nep-cna New Economics Papers
on China
Issue of 2017‒12‒11
eight papers chosen by
Zheng Fang
Ohio State University

  1. Some Doubts about the Economic Analysis of the Flow of Silver to China in 1550-1820 By Jacques Melitz
  2. U.S. Job Flows and the China Shock By Brian J. Asquith; Sanjana Goswami; David Neumark; Antonio Rodriguez-Lopez
  3. Leaving Money on the Table? Suboptimal Enrollment in the New Social Pension Program in China By Xi Chen; Lipeng Hu; Jody L. Sindelar
  4. Resource allocation and productivity across provinces in China By Peng Bin; Xiaolan Chen; Andrea Fracasso; Chiara Tomasi
  5. The Effect of Import Competition on Employment in Canada: Evidence from the 'China Shock' By Alexander Murray
  6. Supplier Search and Re-Matching in Global Sourcing: Theory and Evidence from China By Fabrice Defever; Christian Fischer; Jens Suedekum
  7. An Inverse Problem Study: Credit Risk Ratings as a Determinant of Corporate Governance and Capital Structure in Emerging Markets: Evidence from Chinese Listed Companies By ManYing Kang; Marcel Ausloos
  8. Three essays on trade policies in developing countries By Choi, Yoonho

  1. By: Jacques Melitz
    Abstract: The paper takes issue with the mainstream economic analysis of the enormous flow of silver into China in 1550-1820. First, I challenge the view that arbitrage between gold and silver in European trade with China was important except for one twenty-year spell. Next, I argue that had China imported gold, its history would have been much the same. I also dispute the idea that the persistence of the silver inflows from 1550 to 1820 implies any persistent disequilibrium, and I maintain that economic theory can easily accommodate the view that the inflow of silver into China sponsored growth in China.
    Keywords: Silver Flows into China 1550-1820;Silver/Gold Exchange Rates;Transaction Costs in International Trade
    JEL: N1 N15 N25 F36
    Date: 2017–11
  2. By: Brian J. Asquith; Sanjana Goswami; David Neumark; Antonio Rodriguez-Lopez
    Abstract: International trade exposure affects job creation and destruction along the intensive margin (job flows due to expansions and contractions of firms' employment) as well as along the extensive margin (job flows due to births and deaths of firms). This paper uses 1992-2011 employment data from the {universe} of U.S. establishments to construct job flows at both the industry and commuting-zone levels, and then estimates the impact of the `China shock' on each job-flow type. The China shock is accounted for by either the increase in Chinese import penetration in the U.S., or by the U.S. policy change that granted Permanent Normal Trade Relations (PNTR) status to China. We find that the China shock affects U.S. employment mainly through deaths of establishments. At the commuting-zone level, we find evidence of large job reallocation from the Chinese-competition exposed sector to the nonexposed sector, and establish that the gross employment effects of the China shock are fundamentally different from those of a more general adverse shock affecting the U.S. demand for domestic labor.
    JEL: F14 F16 J2 J65
    Date: 2017–11
  3. By: Xi Chen; Lipeng Hu; Jody L. Sindelar
    Abstract: China’s recently implemented New Rural Pension Scheme (NRPS), the largest social pension program in the world, was designed to provide financial protection for its rural population and reduce economic inequities. Yet the impact of this program is mitigated if those eligible fail to enroll. This paper examines the extent to which pension-eligible individuals, and their families, make optimal pension decisions. Families are involved in the NRPS decisions because, in most cases, adult children need to enroll as a prerequisite of their parents’ receipt of benefits. We examine the decisions of both those eligible for pension benefits (i.e. over 60 years old) and their adult children. We use the rural sample of the 2012 China Family Panel Study to study determinants of the decision to enroll in NRPS, premiums paid, and time taken to enroll. We find evidence of low and suboptimal pension enrollment by eligible individuals and their families. Suboptimal enrollment takes various forms including failure to switch from the dominated default pension program to NRPS and little evidence that families make mutually beneficial intra-family decisions. For the older cohort, few individual and family characteristics are significant in enrollment decisions, but village characteristics play an important role. For the younger cohort, we find that more individual-level characteristics are significant, including own and children’s education. Village characteristics are important but not as much as for the older cohort.
    JEL: D13 D14 H55 I3
    Date: 2017–11
  4. By: Peng Bin; Xiaolan Chen; Andrea Fracasso; Chiara Tomasi
    Abstract: The rapid economic development in China has been characterized by levels of income and productivity very heterogeneous across local areas. This work investigates a previously unexplored aspect of such heterogeneity by assessing the degree of within-industry allocative e ciency across provinces in China over the period 1998-2007. Us- ing firm-level data from the surveys conducted by the National Bureau of Statistics on the Chinese manufacturing firms, we measure the degree of resource misallocation by computing the within-industry covariance between size and productivity at the provincial level. The results suggest that within-industry allocative e ciency varies considerably across local areas and that some place-based factors strongly influence resources mobility. Our work sheds some light on the mechanisms at play in the dis- tribution of resources in China and it contributes to the literature investigating the degree of allocative effciency.
    Keywords: Allocative effciency, Resource allocation, Regional disparities, China
    JEL: D24 L25 O47 F41
    Date: 2017
  5. By: Alexander Murray
    Abstract: In this paper, we provide a quantitative assessment of the impact on Canadian employment of a recent shock to Canada’s import supply: the rapid rise of China as a manufacturing export superpower in the late 1990s and early 2000s
    Keywords: D70, E24, F16, J21, O24
    Date: 2017–06
  6. By: Fabrice Defever; Christian Fischer; Jens Suedekum
    Abstract: In this paper, we consider a dynamic search-and-matching problem of a firm with its intermediate input supplier. In our model, a headquarter currently matched with a supplier, has an interest to find and collaborate with a more efficient partner. However, supplier switching through search and re-matching is costly. Given this trade-off between the fixed costs and the expected gains from continued search, the process will stop whenever the headquarter has found a sufficiently efficient supplier. Using firm-product-level data of fresh Chinese exporters to the United States, we obtain empirical evidence in line with the predictions of our theory. In particular, we find that the share of short-term collaborations is higher in industries with more supplier-cost dispersion, an indication of higher expected search opportunities.
    Keywords: input sourcing, relational contracts, supplier search
    JEL: F23 D23 L23
    Date: 2017–11
  7. By: ManYing Kang; Marcel Ausloos
    Abstract: Credit risk rating is shown to be a relevant determinant in order to estimate good corporate governance and to self-optimize capital structure. The conclusion is argued from a study on a selected (and justified) sample of (182) companies listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange and which use the same Shanghai Brilliance Credit Rating & Investors Service Company assessment criteria, for their credit ratings, from 2010 to 2015. Practically, 3 debt ratios are examined in terms of 11 characteristic variables. Moreover, any relationship between credit rating and corporate governance can be thought to be an interesting finding. The relationship between credit rating and leverage is not as evident as that found by other researchers from different countries; it is significantly positively related to the outside director, firm size, tangible assets and firm age, and CEO and chairman office plurality. However, leverage is found to be negatively correlated with board size, profitability, growth opportunity, and non-debt tax shield. Credit rating is positively associated with leverage, but in a less significant way. CEO-Board chairship duality is insignificantly related to leverage. The non-debt tax shield is significantly correlated with leverage. The correlation coefficient between CEO duality and auditor is positive but weakly significant, but seems not consistent with expectations. Finally, profitability cause could be regarded as an interesting finding. Indeed, there is an inverse correlation between profitability and total debt (Notice that the result supports the pecking order theory). In conclusion, it appears that credit rating has less effect on the so listed large Chinese companies than in other countries. Nevertheless, the perspective of assessing credit risk rating by relevant agencies is indubitably a recommended time dependent leverage determinant.
    Date: 2017–12
  8. By: Choi, Yoonho
    Abstract: During the past decade, foreign exchange reserves of China and Japan have increased dramatically. For instance, China’s foreign exchange reserve rose from $954.6 billion in January 2007 to $3.5 trillion in April 2016. China and Japan seem to hold large foreign reserves, much more than are necessary to facilitate their imports. The WTO regulates only tariff and various non-tariff barriers but has made little effort to regulate the bilateral exchange rates because exchange rate practices are within the purview of the IMF. At present, the World Trade Organization (WTO) does not treat currency devaluation as a protective trade policy. In my dissertation, I have chosen three topics in the area of international economics. The first chapter argues that currency devaluation is equivalent to an import tariff, and hence currency devaluation should be treated as a trade policy instrument. The second chapter considers the employment effects of currency devaluations in a Keynesian open economy. Currency devaluation may decrease domestic employment and increase the social welfare. Under plausible conditions, the optimal policy is to get rid of domestic unemployment in input sectors. The third chapter investigates the effects of public capital investment in the export sector for the labor movement and capital formation and identifies the contribution of public capital and other economic factors to the productivity growth rate in the firm sector. We show that the optimal tariffs are positive but decrease to the steady state level.
    Date: 2017–01–01

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