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on China |
| By: | Carpenter, Jennifer N.; Lu, Fangzhou; Whitelaw, Robert F. |
| Abstract: | This paper shows that, counter to common perception, stock prices in China are strongly linked to firm fundamentals. Since the reforms of the early 2000s, stock prices are as informative about future profits as they are in the US. Although the market is segmented from international equity markets, Chinese investors price individual stock characteristics like other global investors: they pay up for size, growth, liquidity, and long shots, while they discount for systematic risk. Price informativeness is significantly correlated with corporate investment e ciency. For international investors, China's stock market offers high average returns and low correlation with other equity markets. |
| JEL: | E44 F30 G12 G14 G15 O16 O53 P21 P34 |
| Date: | 2018–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2018_002&r=cna |
| By: | Huang, Hanwei; Ju, Jiandong; Yue, Vivian Z. |
| Abstract: | This paper studies how changes in factor endowment, technology, and trade costs jointly determine the structural adjustments, which are defined as changes in distributions of production and exports. We document the structural adjustments in Chinese manufacturing firms from 1999 to 2007 and find that production became more capital-intensive while exports did not. We structurally estimate a Ricardian and Heckscher-Ohlin model with heterogeneous firms to explain this seemingly puzzling pattern. Counterfactual simulations show that capital deepening made Chinese production more capital-intensive, but technology changes that biased toward the labor-intensive sectors and trade liberalizations provided a counterbalancing force |
| Keywords: | structural adjustments; comparative advantage; heterogeneous firm |
| JEL: | F12 L16 |
| Date: | 2017–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:86601&r=cna |
| By: | Xue, Melanie Meng; Koyama, Mark |
| Abstract: | This paper explores the impact of autocratic rule on social capital—defined as the beliefs, attitudes, norms and perceptions that support cooperation. Political repression is a distinguishing characteristic of autocratic regimes. Between 1660–1788, individuals in imperial China were persecuted if they were suspected of holding subversive attitudes towards the state. A difference-in-differences approach suggests that in an average prefecture, exposure to those literary inquisitions led to a decline of 38% in local charities—a key proxy of social capital. Consistent with the historical panel results, we find that in affected prefectures, individuals have lower levels of generalized trust in modern China. Taking advantage of institutional variation in 20th c. China, and two instrumental variables, we provide further evidence that political repression permanently reduced social capital. Furthermore, we find that individuals in prefectures with a legacy of literary inquisitions ar are more politically apathetic. These results indicate a potential vicious cycle in which autocratic rule becomes self-reinforcing through causing a permanent decline in social capital. |
| Keywords: | Social Capital, Institutions, Autocracy, China |
| JEL: | D71 D73 N45 Z1 Z10 |
| Date: | 2018–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:84249&r=cna |
| By: | Dosi, Giovanni; Yu, Xiaodan |
| Abstract: | This paper investigates the microeconomics of employment dynamics, using a Chinese manufacturing firm-level dataset over the period 1998-2007. It does so in the light of a scheme of “circular and cumulative causation”, whereby firms’ heterogeneous productivity gains and sales dynamics, and innovation activities ultimately shape the patterns of employment dynamics. Using firm’s productivity growth as a proxy for process innovation, our results show that the latter correlates negatively with firm-level employment growth. Conversely, relative productivity levels, as such a general proxy for the broad technological advantages/disadvantages of each firm, do show positive effect on employment growth in the long-run through replicator-type dynamics. Moreover, firm-level demand dynamics play a significant role in driving employment growth, which more than compensate the labour-saving effect due to technological progress. Finally, and somewhat puzzlingly, the direct effects of product innovation and patenting activities on employment growth appear to be negligible. |
| Keywords: | Employment Growth,Demand,Product Innovation,Process Innovation,Export,China catching-up |
| JEL: | D22 J01 O33 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:177&r=cna |
| By: | Defever, Fabrice; Fischer, Christian; Suedekum, Jens |
| 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 rematching 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: | D23 F23 L23 |
| Date: | 2017–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:86605&r=cna |
| By: | Xu, Bing |
| Abstract: | By allowing large classes of movable assets to be used as collateral, the Property Law reform trans-formed the secured transactions in China. Difference-in-differences tests show firms operating with ex-ante more movable assets expand access to bank credit and prolong debt maturity. However, the reform does not seem to improve the efficiency of credit allocation, as debt capacity of ex-ante low quality firms expands the most following the reform. Credit expansion also does not lead to better firm performance. These findings are not driven by confounding factors such as improvements in creditor and property rights protection. Our results also cannot be explained by other important reforms which were introduced around the same time as the introduction of the Property Law. These include anti-tunneling and split-share reforms and amendments to the corporate tax structure in China. We conduct explicit robustness tests for these other reforms and amendments to the corporate tax structure in China. We conduct explicit robustness tests for these other reforms and hence contribute to the empirical literature on the reform process in China with new findings. |
| JEL: | G21 G28 G32 K22 |
| Date: | 2018–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2018_003&r=cna |
| By: | John B. Donaldson; Christos Koulovatianos; Jian Li; Rajnish Mehra |
| Abstract: | Lucas (1990) argues that the neoclassical adjustment process fails to explain the relative paucity of FDI inflows from rich to poor countries. In this paper we consider a natural experiment: using China as the treated country and India as the control, we show that the dynamics of the relative FDI flows subsequent to the implementation of China's one-child policy, as seen in the data, are consistent with neoclassical fundamentals. In particular, following the introduction of the one-child policy in China, the capital-labor (K/L) ratio of China increased relative to that of India, and, simultaneously, relative FDI inflows into China vs. India declined. These observations are explained in the context of a simple neoclassical OLG paradigm. The adjustment mechanism works as follows: the reduction in the (urban) labor force due to the one-child policy increases the savings per capita. This increases the K/L ratio and reduces the marginal product of capital (MPK). The reduction in MPK (relative to India) reduces the relative attractiveness of investment in China and is thus associated with lower FDI/GDP ratios. Our paper contributes to the nascent literature exploring demographic transitions and their effects on FDI flows. |
| JEL: | E13 F11 F12 J11 O11 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24256&r=cna |
| By: | Junwen Qiu; Wenjian Liu; Ning Ning |
| Abstract: | Based on endogenous economic growth models and the panel data of 31 regions in China, this paper explores the following four questions: Do spatial knowledge spillovers among regions exist? Do spatial knowledge spillovers promote regional innovative activities? What is the radiation range of spatial knowledge spillovers? Do external knowledge spillovers affect the evolution of regional innovations in the long run? The results show that spatial knowledge spillovers exist, and though the range of knowledge spillover is within 1000 kilometers in China, it pushes up regional innovative activities. Moreover, since developing regions benefit more from external knowledge spillovers than developed regions, it leads to the convergence of regional knowledge growth rate. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1801.06936&r=cna |
| By: | Jiang, M.; Liang, X.; Reiner, D.; Lin, B. |
| Abstract: | China set up pilot Emission Trading Schemes (ETS) in seven cities and provinces from 2013 as a new instrument to incentivise carbon dioxide emission reduction and to reach its 40-45% carbon intensity reduction target by 2020. Using a two-stage survey (a closed-form questionnaire followed by open interviews), we elicit views of stakeholders from Guangdong province on carbon markets, with an emphasis on how ETS would interact with other existing or proposed low-carbon and clean energy policies. Our survey shows that academic stakeholders viewed the interactions between the carbon market and other lowcarbon policies as a significant potential problem but there was less awareness by stakeholders from other sectors. There is a positive correlation between recognising such policy interactions may pose a problem and the time spent working on energy saving and emission reduction policies. Whereas both increasing renewable targets and imposing a carbon tax in addition to an existing ETS would be expected to depress prices in the ETS, relatively few respondents identified this effect correctly. Apart from government respondents, all other stakeholders lacked confidence in China's carbon markets, which is associated with both their lack of knowledge and information about the market and concerns regarding uncertainties and government policy design. The need for learning from the pilot schemes particularly on monitoring, reporting and verification was seen as vital but challenging given the speed of rolling out a national ETS. |
| Keywords: | Emissions trading, China, Carbon pricing; Guangdong ETS pilot; Stakeholder survey; Climate change policy; Low-carbon policy interactions |
| JEL: | H23 Q58 N45 Q48 Q54 |
| Date: | 2018–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1811&r=cna |