nep-cna New Economics Papers
on China
Issue of 2017‒07‒23
six papers chosen by
Zheng Fang
Ohio State University

  1. Inequality of opportunity and household education expenditures: Evidence from panel data in China By Yang Song; Guangsu Zhou
  2. The Consequences of an Aging Chinese Miracle By Wenli Li; Fang Yang; Michael Dotsey
  3. Europe goes Chinese? The impact of Chinese globetrotters on European luxury shops By Tiziano Vescovi; Charlotte Pellizzari
  4. Evaluating the effectiveness of the Rural Minimum Living Standard Guarantee (Dibao) program in China By Nanak Kakwani; Shi Li; Xiaobing Wang; Mengbing Zhu
  5. Does the Stock Market Boost Firm Innovation?; Evidence from Chinese Firms By Hui He; Hanya Li; Jinfan Zhang
  6. Geopolitics and Asia’s Little Divergence: State Building in China and Japan After 1850 By KOYAMA, Mark; MORIGUCHI, Chiaki; SNG, Tuan-Hwee

  1. By: Yang Song (Renmin University of China); Guangsu Zhou (Nankai University, China)
    Abstract: This paper This paper offers the first empirical evidence on the impact of inequality of opportunity on household education investment by using the by using the by using the by using the by using the by using the panel data from China Family Panel Studies (CFPS) in three in three in three in three waves (2010, 2012 and 2014). Our result suggests that inequality of opportunity has a negative effect on household education expenditures. This result is robust to robustness checks. Furthermore, the disadvantaged households (whose householders with less education, income, and rural hukou status) seem to be affected more by inequality of opportunity within the county they live in. Higher inequality of opportunity in the comparison group may reduce their incentives to investment more on education. Policy suggestions to reduce inequality of opportunity may include reducing labor market discrimination based on gender and hukou, balancing education resources to create more equal educational opportunities, and offering children education subsidies in low-income families.
    Keywords: income inequality, inequality of opportunity, education expenditures, economic growth, China.
    JEL: J24 D33 O15 O53
    Date: 2017–05
  2. By: Wenli Li (Federal Reserve Bank of Philadelphia); Fang Yang (Louisiana State University); Michael Dotsey (Federal Reserve Bank of Philadelphia)
    Abstract: In this paper, we study the consequences of the demographic changes in China and the U.S. on the two nation’s output growth, capital accumulation, labor supply, and welfare in various economic environments including closed economies, economies with perfect capital mobility and no trade barriers, and economies with imperfect capital mobility and /or trader barriers. Our focus on only two of the largest economies in the world, China and U.S., allow us to more realistically capture each economy and make use of micro data that exhibits unique and interesting patterns such as having savings rate in China.
    Date: 2017
  3. By: Tiziano Vescovi (Dept. of Management, Università Ca' Foscari Venice); Charlotte Pellizzari (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: As they travel more, the Chinese consumers are making a rapidly-growing share of their luxury purchases outside the Mainland. There are several reasons that exhort Chinese luxury consumers to have their expenditures outside their home country, being economic, cultural and social. With so many Chinese visiting elegant store on their travels, luxury brands must try to provide consistent positioning in the outlets around the world. In order to analyze the impact of Chinese globetrotters on European luxury retailing, a research was made inside a Christian Dior shop in Venice, by mean of the observation of 346 consumer behaviors in a period of four months. The evidences from the observation of the Chinese consumer behaviors in the DiorÕs retail store in Venice underline some aspects should be analyzed and considered in facing the Chinese consumer going global. Despite the event limitations this research disclosed an additional aspect in the luxury goods buying behavior that is strictly connected with the globalization of the Chinese customer, influencing the sales strategy of western companies not only in China but also in their domestic markets.
    Keywords: Retailing, International marketing, Luxury marketing
    JEL: M31
    Date: 2017–07
  4. By: Nanak Kakwani (The University of New South Wales, Australia); Shi Li (Beijing Normal University, China); Xiaobing Wang (The University of Manchester, U.K.); Mengbing Zhu (Beijing Normal University, China)
    Abstract: China’s Rural Minimum Living Standard Guarantee program (Dibao) is the largest social safety-net program in the world. Given the scale and the popularity of Rural Dibao, it is necessary to rigorously evaluate it so that policymakers know the extent to which the program meets its intended objective of reducing poverty. This paper develops some new methods and uses data from the 2013 Chinese Household Income Project (CHIP2013) to examine the targeting performance of the rural Dibao program. The paper has found that the Rural Dibao program suffers from very low targeting accuracy, high exclusion error, and inclusion error, and yields a significant negative social rate of return. It discusses possible causes and argues that the fundamental mechanism has to be redesigned to increase the effectiveness of the program. The paper makes some recommendations to reform Dibao that will significantly improve targeting and reduce the cost of running the program. That will help China to achieve its goal of eradicating extreme poverty by 2020.
    Keywords: Dibao, policy effectiveness, poverty reduction, social rate of return.
    JEL: O11
    Date: 2017–05
  5. By: Hui He; Hanya Li; Jinfan Zhang
    Abstract: The paper analyses the effect of the stock market on firm innovation through the lens of initial public offering (IPO) using uniquely matched Chinese firm-level data. We find that IPOs lead to an increase in both the quantity and quality of firm innovation activity. In addition, IPOs expand a firm’s scope of innovation beyond its core business. The impact of IPOs on firm innovation varies across financial constraints, corporate governance, and ownership structures. Our results further illustrate that IPOs induce a firm to increase the number of inventors and enable better retention of existing inventors after the IPO. Finally, we show that the enhanced innovation activity resulting from IPOs increases a firm’s Tobin’s Q in the long run.
    Date: 2017–06–30
  6. By: KOYAMA, Mark; MORIGUCHI, Chiaki; SNG, Tuan-Hwee
    Abstract: We provide a new framework to account for the diverging paths of political development in China and Japan during the late nineteenth century. The arrival of Western powers not only brought opportunities to adopt new technologies, but also fundamentally threatened the sovereignty of both countries. These threats and opportunities produce an unambiguous impetus toward centralization and modernization for small states, but place conflicting demands on larger states. We use our theory to study why China, which had been centralized for much of its history, experienced gradual disintegration upon the Western arrival, and how Japan rapidly unified and modernized.
    Keywords: China, Japan, Geopolitics, State Capacity, Political Fragmentation, Political Centralization, Economic Modernization
    Date: 2017–07

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.