nep-cna New Economics Papers
on China
Issue of 2017‒06‒04
twelve papers chosen by
Zheng Fang
Ohio State University

  1. Manufacturing productivity in China: Deconstructing the role of Agglomeration By Chen, Yang; He, Ming; Rudkin, Simon
  2. Adaptation assessment and analysis of economic growth since the market reform in China By Ren, Chongqiang; Zhai, Guofang; Zhou, Shutian; Li, Shasha; Chen, Wei
  3. Electricity consumption, Education Expenditure and Economic Growth in Chinese Cities By Fang, Zheng; Chen, Yang
  4. ChinaÕs Nonmarket Economy Treatment and U.S. Trade Remedy Actions By Jieun Lee
  5. More Schooling, More Generous? Estimating the effect of education on intergenerational transfers By YIN Ting; ZHANG Junchao
  6. Enterprise innovation in China: Does ownership or size matter? By Huang, Yanghua; Salike, Nimesh; Yin, Zhifeng; Zeng, Douglas Zhihua
  7. How Does Mortgage Debt Affect Household Consumption? Micro Evidence from China By Fan, Ying; Yavas, Abdullah
  8. Re-Opening the Silk Road to Transform Chinese Trade By Ning Mao; Michael McAleer
  9. Russia-EU28 and Russia-China trade interdependence vs. the competitiveness of the Russian economy By Krzysztof Falkowski
  10. Entrepreneurship and Industrial Clusters: Evidence from China Industrial Census By Zhu, Xiwei; Liu, Ye; He, Ming; Luo, Deming; Wu, Yiyun
  11. Running with a Mask? The Effect of Air Pollution on Marathon Runners’ Performance By Fu, Shihe; Guo, Mengmeng
  12. China's Lost Generation: Changes in Beliefs and their Intergenerational Transmission By Gerard Roland; David Y. Yang

  1. By: Chen, Yang (Division of Economics, Xi'an Jiaotong-Liverpool University); He, Ming (Division of Economics, Xi'an Jiaotong-Liverpool University); Rudkin, Simon (SHU-UTS SILC Business School, University of Shanghai)
    Abstract: Economists talk of agglomeration bene ting rms but little work has sought to understand the impact various consequences of close location of rms has on productivity. Using unconditional quantile regression for the rst time in productivity we revisit the Chinese Industry Survey, from 1999 to 2007, to ask (a) how does spatial competition, local diversity, population density and regional specialisation impact across the productivity distribution, and (b) how have these effects changed through China's opening up to foreign direct investment. High productivity firms bene t more from specialist agglomerations, monopoly and can take larger advantage of market size compared to those which are less productive.
    Keywords: Unconditional Quantile Regression, Manufacturing Productivity, China, Agglomeration.
    Date: 2017–05–24
  2. By: Ren, Chongqiang; Zhai, Guofang; Zhou, Shutian; Li, Shasha; Chen, Wei
    Abstract: China has experienced extraordinary institutional and socio-economic changes after 1978, and its deepening reform to market-oriented economy since 1990s was also recognized as one the most significant factors to drive China's rise in the contemporary world. Although many aspects of China's market reform have been extensively analysed in the literature, specific attention on the adaptation of economic growth to this reform has been relatively ignored. To fill this gap, this research adopts the extenics assessment method to assess this adaptation and applies the membership function coordination degree model to analyse the sustainability of such adaptation. In conclusion, China has demonstrated a significantly enhanced adaptation capacity at the expense of coordination, which requires to be further emphasised in its economic growth adaptation strategies.
    Keywords: economic adaptation,extenics assessment method,membership function coordination degree model,market economy reform
    JEL: A11 O11 P21 P41
    Date: 2017
  3. By: Fang, Zheng (School of Business, SIM University, Singapore); Chen, Yang (Division of Economics, Xi'an Jiaotong-Liverpool University)
    Abstract: We examine the city-level cointegrating and Granger causal relationships between economic growth, electricity consumption and human capital during a period of 2003-2012 in China. Applying the Continuously-updated fully modified OLS panel estimation, we find that for China as a whole physical and human capital have similar positive impacts on local economic growth, which are slightly larger than the effect of electricity consumption. A 1% rise in either physical or human capital investment boosts economic growth by 0.07% and the output elasticity of electricity consumption is 0.06. Comparatively, electricity consumption plays a dominant role to boost economic growth in the Center, human capital contributes most to growth in the East, and growth in the West benefits most from physical capital investments. Using a Granger causality test that is suitable for heterogeneous panels, we find a uni-directional causal relationship running from economic growth to electricity consumption in central and western China and a feedback effect in eastern China. In terms of the causal relationship between electricity consumption and education expenditure, electricity Granger causes education expenditure in some eastern Chinese cities and a reverse relationship is observed for cities in Middle China, while for western cities a bi-directional causal link is found. Local policies should therefore vary and be coordinated across government agencies.
    Keywords: Electricity consumption, education expenditure, heterogeneous panel causality, Chinese cities
    Date: 2017–05–24
  4. By: Jieun Lee (University of Michigan)
    Abstract: The price comparability provision of ChinaÕs accession protocol recognizes that WTO members may face special difficulty in determining subsidies and dumping from China, due to its governmentÕs pervasive intervention in the economy. The provision permits importing members to disregard domestic prices or costs in China and to use alternative benchmarks in determining the normal value of Chinese exports. Consequently, this so-called nonmarket economy methodology tends to inflate antidumping and countervailing duty rates. Certain paragraphs of the provision determining dumping expire on 11 December 2016, and yet the heated debate on ChinaÕs economic status post-December 2016 remains ongoing. This paper studies the history of U.S. trade remedy actions against nonmarket economies and traces recent developments and findings at the WTO dispute settlement body. Congressional history shows that antidumping regulations in the U.S. have been constantly amended to catch up with agency practices that discriminate against nonmarket economies. Meanwhile, the Department of Commerce recently started to apply countervailing duties on Chinese imports and has finally codified such practices into law. The paper offers many reasons to believe that the U.S. is equipped with various trade remedy measures to continue Ôspecial treatmentÕ against China, even if the country graduates from a nonmarket economy status.
    Keywords: non-market economy status, anti-dumping
    JEL: F13
    Date: 2016–10–15
  5. By: YIN Ting; ZHANG Junchao
    Abstract: This paper studies the causal effect of education on intergenerational transfers from/to adult children. Using micro-data from the China Health and Retirement Longitudinal Study, we exploit exogenous variations in parents' schooling induced by China's Great Famine to take account of the endogeneity of education, and then estimate the effect of schooling on the probability of receiving/giving transfers from/to adult children. The instrumental variable estimates show that an additional year of schooling has a negative effect on the probability of receiving transfers, but a positive effect on the probability of giving transfers at old age. Our results have some policy implications on social security in aging societies.
    Date: 2017–05
  6. By: Huang, Yanghua (Institute of Industrial Economics, Chinese Academy of Social Sciences); Salike, Nimesh (Division of Economics, Xi'an Jiaotong-Liverpool University); Yin, Zhifeng (School of Economics, Central University of Finance and Economics); Zeng, Douglas Zhihua (World Bank)
    Abstract: In contrast to previous papers, where in these two important aspects of innovation were delved separately, this paper analyses the effects in unison by using the most comprehensive data on Chinese enterprises- World Bank China Enterprise Survey (2012). Our dependent variables are innovation performance measured in various dimensions: the probabilities of R&D expenditure, staff training, product innovation, process innovation and management innovation. Our key variables of interest are ownership based on largest share (SOE, private and foreign) and firm size based on the number of employees. The analysis is based on panel data approach with different dimensions added (city, industry fixed) and the interaction of ownership and size variables. Major findings suggest that SOEs and domestic private enterprises are much alike in innovation participation, but different in innovation diversification that leads to ownership specific innovative advantage. Foreign enterprises are innovative in most of the innovation measurements. Size if positively correlated to innovation. We also find that as the size of enterprise increases, ownership specific innovative advantage is subject to changeable. That implies ownership and size should be examined jointly rather than separately. The result also shows the effects of ownership and size on innovations are uneven geographically and industrially.
    Date: 2017–05–24
  7. By: Fan, Ying; Yavas, Abdullah
    Abstract: The high growth rate of mortgage debt in various emerging and developed economies has captured headlines following the financial crisis. In this paper, we investigate how mortgage debt impacts household consumption behavior and various components of household consumption. Utilizing a comprehensive household survey data from China, we show that households with a mortgage consume a higher portion of their income than households without a mortgage. This is in line with the argument that having a mortgage reduces the uncertainty that the household faces regarding how much to save each month in order to be able to own a house, and this reduced uncertainty leads to lower monthly savings for the purpose of buying a house. We also find that among households with a mortgage, those who spend a larger share of their income on mortgage payments spend less of their income on consumption, reflecting the crowding out effect of mortgage payments on household consumption. Furthermore, we show that a government policy of decreasing the maximum loan-to-value ratio has a significant impact on the consumption behavior of households. The current paper offers the first evidence of the impact of growing mortgage debt on the consumption behavior of households. Our results will have implications for government policies that encourage mortgage borrowing.
    Keywords: Consumption, Mortgage Debt
    JEL: D14 E21 G21
    Date: 2017–05–22
  8. By: Ning Mao (Dhurakij Pundit University, Bangkok, Thailand); Michael McAleer (National Tsing Hua University, Taiwan; University of Sydney Business School, Australia; Erasmus School of Economics, Erasmus University Rotterdam, and Tinbergen Institute, The Netherlands; Complutense University of Madrid, Spain and Yokohama National Univ)
    Abstract: Under anti-globalization and isolationism, China is seeking to portray itself as a new leader for globalization under the banner of the Silk Road initiative. Meanwhile, China’s traditional and comparatively advantaged industry, silk, has faced dire predicaments and challenges for long time, and needs a transformation in terms of initiatives. Throughout history, the prosperity arising from silk was supposed to represent a microcosm of Chinese society. This paper searches the breakthrough point to improve the current dilemma of Chinese silk enterprises; uses a Case Study for inductive reasoning that is feasible for marketing strategies; and provides a strategy to help Chinese silk enterprises to transform their market positioning and operating modes to obtain better development opportunities. The paper also analyzes the new external environment based on the “One Belt, One Road” principle, which is of crucial importance for the implementation of new marketing strategies.
    Keywords: China; Silk; Company Strategy; National Strategy; Transformation; Chinese Trade
    JEL: O24 P33 Q27
    Date: 2017–05–22
  9. By: Krzysztof Falkowski (World Economy Research Institute, Warsaw School of Economics)
    Abstract: Research background: The actual position of a country in the international division of labour is determined by the competitiveness of its trade, the structure of which may both reveal and perpetuate the comparative advantages possessed. This is particularly true for Dutch disease economies such as Russia. Recently, economic literature has seen a growing interest in the topic of Russia’s economic relations with the European Union and China. This article is meant to be the author’s contribution to this discussion. Purposes of the article: (1) to discuss the existing trade interdependence between Russia and EU28, and Russia and China; (2) to try to assess the extent to which the current structure of Russian trade with these two partners corresponds with the competitiveness of the Russian economy. Methodology/methods: An in-depth analysis of Russia-EU28 and Russia-China trade interdependencies in 2007-2015 has been conducted, with emphasis on the categories of goods within the spectrum from low-tech to high-tech, according to the OECD classification. Furthermore, in order to analyse Russia’s competitive profile with regard to the same categories of goods, Balassa’s methodology of revealed comparative advantages has been applied. Findings & Value added: In the recent years, a growing importance of China in Russian trade can be observed, being the effect of dynamic growth of Chinese economy, cooling political relations between Moscow and Brussels and the drop in petroleum prices in international markets. Sadly, the existing structure of Russian trade with EU28 and China seems likely to preserve its traditional competitive advantages in the medium-low-tech goods and petroleum, which, in turn, will only further exacerbate the negative effects of the so-called Dutch disease affecting the Russian economy.
    Keywords: trade interdependence; competitiveness; competitive advantages; Russia; European Union; China
    JEL: F14 F40 P45
    Date: 2017–05
  10. By: Zhu, Xiwei (School of Economics, Zhejiang University); Liu, Ye (School of Economics, Zhejiang University); He, Ming (Division of Economics, Xi'an Jiaotong-Liverpool University); Luo, Deming (School of Economics, Zhejiang University); Wu, Yiyun (School of Economics, Zhejiang University)
    Abstract: This article studies the synergy effect of entrepreneurship on China’s industrial clusters. We propose an extension to Duranton and Overman’s (2005) method which enables us to delimit industrial clusters in space. The empirical model is identified with historical measures of local entrepreneur potential in the spirit of Chinitz (1961). We find that measures of entrepreneurship contribute significantly to cluster formation, cluster size, and cluster strength. Access to sea ports stimulates industrial concentration but agricultural legacy has the opposite effect. Light industries have more clusters which are also larger and stronger. Clusters also benefit from historical measures of market potential, localization/urbanization economies, and urban population density. Most of the results are robust to alternative instrumental strategies. Finally, we find evidence that the synergy effect is stronger where the local conditions are favorable to clusters.
    Date: 2017–05–24
  11. By: Fu, Shihe; Guo, Mengmeng
    Abstract: Using a sample of over 0.3 million marathon runners in 37 cities and 55 races in China in 2014 and 2015, we estimate the air pollution elasticity of finish time to be 0.041. Our causal identification comes from the exogeneity of air pollution on the race day because runners are required to register a race a few months in advance and we control for city fixed effects, seasonal effects, and weather condition on the race day. Including individual fixed effects also provides consistent evidence. Our study contributes to the emerging literature on the effect of air pollution on short-run productivity, particularly on the performance of athletes engaging outdoor sports and other workers whose jobs require intensive physical activities.
    Keywords: Air pollution; marathon; outdoor behavior; mega events; short-run productivity
    JEL: I18 Q53 R11 Z10
    Date: 2017–05–31
  12. By: Gerard Roland; David Y. Yang
    Abstract: Beliefs about whether effort pays off govern some of the most fundamental choices individuals make. This paper uses China’s Cultural Revolution to understand how these beliefs can be affected, how they impact behavior, and how they are transmitted across generations. During the Cultural Revolution, China’s college admission system based on entrance exams was suspended for a decade until 1976, effectively depriving an entire generation of young people of the opportunity to access higher education (the “lost generation”). Using data from a nationally representative survey, we compare cohorts who graduated from high school just before and after the college entrance exam was resumed. We find that members of the “lost generation” who missed out on college because they were born just a year or two too early believe that effort pays off to a much lesser degree, even 40 years into their adulthood. However, they invested more in their children’s education, and transmitted less of their changed beliefs to the next generation, suggesting attempts to safeguard their children from sharing their misfortunes.
    JEL: I23 O53 P26 P48 Z1
    Date: 2017–05

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