | G21 G28 G38 |
| Date: | 2017–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2017_008&r=cna |
| By: | Fu, Shihe; Viard, Brian; Zhang, Peng |
| Abstract: | We provide comprehensive estimates of air pollution’s effect on short-run labor productivity for manufacturing firms in China from 1998 to 2007. An emerging literature estimates air pollution’s effects on labor productivity but only for small groups of workers of particular occupations or sets of firms to ensure causality. To provide more comprehensive estimates necessary for policy analysis, we estimate effects for all but some small firms (90% of manufacturing output in China) and capture all channels by which pollution influences productivity. We instrument for reverse causality between pollution and output using thermal inversions. Our causal estimates imply that a one |
| Keywords: | air pollution; productivity; environmental costs and benefits; firm competitiveness |
| JEL: | D62 Q51 Q53 R11 |
| Date: | 2017–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78914&r=cna |
| By: | Thomas Piketty; Li Yang; Gabriel Zucman |
| Abstract: | This paper combines national accounts, survey, wealth and fiscal data (including recently released tax data on high-income taxpayers) in order to provide consistent series on the accumulation and distribution of income and wealth in China over the 1978-2015 period. We find that the aggregate national wealth-income ratio has increased from 350% in 1978 to almost 700% in 2015. This can be accounted for by a combination of high saving and investment rates and a gradual rise in relative asset prices, reflecting changes in the legal system of property. The share of public property in national wealth has declined from about 70% in 1978 to 30% in 2015, which is still a lot higher than in rich countries (close to 0% or negative). Next, we provide sharp upward revision of official inequality estimates. The top 10% income share rose from 27% to 41% of national income between 1978 and 2015, while the bottom 50% share dropped from 27% to 15%. China’s inequality levels used to be close to Nordic countries and are now approaching U.S. levels. |
| JEL: | D31 E01 E21 O53 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23368&r=cna |
| By: | Fleisher, Belton M. (Ohio State University); McGuire, William H. (University of Washington Tacoma); Wang, Xiaojun (University of Hawaii at Manoa); Zhao, Min Qiang (Xiamen University) |
| Abstract: | We investigate the role of factor-priced-induced innovation in mediating the employment impact of expanding production in China. Our empirical approach implements concepts developed in Acemoglu (2010) and complements the approaches summarized by Wei, Xie, and Zhang (2017) that focus on directly observable aspects of innovation (R&D, patent activity, etc.); labor-force characteristics including the availability of "surplus" labor, investments in human capital; and investments in physical capital. It complements work on the causes of a decline in labor's share in total output as documented in Bai and Qian (2010) and in Molero-Simarro (2017). Our empirical results to date support the hypothesis that wage-induced technology change has influenced productivity growth in China, at least in the decade of the 1990s, but perhaps less so or not at all after the middle of the next decade. |
| Keywords: | endogenous innovation, China, factor shares |
| JEL: | O30 D22 D24 D33 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10749&r=cna |
| By: | Yi Huang (The Graduate Institute, Geneva); Marco Pagano (University of Naples Federico II, CSEF, EIEF, ECGI and CEPR); Ugo Panizza (The Graduate Institute, Geneva, and CEPR) |
| Abstract: | In China between 2006 and 2013 local public debt issuance crowded out the investment of private manufacturing fi rms by tightening their funding constraints, but it did not affect state-owned and foreign fi rms. The paper, using novel data for local public debt, establishes this result in three ways. First, local public debt is inversely correlated with city-level investment by domestic private manufacturing firms. Second, this fi nding is stronger for private firms that depend more heavily on external funding. And third, in cities where public debt is high, fi rms' investment is more sensitive to internal cash flow, even when cash-flow sensitivity is estimated jointly with the probability of being credit- constrained. These results suggest that the enormous increase in local public debt produced by massive debt issuance as part of the post-2008 fi scal stimulus curtailed private investment, thus weakening China's long-term growth prospects. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1707&r=cna |
| By: | Cheung, Yin-Wong; Hui, Cho-Hoi; Tsang, Andrew |
| Abstract: | On August 11, 2015, China revamped its procedure for setting the official central parity of the renminbi (RMB) against the US dollar. Our empirical investigation suggests that the intertemporal dynamics of China’s central parity shifted after this policy change, though the deviation of the RMB offshore rate from the central parity and the US dollar index remained the two significant determi-nants of central parity after the policy change. In contrast, the VIX index only offered explanatory power up to August 2015. Thereafter, the onshore RMB rate and the difference between the one-month offshore and onshore RMB forward points have significant impacts on the central parity. While the US dollar index effect remains, we find no evidence of a rate-fixing role for the RMB exchange rate against the currency basket announced by China in December 2015. |
| JEL: | F31 F33 G15 G17 G18 |
| Date: | 2017–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2017_007&r=cna |
| By: | Patrice Bougette (Université Côte d'Azur; GREDEG CNRS); Christophe Charlier (Université Côte d'Azur; GREDEG CNRS) |
| Abstract: | The paper analyzes the interactions between trade and renewable energy policies based on the EU--China Solar Panel dispute which is the most significant antidumping (AD) complaint in Europe. We build a price competition duopoly model with differentiated products and intra-industry trade in photovoltaic equipment. We provide two relevant types of AD duties. The optimal AD which maximizes social domestic welfare always increases with the feed-in tariff (FIT) program set in the home country. The appropriate AD -- equalizing the foreign firm's price on the domestic market with the foreign market price -- decreases with the FIT program. We show that the optimal FIT increases with the AD duty. Therefore, trade and renewable energy optimal policies may complement one another. When setting AD duties in clean energy sectors, it is important not to ignore the extent to which renewable energy is subsidized. |
| Keywords: | Antidumping, FIT, Solar Panels, Renewable Energy, Trade disputes, EU, China |
| JEL: | F18 L52 Q42 Q48 Q56 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2017-17&r=cna |