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on China |
| By: | Zheng Michael Song; Wei Xiong |
| Abstract: | Motivated by growing concerns about the risks and instability of China’s financial system, this article reviews several commonly perceived financial risks and discusses their roots in China’s politico-economic institutions. We emphasize the need to evaluate these risks within China’s unique economic and financial systems, in which the state and non-state sectors coexist and the financial system serves as a key tool of the government to fund its economic policies. Overall, we argue that: (1) financial crisis is unlikely to happen in the near future, and (2) the ultimate risk lies with China’s economic growth, as a vicious circle of distortions in the financial system lowers the efficiency of capital allocation and economic growth and will eventually exacerbate financial risks in the long run. |
| JEL: | E00 E02 G00 G01 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24230&r=cna |
| By: | Noëmi, Lisack (Bank of England) |
| Abstract: | This paper studies the impact of credit sector reforms in a general equilibrium framework where heterogeneous firms choose their optimal investment and how to finance it. Besides retained earnings and bank loans, I focus on the crucial role played by alternative sources of funding, including family, friends, non-listed equity and informal banking institutions. While small young enterprises face important difficulties to finance their investment, these alternative financing sources allow them to partially bypass credit constraints. The model can account for the financing patterns observed in Chinese data. Despite an increase in non-performing loans by 11%, liberalizing the banking sector increases the steady-state aggregate level of capital by 10% and the steady-state aggregate production by 5%, inducing efficiency gains and a welfare increase of 1.8%. Selectively tightening the regulation of the alternative finance sector, if simultaneous to bank liberalization, may prevent the rise in non-performing loans while preserving most welfare improvements. This remains however detrimental to the development of small, young enterprises and limits efficiency gains. |
| Keywords: | Informal finance; banking reform; heterogeneous agents; credit constraints; China |
| JEL: | E22 O16 O17 |
| Date: | 2017–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0694&r=cna |
| By: | Giancarlo Corsetti (Centre for Economic Policy Research (CEPR); Centre for Macroeconomics (CFM); University of Cambridge); Meredith Crowley (Centre for Economic Policy Research (CEPR); University of Cambridge); Lu Han (University of Cambridge); Huasheng Song (Zhejiang University) |
| Abstract: | We develop a new empirical framework to analyse destination-specific markup and quantity adjustments to bilateral exchange rates by exporters. The framework offers two methodological innovations. First, we develop an unbiased estimator of the markup elasticity that correctly isolates marginal costs in large unbalanced panels where the set of markets served by firms varies endogenously with currency movements. Second, we exploit Chinese linguistics to process characters recorded in Chinese custom forms to build a novel, general, product classification distinguishing high and low differentiation goods|which we can use to proxy for exporters' market power. Applying this framework to exporters from China over 2000-2014, we document substantial heterogeneity in destination-specific markup elasticities across product classes and firm types. Conditional on a price change, the average markup elasticity for highly differentiated consumption goods is 32%; markup adjustments explain three quarters of incomplete pass through into import prices for these goods. In contrast, the average for low-differentiation intermediates is only 5%, suggesting that pricing for these goods responds to global, rather than local, economic conditions. Markup elasticities are higher for both state-owned and foreign-invested enterprises than for private enterprises, which, on average, pursue aggressively competitive strategies throughout our sample. |
| Keywords: | Exchange rates, Pricing-to-market, Product classification, Differentiated goods, Market power, Markup elasticity, China |
| JEL: | F31 F41 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1803&r=cna |
| By: | Zhe Chen; Yoshinori Kurokawa |
| Abstract: | Using Chinese firm-product data from 2000 to 2006, this paper empirically tests whether the appreciation (depreciation) of China's yuan weakens (strengthens) the effect of trade liberalization on the extensive margin of China's exports to 170 countries. Based on regressions, we have four main empirical findings. First, reductions in tariffs, charged by China's trade partners, increased China's exporter numbers and export value/quantity per exporter at the product level, whereas the appreciation (depreciation) of China's yuan caused a decrease (increase)--the effect of exchange rates is larger than that of tariffs in all cases. Second, reductions in tariffs, charged by trade partners, increased the entry and exit of China's exporters, and yuan appreciation (depreciation) decreased (increased) them. Third, the effects of tariffs and exchange rates are significantly different between processing and ordinary trade firms. Fourth, the significance of the effects is greater if the export destinations are non-OECD countries. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2018-001&r=cna |
| By: | Hongyi Chen (Hong Kong Institute for Monetary Research); Ran Li (Bank for International Settlements); Peter Tillmann (Justus-Liebig-University Giessen) |
| Abstract: | This paper studies whether monetary transmission in China is asymmetric. While researchers found an asymmetric transmission in the U.S. and other economies, China offers a specific rationale for asymmetries: the presence of state-owned enterprises (SOEs) enjoying preferential access to financing. To study the consequences of SOEs for policy transmission, we differentiate between expansionary and restrictive policy shocks and argue that SOEs should suffer less from a policy tightening and benefit more from a policy easing. Based on sector-specific macroeconomic time series and a large firm-level data set, we provide evidence of a systematic and sizable asymmetry in the transmission of monetary policy shocks in China. The nature of the asymmetry is consistent with the notion of explicit or implicit government-guarantees of SOEs and has consequences for the adjustment of aggregate variables. In contrast to other central banks, the People’s Bank of China seems to be able to “push on a string”. |
| Keywords: | monetary transmission, state-owned enterprises, financial system, VAR, state-dependent local projections, firm-level data |
| JEL: | E32 E44 G32 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201806&r=cna |
| By: | Sally Chen; Joong Shik Kang |
| Abstract: | Strong Chinese output growth after the Global Financial Crisis was supported by booming credit. This credit boom carries risks. International experience suggests that China’s credit growth is on a dangerous trajectory, with increasing risks of a disruptive adjustment and/or a marked growth slowdown. Several China-specific factors—high savings, current account surplus, small external debt, and various policy buffers—can help mitigate near-term risks of a disruptive adjustment and buy time to address risks. But, if the risks are left unaddressed, these mitigating factors will likely not eliminate the eventual adjustment, but make the boom larger and last longer. Hence, decisive policy action is needed to deflate the credit boom safely. |
| Keywords: | Financial crises;Financial cycles;Banking crises;Asia and Pacific;credit gap, debt overhang, sustainable growth, General |
| Date: | 2018–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/2&r=cna |
| By: | Arnaud Dupuy (CREA, Université du Luxembourg) |
| Abstract: | This paper develops a model encompassing both Becker's matching model, and Tinbergen-Rosen's hedonic model. We study its properties and provide identification and estimation strategies. Using data on internal migration in China, we estimate the model and compute equilibrium under counter-factual alternatives to decompose the migration surplus. Our findings reveal that about 1/5 of the migration surplus of migrant women is generated in the marriage market and 3/5 in the labor market. We also find that the welfare of urban men married with a migrant wife would have been 10% lower had their migrant wives not entered the urban marriage market. |
| Keywords: | Sorting in many local markets, marriage market, hedonic and matching models. |
| JEL: | D3 J21 J23 J31 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:18-06&r=cna |
| By: | Yibin Mu; Chu Wang; Dong Frank Wu |
| Abstract: | The analysis of China’s impacts on the 44 SSA countries reveals that: (i) after joining the WTO in 2001, China has started to impact significantly on SSA growth: one-percent increase in China’s GDP per capita leads to 0.02 percent increase on the SSA’s GDP per capita; (ii) oil and investment-goods exporters benefit more from China’s growth; (iii) compared to China’s consumption, its investment growth acts as a more important channel in influencing SSA; (iv) exports to China, highly linked to China’s growth, is an important indicator for SSA’s exports. Our results call for SSA countries to be well prepared for China’s rebalancing given its growing economic influence and to proactively search a sustainable way to continuously enhance productivity. |
| Keywords: | Asia and Pacific;Development;Exports;Growth, China Economy, SSA, General, Macroeconomic Analyses of Economic Development |
| Date: | 2017–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/288&r=cna |
| By: | Hua Liao; Celio Andrade; Julio Lumbreras; Jing Tian |
| Abstract: | Cities contribute to most of the CO2 emissions. And the economic system at city level is much complex due to various linkaged sectors. This paper aims to analyze the economy-wide contribution of sectors and households to CO2 emissions in Beijing (China) by utilizing a semi-closed input-output model integrated with a modified hypothetical extraction method. Results show that, compared with 2005, in 2012 (1) within the entire economic system, interprovincial export caused the largest amount of CO2 emissions [135.50 million tons (Mt)] with the main contributions arising from manufacturing (42.12 Mt); transportation, storage, and post (TSP in short, 29.13 Mt); and urban households (23.57 Mt); (2) across the intermediate input-output system, real estate activities accounted for the largest amount of embodied CO2 intensity (0.07 kg per yuan) and more sectors outsourced CO2; (3) tracing the integrated sector network, CO2 linkages pointed to manufacturing and TSP dominating the internal linkages, manufacturing prominent in mixed linkages, secondary industry leading the net forward linkages, and tertiary industry dominant in terms of net backward linkages, helping control CO2 according to its origin; (4) CO2 emissions induced by household strikingly affected total CO2 emissions in Beijing, mainly coming from income-oriented affects, with a large rural-urban disparity and a similar sectoral distribution pattern. Finally, we propose suggestions on carbon reduction in terms of technological interlinkages, final demand and household participation. |
| Keywords: | CO2 emissions; Semi-closed input-output model; Modified hypothetical extraction method; City; Beijing |
| JEL: | Q54 Q40 |
| Date: | 2018–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:113&r=cna |
| By: | Chia-Lin Chang (Department of Applied economics, Department of Finance National Chung Hsing University, Taiwan.); Te-Ke Mai (Department of Economics National Tsing Hua University, Taiwan.); Michael McAleer (Department of Quantitative Finance National Tsing Hua University, Taiwan and Econometric Institute Erasmus School of Economics Erasmus University Rotterdam, The Netherlands and Department of Quantitative Economics Complutense University of Madrid, Spain And Institute of Advanced Sciences Yokohama National University, Japan.) |
| Abstract: | The purpose of the paper is to provide a clear mechanism for determining carbon emissions pricing in China as a guide to how carbon emissions might be mitigated to reduce fossil fuel pollution. The Chinese Government has promoted the development of clean energy, including hydroelectric power, wind power, and solar energy generation. In order to involve companies in carbon emissions control, a series of regional and provincial carbon markets have been established since 2013. Since China’s carbon market was established in 2013 and mainly run domestically, and not necessarily using market principles, there has been almost no research on China’s carbon price and volatility. This paper provides an introduction to China’s regional and provincial carbon markets, proposes how to establish a national market for pricing carbon emissions, discusses how and when these markets might be established, how they might perform, and the subsequent prices for China’s regional and national carbon markets. Power generation in manufacturing consumes more than other industries, with more than 40% of total coal consumption. Apart from manufacturing, the northern China heating system also relies on fossil fuels, mainly coal, which causes serious pollution. In order to understand the regional markets well, it is necessary to analyze the energy structure in these regions. Coal is the primary energy source in China, so that provinces that rely heavily on coal receive a greater number of carbon emissions permits from the Chinese Government. In order to establish a national carbon market for China, a detailed analysis of eight important regional markets will be presented. The four largest energy markets, namely Guangdong, Shanghai, Shenzhen and Hubei, traded around 82% of the total volume and 85% of the total value of the seven markets in 2017, as the industry structure of the western area is different from that of the eastern area. The China National Development and Reform Commission has proposed a national carbon market, which can attract investors and companies to participate in carbon emissions trading. This importantissue will be investigated in the paper. |
| Keywords: | Pricing chinese carbon emissions, National pricing policy, Energy, Volatility, Energy finance, Provincial decisions. |
| JEL: | C22 C58 G12 Q48 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1803&r=cna |
| By: | Jin Liu; Bingdong Hou; Xiao-Wei Ma; Hua Liao |
| Abstract: | Indoor air pollution is mainly caused by solid fuel use for cooking in developing countries. Many previous studies focused on its health risks on the children and in specific local area. This paper investigates household energy usage and transition for cooking in rural China and the health effects on the elderly. A national large-scale dataset CHARLS (China Health and Retirement Longitudinal Study) covering 450 villages and communities is employed. Logit regressions were used to quantitatively estimate the effects, after controlling for some factors such as income, demographic and geographical variables. The results robustly show that compared to non-solid fuels, solid fuel use significantly increases the possibility of chronic lung diseases (30%), exacerbation of chronic lung diseases (95%), seizure of heart disease (1.80 times), and decreases self-evaluated health status of the elderly (1.38 times). Thus, it is urgent to improve clean energy access for cooking in rural China. |
| Keywords: | indoor air pollution; household solid fuel; health risks; elderly; rural; China |
| JEL: | Q54 Q40 |
| Date: | 2018–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:111&r=cna |
| By: | Jingwen Wu; Bingdong Hou; Ruoyu Ke; Yun-Fei Du; Ce Wang; Xiangzheng Li; Jiawei Cai; Tianqi Chen; Meixuan Teng; Jin Liu; Jin-Wei Wang; Hua Liao |
| Abstract: | Solid fuels are still widely used in rural China though the living standard has improved greatly. Energy poverty is an obvious indicator of poverty, which has serious effect on economic development, environment and health. In this paper, we conducted a detailed analysis on fuel choice and usage behavior of different end-use activities in rural residential energy consumption. Using 717 household observations from a micro survey data in two counties of Shandong and Hebei province in 2016, we find that biomass is the dominant fuel used for cooking among all energy sources despite of obvious trend of decrease in recent years, accounting for 44%. Clean energy used to cook increased markedly with a proportion of nearly 50%. Biomass is also the ordinary fuel used for water heating excerpt for solar energy. Almost 90% households rely on coal for space heating in winter, and one-third households have space heating less than 2 months. Ownerships of home appliances for basic needs is higher than that for hedonistic needs, and usage behaviors of some appliances are economical. Fuel accessibility of commercial energy has improved noticeably in rural, and the high proportion usage of biomass is affected by family income, using habits, local resources, environmental recognition, education and age. Since solid fuels are widely used in rural, it is important to cleanse biomass, develop new energy, and improve residents¡¯ cognition about the consequences of using solid fuels. |
| Keywords: | rural households; fuel choice; end-use; usage behaviors |
| JEL: | Q54 Q40 |
| Date: | 2018–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:109&r=cna |
| By: | Bingdong Hou; Xin Tang; Chunbo Ma; Li Liu; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology); Hua Liao |
| Abstract: | Unclean cooking fuel is widely used in the developing world, and it is the main indication of energy poverty in rural China. In this paper, we investigate the situation, transition, and determination of fuel choice in China's rural household cooking. Using the large scale micro-survey data of China Health and Retirement Longitudinal Study (CHARLS), we find that there is a big gap in using commercial cooking fuels between rural and urban households: 60% of the rural households adopt traditional biomass resource as their main fuel for cooking in 2011, while this figure is less than 5% in the urban. We also identify a significant spatial divide in fuel choice: in southeastern coastal areas, about 40% of the rural households prefer solid fuels, while this figure jumps to over 80% in northeastern areas. The longitudinal data also reveal a significant transition from traditional to modern fuels from 2008 to 2012. Moreover, the distance to the most commonly used farmer's market, education background, coal price and female labor participation are all influential in determining the households' choices. |
| Keywords: | cooking fuel; solid fuel; household; energy poverty; rural China |
| JEL: | Q54 Q40 |
| Date: | 2018–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:biw:wpaper:110&r=cna |
| By: | Maria Carvalho; Antoine Dechezleprêtre; Matthieu Glachant |
| Abstract: | China dominates the global solar photovoltaic (PV) value chain, while 15 years ago the demand and supply were located in few Western economies. In this process, the PV industry has seen a booming demand, drastic price decreases along the supply chain, and fierce competition among surviving companies. This paper seeks to understand how this spatial shift has occurred and its drivers, with a specific focus on the role of intangible assets and intellectual property. |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:wip:wpaper:40&r=cna |