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on China |
| By: | Grace Xing Hu; Jun Pan; Jiang Wang |
| Abstract: | The Chinese capital market, despite its relative short history in its modern form, has experienced a tremendous growth and is now the second largest in the world. Due to China's tight capital controls, the development of its capital market has mostly been isolated from and hence not been well understood by the rest of the world. Yet, this state of isolation is bound to change substantially as China becomes more integrated into the global financial system. In this paper, we provide an empirical overview of the Chinese capital market: its historical development and main empirical characteristics. |
| JEL: | G00 G1 G11 G12 G15 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24346&r=cna |
| By: | Dieppe, Alistair; Gilhooly, Robert; Han, Jenny; Korhonen, Iikka; Lodge, David |
| Abstract: | China’s rise has been the economic success story of the past four decades but economic growth has been slowing and domestic imbalances have widened. This paper analyses the recent evolution of China’s imbalances, the risks they pose to the economic outlook and the potential impact of a transition to sustainable growth in China on the global and euro area economies. The paper documents China’s heavy reliance on investment and credit as drivers of growth, which has created vulnerabilities in a number of sectors and has been accompanied by increased complexity and leverage in the financial system. China retains some buffers, including policy space, to cushion against adverse shocks for the time being, but additional structural reforms would facilitate a shift of China’s economy onto a sustainable and strong growth trajectory in the medium term. China’s size, trade openness, dominant position as consumer of commodities and growing financial integration mean that its transition to sustainable growth is crucial for the global economic outlook. Simulation analysis using global macro models suggests that the spillovers to the euro area would be limited in the case of a modest slowdown in China’s GDP growth, but significant in the case of a sharp downturn. Sensitivity analysis underscores that the spillovers are dependent on the strengths of the various transmission channels, as well as the policy reaction by central banks and governments. JEL Classification: E21, E22, E27, F10, F47, O11, O53 |
| Keywords: | China, economic growth, imbalances, rebalancing, spillovers |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:2018206&r=cna |
| By: | Christian Elleby (Department of Food and Resource Economics, University of Copenhagen); Wusheng Yu (Department of Food and Resource Economics, University of Copenhagen); Qian Yu (Department of Food and Resource Economics, University of Copenhagen) |
| Abstract: | China’s global export share has increased dramatically over the past decades. This development has prompted an empirical literature on whether Chinese exports displace those originated from elsewhere in various destination markets. In this paper we focus on the growth of China’s exports to the East African Community (EAC) countries and show how it has affected exports from the European Union (EU) to the EAC. Our main contribution to the literature on the displacement effect of Chinese exports is a set of total and relative displacement estimates based on different specifications of the gravity model where we control for country-year fixed effects so as to avoid the “gold medal mistake” of not accounting for time varying “multilateral resistance”. Our findings do not support the hypothesis that Chinese exports have displaced exports from other countries in general. Nor do they support the hypothesis that Chinese exports have displaced exports from EU countries to the EAC countries or elsewhere. There has been no displacement in the sense that, although exporters from the EU and elsewhere have lost market share to China, the value of their exports to the EAC and elsewhere have still increased. |
| Keywords: | habits, trade, gravity equation, export displacement, China, East African Community, European Union |
| JEL: | F13 F14 F15 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:foi:wpaper:2018_02&r=cna |
| By: | Xi Li (Department of Accounting , The Hong Kong University of Science and Technology); Yikai Wang (Department of Economics , University of Oslo, Norway); Tong Zhang (Department of Economics, University of Zurich, Switzerland) |
| Abstract: | In this paper, we study how the financial market frictions in the Chinese economy, especially the interest rate policies, lead to inefficient resource allocations and economic imbalances. First, the repressed low interest rate for household savings induce them to increase saving in order to prepare for future necessary expenditures. Consequently consumption share is low and the economic imbalance of consumption and saving emerges. Second, the government provides explicit or implicit guarantees for state firms, so banks prefer to lend to state firms which are less productive. Private firms get less financial resource and operate at sub-optimal levels. The lower aggregate productivity implies the lower household income and consumption and worsen the imbalance. Due to the financial market frictions, traditional consumption stimulating policies, e.g., reducing the interest rate, may actually results in the opposite: even lower consumption and a more imbalanced economy. Reforms towards market-determined interest rates can help to rebalance the economy. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201853&r=cna |
| By: | Thomas Piketty (Paris School of Economics, 48 Boulevard Jourdan, 75014 Paris, France); Li Yang (World Bank and Paris School of Economics, 48 boulevard Jourdan, 75014 Paris, France); Gabriel Zucman (Department of Economics, University of California, Berkeley, 530 Evans Hall, #3880, Berkeley, CA 94720, and NBER) |
| Abstract: | This paper combines national accounts, survey, wealth and fiscal data (including recently released tax data on high-income taxpayers) in order to provide consistent series on the accumulation and distribution of income and wealth in China over the 1978-2015 period. We find that the aggregate national wealth-income ratio has increased from 350% in 1978 to 700% in 2015. This can be accounted for by a combination of high saving and investment rates and a gradual rise in relative asset prices, reflecting changes in the legal system of property. The share of public property in national wealth has declined from about 70% in 1978 to 30% in 2015, which is still a lot higher than in rich countries (close to 0% or negative). Next, we provide sharp upward revision of official inequality estimates. The top 10% income share rose from 27% to 41% of national income between 1978 and 2015, while the bottom 50% share dropped from 27% to 15%. China’s inequality levels used to be close to Nordic countries and are now approaching U.S. levels. |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201854&r=cna |
| By: | Chen, Zhuo (Asian Development Bank Institute); He, Zhiguo (Asian Development Bank Institute); Liu, Chun (Asian Development Bank Institute) |
| Abstract: | The People’s Republic of China (PRC)’s four-trillion-yuan stimulus package fueled by bank loans in 2009 has led to the rapid growth of shadow banking activities in the PRC after 2012. The local governments in the PRC financed the stimulus plan mainly through bank loans in 2009, and resorted to non-bank debt financing after 2012 given the mounting rollover pressure from bank debt coming due, a manifestation of the stimulus loan-hangover effect. Cross-sectionally, provinces with abnormally greater bank loan growth in 2009 experienced more Municipal Corporate Bonds issuance during 2012-2015, as well as more shadow banking activities including entrusted loans and wealth management products. We highlight the market forces behind the regulation changes on local government debt post 2012, together with the expedited reform on interest rate liberalization during that period. |
| Keywords: | local government financing vehicles; municipal corporate bonds; shadow banking in china |
| JEL: | E61 G21 H72 O17 |
| Date: | 2018–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0800&r=cna |
| By: | Song, Yang (Department of Economics, Colgate University) |
| Abstract: | School choice reforms give talented students the option to sort out of low-performing schools but often leave disadvantaged students behind. This study shows how a Chinese city was successful in helping its low-performing schools to catch up by encouraging talented students to sort into these schools. The city identified eleven low-performing middle schools and guaranteed elite high school admission to their top ten-percent graduates. This study documents that the policy improved school performance by 0.19-0.26 standard deviations. Using data on lottery middle school assignment, I further test for potential mechanisms, including strategic sorting and improvement in school value-added. |
| Keywords: | Education Inequality; School Choice; Incentives; Sorting; Peer Effects. |
| JEL: | I21 I24 I25 I28 |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cgt:wpaper:2018-01&r=cna |
| By: | Siebert, W. Stanley (University of Birmingham); Wei, Xiangdong (Lingnan University); Wong, Ho Lun (Lingnan University); Zhou, Xiang (University of Birmingham) |
| Abstract: | This study reports a randomized controlled trial to improve teacher-student-parent feedback, conducted in a rural county in China with many left-behind children. Data are collected from over 4,000 primary schoolchildren (8 to 10 years old) over two school terms. We find that bi-weekly student feedbacks using our special scorecard of schoolwork and behavior improve mathematics results by 0.16 to 0.20 standard deviations, with 0.09 for language. Communicating these assessments also to parents produces further large mathematics benefits for young left-behind children, about 0.30 standard deviations. A low-cost investment in better feedback thus brings significant achievement gains especially for disadvantaged children. |
| Keywords: | student assessment, parent-teacher communication, academic performance, randomized controlled trial, rural China |
| JEL: | C93 I21 J24 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11347&r=cna |
| By: | Jing Wang and Bingqin Li |
| Abstract: | This article studies the causes for unequal access to rural community and social development infrastructures in China. We use a dataset in the China Health and Retirement Longitudinal Study (2011–2012), the National Baseline Survey of Communities, to examine the availability of four types of infrastructures: public transportation, sanitation, health care and aged care. Three hundred and seven villages are included in this study. The findings suggest that the primary funder of infrastructures and the status of village governance have impacts on the unequal availability of rural infrastructures. The effects vary by the type of infrastructures under discussion. This is the first attempt to combine planning, finance and governance factors in explaining rural infrastructure availability. It has strong policy implications and shed important light on state–society relations and the urbanisation trends in China. |
| Keywords: | community infrastructure, social development infrastructure, governance, finance, rural China |
| Date: | 2018–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:een:appswp:201801&r=cna |
| By: | Christophe Muller (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE); Huijie Yan (CEARC, Université de Versailles Saint-Quentin-en-Yvelines et Université Paris-Saclay) |
| Abstract: | The household transition from dirty to clean fuels is important because of its economic, health and environment consequences, locally, nationally and globally. In order to study fuel choices, a non-separated farm household model for fuel demands is developed. Then, discrete choice equations of fuel uses, consistent with this theoretical model, are estimated using microeconomic household panel data from rural China.The estimation results support the theoretical approach that implies that the fuel demands depend not only on income, fuel prices, and demand-side socioeconomic factors, as would occur in the standard fuel demand models in the literature, but also on food prices, agricultural assets, and original household and community characteristics that shape the household responses to market failures. Finally, we present a few policy simulations that reveal the complex substitution impact of energy price policies in China.We provide the first evidence on: price sensitivity of fuel stacking, that food prices exert some pressure on the fuel transition, the role of farm work and activity specialization in fuel choices. Policies should incorporate some of the complexity of the non-separated decisions of rural households in this context of market failures. The complex cross-price effects imply that the policy pricing mechanisms should account for all energy types and food prices. Finally, market-based policies should be coupled with policy interventions aimed at increasing the opportunity cost of dirty fuels. |
| Keywords: | fuel use, China, consumption demand, energy |
| JEL: | D11 D12 Q41 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1808&r=cna |
| By: | Yihong Liu and Rami Hin-yeung Chan |
| Abstract: | The extent by which public agenda influences policy agenda indicates the degree of democracy in a regime. However, few researchers have drawn their attention on authoritarian regimes like China. This article investigates how the government addresses the demands of the public during a crisis at the policy agenda level. This paper dissects five patterns of agenda setting, namely, agenda-as-usual, symbolic agenda, conflicting agenda, mass campaign (or competing agenda) and authority domination (or hidden agenda) with real case examples in contemporary China. Ultimately, the evolution of various types of agenda setting provides us with a horizon to understand subtly yet significantly changes in the Chinese policymaking and political system with special focus on competing agenda and hidden agenda because such level of political sensitivity can rarely be found in democratic systems. Meanwhile, the comparison among these agendas would inspire authoritative governments such as China to exploit a crisis. |
| Keywords: | crisis, policy agenda, public attention, triggering mechanism, China |
| Date: | 2018–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:een:appswp:201802&r=cna |
| By: | Mark Beeson |
| Abstract: | China has assumed a crucial importance in debates about climate change mitigation. On the one hand, China is one of the largest emitters of greenhouse gasses and pollution. On the other, it has invested more in renewable energy than any other country and is making real efforts to address the consequences of rapid industrialisation. There are three key questions for students of comparative political economy that emerge from the Chinese experience: first, what is the relationship between economic development and authoritarian rule? Second, what role has China's distinct social and political system played in creating and addressing environmental problems? Third, what domestic and international implications does the ‘China model’ have? In short, will China's authoritarian leaders be able to manage the expectations of its own people and those of the so-called international community? This article considers the often paradoxical and contradictory nature of the authoritarian Chinese government's current environmental policies and suggests that while they may have some success at the domestic level, they may still be an obstacle to international cooperation. |
| Keywords: | China, environmental policy, authoritarianism, policy implementation |
| Date: | 2017–12–27 |
| URL: | http://d.repec.org/n?u=RePEc:een:appswp:201803&r=cna |
| By: | Ralph W. Huenemann |
| Abstract: | President Trump's analysis of the persistent United States–China trade imbalance reveals fundamental misunderstandings of basic economics. During the 2016 campaign, candidate Trump made an important Big Promise with two facets: to bring back American jobs from other countries (especially China) and to eliminate the American trade deficit. But, as pointed out by Barack Obama in his farewell address, many of the American jobs were lost to factory automation, not to imports. Furthermore, if China's central bank had pursued a less interventionist foreign exchange rate policy, most of the labor-intensive imports from China would have been produced in other low-wage countries, not in domestic factories. Finally, and most importantly, the persistent American foreign trade deficits (with many countries, not just with China) arise from the domestic imbalance between taxes and government expenditures. Unless this budget imbalance is dealt with, the foreign trade imbalance will necessarily continue. |
| Keywords: | China, international trade, United States-China relations, President Trump |
| Date: | 2017–12–04 |
| URL: | http://d.repec.org/n?u=RePEc:een:appswp:201811&r=cna |