nep-cna New Economics Papers
on China
Issue of 2018‒02‒05
seven papers chosen by
Zheng Fang
Ohio State University

  1. China Needs Better Credit Data to Help Consumers By Martin Chorzempa
  2. Amenities and Geography of Innovation: Evidence from Chinese Cities By Zhang, Min; Partridge, Mark; Song, Huasheng
  3. Where Are Migrants From? Inter- vs. Intra-Provincial Rural-Urban Migration in China By Yaqin Su; Petros Tesfazion; Zhong Zhao
  4. Is there a housing bubble in China By Tianhao Zhi; Zhongfei Li; Zhiqiang Jiang; Lijian Wei; Didier Sornette
  5. To License or Sell: A Study on the Patent Transaction Modes in China By Naubahar Sharif
  6. From taxing to subsidizing farmers in China Post-1978 By Kym Anderson
  7. Cooperation of vocational colleges and enterprises in China: Institutional foundations of vocational education and skill formation in nursing and mechanical engineering - Preliminary findings By Müller, Armin

  1. By: Martin Chorzempa (Peterson Institute for International Economics)
    Abstract: Formidable barriers stand between the modern financial system and the hundreds of millions of Chinese citizens still using costly informal credit. For many, the financial data that could be used to give them a credit score that would lead to a fair priced loan exist but are not being used. This analysis finds that the most difficult barriers cutting these data off from their potential use for greater financial inclusion are the legal and political restrictions on data sharing and use, economic and competitive concerns from data holders, and the technical difficulty of integrating disparate systems. Policies that encourage coordination between public authorities and private actors in finance and technology can go a long way towards making these data available and driving access to credit in China. This shift would not only help borrowers: It would also encourage the needed economic rebalancing towards consumption, increase competition in the financial sector, raise efficiency through better credit allocation, and contribute to sustainable economic growth and social welfare.
    Date: 2018–01
  2. By: Zhang, Min; Partridge, Mark; Song, Huasheng
    Abstract: People increasingly value amenities as their living standards improve. While the past thirty years have witnessed significant income growth in China, the role of amenities is less discussed. This paper fills the gap by investigating how amenities shape the geography of innovation in China. The empirical results based on city-level data suggest that both natural and consumer amenities are positively associated with regional innovation. Specifically, amenities related to temperature comfort, air quality, sunshine, educational resources and healthcare services matter most. Further, the analysis suggests the influence of amenities on innovation is closely linked with city characteristics such as income, density, and human capital. Therefore, to formulate innovation-driven growth, more attention should be paid to the role of amenities and amenity-related strategies should be tailored to city characteristics.
    Keywords: natural amenities, consumer amenities, innovation, regional economy
    JEL: O31 Q55 R1
    Date: 2018–01–05
  3. By: Yaqin Su (Hunan University); Petros Tesfazion (Central College); Zhong Zhao (Renmin University of China)
    Abstract: Using a representative sample of rural migrants in cities, this paper investigates where the migrants in urban China come from, paying close attention to intra-provincial vs. inter-provincial migrants, and examining the differences in their personal attributes. We find that migrants who have come within the province differ significantly from those who have come from outside of the province. Using a nested logit model, we find that overall, higher wage differentials, larger population size, higher GDP per capita, and faster employment growth rate are the attributes of a city that attract migrants from both within and outside province. In addition, moving beyond one’s home province has a strong deterrent effect on migration, analogous to the “border effect” identified in international migration studies. We also explore the role of culture, institutional barrier, and dialect in explaining such a pronounced “border effect”.
    Keywords: rural-urban migration, China, border effect, inter- vs. intra-provincial migration
    JEL: J62 O15
    Date: 2018–01
  4. By: Tianhao Zhi (SYU); Zhongfei Li (SYU); Zhiqiang Jiang (ECUST); Lijian Wei (SYU); Didier Sornette (ETH Zurich)
    Abstract: There is a growing concern in recent years over the potential formation of bubbles in the Chinese real estate market. This paper aims to conduct a series of bubble diagnostic analysis over nine representative Chinese cities from two aspects. First, we investigate whether the prices had been significantly deviating from economic fundamentals by applying a standard Engle-Granger cointegration test. Second, we apply the Log-Periodic-Power-Law-Singularity (LPPLS) model to detect whether there is any evidence of unsustainable, self-reinforcing speculative behaviours amongst the price series. We propose that, given the heterogeneity that exists amongst cities with different types of bubble signatures, it is vital to conduct bubble diagnostic tests and implement relevant policies toward specific bubble characteristics, rather than enforcing one-that-fits-for-all type policy that does not take into account such heterogeneity.
    Date: 2018–01
  5. By: Naubahar Sharif (Division of Social Science , The Hong Kong University of Science and Technology; Institute of Emerging Market Studies, The Hong Kong University of Science and Technology)
    Abstract: Analyzing a unique, previously unavailable, government patent database, this study investigates the determinants of transaction modes (namely to sell, license or retain) of invention and utility model patents in China. The results suggest that there is an inverted U-shaped relationship between an invention patent’s quality and the probability of it being licensed out while no relationship exists between a utility model’s quality and the probability of it being transacted. We also find that a firm with economically-motivated patent strategies is less likely to sell its invention patents while a firm with administratively-motivated patent strategies are more likely to transact its patents.
    Date: 2018–01
  6. By: Kym Anderson
    Abstract: This paper has three purposes: to document the pace and extent to which China’s policy regime has transitioned over the past four decades from taxing to subsidizing its farmers relative to its producers of other tradable goods; to present projections of the world economy to 2030 that suggest China will continue to become more food import-dependent under current policies and productivity growth rates; and to explore alternative policy instruments for remaining food secure and ensuring that farmers are not losers from economic growth. The data used to estimate the extent of distortions to producer incentives come from freely available World Bank and OECD sources that allow direct comparisons of China’s policy developments with those of more- and less-advanced economies. The estimates reveal that China has made the transition from negative to positive assistance to farmers far faster than the average developing country, and almost as fast as its Northeast Asian neighbours did in earlier decades at similar levels of real per capita incomes. That has helped to ensure China remained food self-sufficient during the first two decades of reform. However, food self-sufficiency is now declining and is projected to continue to do so over the next decade under current policies. Preventing food self-sufficiency from declining further by increasing agricultural protection is now unnecessary thanks to the information and communication technology revolution that enables the government to use conditional cash transfers to directly support the adjustment and well-being of poor farm households.
    Keywords: agricultural support policies, China’s economic growth, food security, multiple exchange rates
    JEL: F13 F14 Q17 Q18
    Date: 2017
  7. By: Müller, Armin
    Abstract: In the context of the ongoing transformation of China's economic development model, the central government under Xi Jinping announced a general upgrading of China's skill-formation system. The initiative is part of a larger strategy to avoid the middle income trap and move towards a high-skill route of development. One of the core challenges in this respect is to consolidate the cooperation of enterprises and vocational schools and colleges, and to couple the realms of education and employment more tightly. The aim of this paper is to analyze these issues in the institutional context of state-permeated capitalism from the perspective of actor-centered institutionalism. By conducting a structured and focused comparison of the fields of nursing and mechanical engineering in two vocational colleges in Eastern China, it identifies important factors facilitative to reforms. The nursing case illustrates that bureaucratic integration and a dominance of the public sector facilitate the cooperation of schools and enterprises and the coupling of education and employment. Here, hierarchical steering can reinforce cooperation and couple education and employment via vocational qualification certificates. The fragmentation of bureaucratic authority and marketization, on the other hand, require new patterns of cooperation and coupling. The case of mechanical engineering illustrates the potential of well-performing education facilities to attract cooperation partners without direct state support, and of industry associations to play an intermediary role between schools and companies, and to develop new vocational qualifications geared to companies' requirements. The case study design focuses on areas of vocational education with high incentives for cooperation and good material conditions. The preliminary results indicate that the generally negative assessment of China's TVET system in the literature may be somewhat too pessimistic, and that a more differentiated analysis is needed.
    Keywords: China,vocational education,vocational colleges,skill formation,nursing,mechanical engineering
    Date: 2017

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