|
on China |
| By: | Jianan Liu; Robert F. Stambaugh; Yu Yuan |
| Abstract: | We construct size and value factors in China. The size factor excludes the smallest 30% of firms, which are companies valued significantly as potential shells in reverse mergers that circumvent tight IPO constraints. The value factor is based on the earnings-price ratio, which subsumes the book-to-market ratio in capturing all Chinese value effects. Our three-factor model strongly dominates a model formed by just replicating the Fama and French (1993) procedure in China. Unlike that model, which leaves a 17% annual alpha on the earnings-price factor, our model explains most reported Chinese anomalies, including profitability and volatility anomalies. |
| JEL: | G12 G15 G18 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24458&r=cna |
| By: | Kun Jiang; Wolfgang Keller; Larry D. Qiu; William Ridley |
| Abstract: | This paper studies international joint ventures, where foreign direct investment is performed by a foreign and a domestic firm that together set up a new firm, the joint venture. Employing administrative data on all international joint ventures in China from 1998 to 2007—roughly a quarter of all international joint ventures in the world—we find, first, that Chinese firms chosen to be partners of foreign investors tend to be larger, more productive, and more likely subsidized than other Chinese firms. Second, there is substantial technology transfer both to the joint venture and to the Chinese joint venture partner, an external, intergenerational technology transfer effect that this paper introduces. Third, with technology spillovers typically outweighing negative competition effects, joint ventures generate on net positive externalities to other Chinese firms in the same industry. Joint venture externalities are large, perhaps twice the size of wholly-owned FDI spillovers, and it is R&D-intensive firms, including the joint ventures themselves, that benefit most from these externalities. Furthermore, the positive external joint venture effect is larger if the foreign firm is from the U.S. rather than from Japan or Hong Kong, Macau, and Taiwan, while this effect is virtually absent in broad sectors that include economic activities for which China’s FDI policy has prohibited joint ventures. |
| JEL: | F23 O31 O34 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24455&r=cna |
| By: | Xuefeng Qian; Bifei Tian; W. Robert Reed (University of Canterbury); Ziruo Chen |
| Abstract: | This paper investigates profit-shifting behaviour among multinational corporations (MNCs) in China. We exploit the flat-rate structure of China’s corporate income tax, along with its system of targeted, preferential rates, to estimate the relationship between profits and tax rates. Our sample consist of approximately 60,000 observations of foreign-owned MNCs from the years 2005-2009. Using the traditional approach of regressing before-tax profits on tax rates, we find evidence consistent with profit-shifting. However, this approach is suspect because the nature of China’s tax preferences make it especially vulnerable to omitted variable bias. Accordingly, we employ finite mixture modelling to search for the existence of a group of profit-shifting MNCs. While our analysis identifies two types of firms, subsequent investigation failed to produce any evidence linking these to profit-shifting behavior. Robustness checks exploiting the panel nature of the dataset, along with further investigation of investment-tax elasticities, confirm our null finding of profit-shifting. One reason for the lack of profit-shifting among Chinese MNCs may be that corporate tax rates were relatively low during this period. |
| Keywords: | Multinational corporations (MNCs); profit shifting; tax elasticity; finite mixture model, China |
| JEL: | F23 H32 |
| Date: | 2018–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:18/08&r=cna |
| By: | Qichun He (Central University of Finance and Economics); Heng-fu Zou (Central University of Finance and Economics) |
| Abstract: | We find robust evidence that within each consecutive dynasty of ancient China, inequality demonstrates a "U" shape (or rather a "spoon" shape, to be more precise). As inequality hit an upper limit, war occurred, leading to a new dynasty replacing the old one. The cycle would then repeat itself. A simple explanation for this has been offered, and policy implications have also been presented. |
| Keywords: | Kuznets Curve, Income inequality, U shape, Ancient China |
| JEL: | N95 O11 O43 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:607&r=cna |
| By: | Bailliu, Jeannine; Han, Xinfen; Kruger, Mark; Liu, Yu-Hsien; Thanabalasingam, Sri |
| Abstract: | The official Chinese labour market indicators have been seen as problematic, given their small cyclical movement and their only-partial capture of the labour force. In our paper, we build a monthly Chinese labour market conditions index (LMCI) using text analytics applied to mainland Chinese-language newspapers over the period from 2003 to 2017. We use a supervised machine learning approach by training a support vector machine classification model. The information content and the forecast ability of our LMCI are tested against official labour market activity measures in wage and credit growth estimations. Surprisingly, one of our findings is that the much-maligned official labour market indicators do contain information. However, their information content is not robust and, in many cases, our LMCI can provide forecasts that are significantly superior. Moreover, regional disaggregation of the LMCI illustrates that labour conditions in the export-oriented coastal region are sensitive to export growth, while those in inland regions are not. This suggests that text analytics can, indeed, be used to extract useful labour market information from Chinese newspaper articles. |
| JEL: | C38 E24 E27 |
| Date: | 2018–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2018_009&r=cna |
| By: | Chia-Lin Chang (Department of Applied Economics Department of Finance National Chung Hsing 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.); Te-Ke Mai (Department of Economics National Tsing Hua University, Taiwan.) |
| Abstract: | The purpose of the paper is to establish national carbon emissions prices for the People’s Republic of China, which is one of the world’s largest producers of carbon emissions. Several measures have been undertaken to address climate change in China, including the establishment of a carbon trading system. Since 2013, eight regional carbon emissions markets have been established, namely Beijing, Shanghai, Guangdong, Shenzhen, Tianjin, Chongqing, Hubei and Fujian. The Central Government announced a national carbon emissions market, with power generation as the first industry to be considered. However, as carbon emissions prices in the eight regional markets are very different, for a variety of administrative reasons, it is essential to create a procedure for establishing a national carbon emissions price. The regional markets are pioneers, and their experience will play important roles in establishing a national carbon emissions market, with national prices based on regional prices, turnovers and volumes. The paper considers two sources of regional data for China’s carbon allowances, which are based on primary and secondary data sources, and compares their relative strengths and weaknesses. The paper establishes national carbon emissions prices based on the primary and secondary regional prices, for the first time, and compares both national prices and regional prices against each other. The carbon emission prices in Hubei, Guangdong, Shenzhen and Tianjin are highly correlated with the national prices based on the primary and secondary sources. Establishing national carbon emissions prices should be very helpful for the national carbon emissions market that is under construction in China, as well as for other regions and countries worldwide. |
| Keywords: | Pricing Chinese carbon emissions, National pricing policy, Energy, Volatility, Energy finance, Provincial decisions. |
| JEL: | C22 C58 G12 Q48 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1810&r=cna |
| By: | Chia-Lin Chang (Department of Applied Economics Department of Finance National Chung Hsing 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.); Shu-Han Hsu (Department of Applied Economics National Chung Hsing University, Taiwan .) |
| Abstract: | Fluctuations in the numbers of visitors directly affect the rates of return on tourism business activities. Therefore, maintaining a firm grasp of the relationship between the changes in the numbers of Chinese tourists and international travellers visiting Taiwan is conducive to the formulation of an effective and practical tourism strategy. Although the topic of international visitors to Taiwan is important, existing research has discussed the issue of the travel demand between Chinese tourists and international travellers visiting Taiwan. This paper is the first to examine the spillover effects between the rate of change in the numbers of Chinese tourist arrivals and the rate of change in the numbers of international traveller arrivals. Using daily data for Chinese tourists and international travellers visiting Taiwan over the period from 1 January 2014 to 31 October 2016, together with the Diagonal BEKK model, the paper analyses the co-volatility spillover effects between the rate of change in the numbers of international travellers and the rate of change in the numbers of Chinese tourists visiting Taiwan. The empirical results show that there is no dependency relationship between the rate of change in the numbers of Chinese tourists and the rate of change in the numbers of international travellers visiting Taiwan. However, there is a significant negative co-volatility spillover effect between the rate of change in the numbers of Chinese tourists and the rate of change in the numbers of international travellers. The empirical findings suggest that Taiwan should abandon its development strategy of focusing only on a single market, namely China, and to be pro-active in encouraging visits by international travellers to Taiwan for sightseeing purposes, thereby increasing the willingness of international travellers to visit Taiwan. Moreover, with the reduction in the numbers of Chinese tour groups visiting Taiwan, and increases in the numbers of individual travellers, the Taiwan Government should change its previous travel policies of mainly attracting Chinese tour group travellers and actively promoting in-depth tourism among international tourists, by developing tourism that focuses on the special characteristics of different localities. In this way, the government can enhance the quality of Taiwan’s tourism, and also attract travellers with high spending power. |
| Keywords: | Risk spillovers, International tourism arrivals, Chinese tourist arrivals, Group tourists, Individual tourists, Medical tourists, Co-volatility effects, Diagonal BEKK model. |
| JEL: | C22 C32 C58 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1811&r=cna |
| By: | Matthew E. Kahn; Weizeng Sun; Jianfeng Wu; Siqi Zheng |
| Abstract: | Over the last 30 years, the Chinese government has invested in new industrial parks with the intent of stimulating urban economic growth. The central government delegates the site selection decision to provincial leaders. A principal-agent issue arises because the central government prioritizes efficiency and equity criteria while the provincial leader may allocate such place based investments to reward socially connected mayors. We present a revealed preference test of industrial park site selection and document the willingness of China’s provincial leaders to sacrifice economic development in order to reward social connections. We examine the causes and consequences of this misallocation of capital. |
| JEL: | R5 R53 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24457&r=cna |
| By: | Auboin, Marc; Borino, Floriana |
| Abstract: | This paper looks at the extent to which the shift in the lower value added production to countries in the following development "tier" is actually becoming a reality. Several countries in East Asia have been upgrading production patterns and moving up the value chain, this paper looks at how this helps and offers new opportunities to less advanced countries to integrate in world trade. The paper uses a combination of techniques, from an analysis of disaggregated trade flows by country and sectors, to the calculation of trade intensity indices by country and sector, and value-added trade by sector. It finds combined evidence of forward and backward trade increasing between several neighbouring Asian economies and China, in the most labour-intensive industries in particular. Econometric analysis shows that relative unit labour costs are an explanatory factor of increased trade links. In cases, the intensification of trade links on the export side can relate to a strongly expanding local market (for example India for electronic products such as smartphones), but mostly the intensification of trade links takes place both on the import and export sides with markets which are much smaller than China (Vietnam, Bangladesh, etc.), and which experienced increased outward-processing activities as a result of China's production upgrade. |
| Keywords: | investment,trade policy,business cycles |
| JEL: | E22 F13 F44 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201804&r=cna |
| By: | Khan, Haider Ali; Schettino, Francesco; Gabriele, Alberto |
| Abstract: | The record economic growth of PRC since the 1990s has been accompanied by an increase in both income inequalities and polarization. We employ Relative Distribution tools (Handcock and Morris, 1998) on different datasets in order to provide a detailed analysis of Chinese income distribution during the last decade. The main result shows a hollowing out of the mid-range deciles with a corresponding fattening of the highest ones. Thus the analysis confirms the hollowing out---or perhaps even a prevention of the rise---of the middle class in PRC. Analyzing further the “pure distribution” effect (i.e., depurated by the growth one), we find that this typical polarization profile emerged mainly in the last decade. This findings can be explained by noting that the (negative) “pure distributional” effect has been, to some extent, mitigated by the impressive GDP growth. In other words, the growth effect considered without noticing the changes in the shape of distribution effect---i.e.---the shape effect--- hides distributive changes that materially occurred in the 1990s and in the 21st century so far. We need to take both growth effects and shape effects over time into consideration for a proper political economic assessment of Chinese economic performance. As growth slows, unless countervailing policies are undertaken, polarization will reveal itself more sharply. Given the existing inequalities, increasing polarization would seem to imply that distributional and related conflicts are likely in PRC. Policies to counteract these tendencies must be anti-polarization policies along with those of relatively more egalitarian growth. |
| Keywords: | Polarization, Political Economy of PRC, Relative Distribution Tools, Middle Class, Inequalities, Growth Effect, Distribution Effect |
| JEL: | I3 O15 P3 P35 P36 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86133&r=cna |
| By: | Loeschel, Andreas; Pei, Jiansuo; Sturm, Bodo; Wang, Ran; Buchholz, Wolfgang; Zhao, Zhongxiu |
| Abstract: | In this study, the real demand for global and local environmental protection in Beijing, China, is elicited and investigated. Participants from Beijing were offered the opportunity to contribute to voluntary climate change mitigation by purchasing permits from two Chinese CO2 emissions trading schemes (ETS). Purchased permits were withdrawn from the ETS. Since CO2 emissions mitigation is inevitably linked to other local benefits like the reduction in emissions of air pollutants, the aim of our study is to establish the demand for local and global environmental protection. To this end, Beijing and Shenzhen ETS permits were offered. The result is that at low prices the demand for Beijing ETS permits is significantly higher than for Shenzhen ETS permits indicating that a substantial part of the revealed demand for voluntary climate change mitigation in Beijing is driven by concerns for local co-benefits of CO2 emissions reduction. Our research identifies the important role of private benefits in the voluntary provision of the global public good climate change mitigation and provides first experimental evidence for China. |
| Keywords: | demand for environmental protection,experimental economics,willingness to pay,China,voluntary climate change mitigation,co-benefits |
| JEL: | Q51 Q54 C93 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:18017&r=cna |
| By: | Salzmann, Leonard |
| Abstract: | I fit a high-dimensional macroeconomic dataset of 41 countries to a factor-augmented vector autoregressive model to examine the role of the recent Chinese economic slowdown for international inflation dynamics. I identify Chinese supply and demand shocks and examine their contributions to international price indicators. My main findings are: (i) Impulse response analyses indicate that Chinese business cycle shocks and especially demand shocks significantly spill over to inflation rates in Europe, North America, Asia and Oceania, mainly transmitted through global oil, commodity and manufacturing prices. (ii) The Chinese growth slowdown that started in 2012 can be attributed to a fall in aggregate Chinese demand and supply. (iii) Historical decompositions indicate that the fall in Chinese demand lowered national prices in Europe, North America, Asia and Oceania by up to 12 percent from the third quarter of 2013 on. |
| Keywords: | China’s Economic Slowdown,Global inflation,Spillovers,Factor Augmented Vector Autoregressive Model |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:176757&r=cna |
| By: | Avila, Zulum.; Tian, Guangzhe. |
| Abstract: | This paper was prepared by the ILO as part of a global study to look at the emergence of partnerships between public employment services and other providers seeking to promote access to employment. Across the world, such partnerships are becoming instrumental in delivering these services and active labour market programmes (ALMPs) to help employers and job-seekers adapt to change, and to cope with labour market transitions in increasingly complex labour markets. This paper explores the mechanisms and preconditions that are contributing to these emerging partnerships to keep employment situation stable in China.The paper also presents three case studies which cast light on the key factors that prompt the formation of partnerships and the ways in which the challenges of working with external providers have been addressed. The analysis also aims to establish whether there are transferable lessons which could be replicated by other provinces with similar economic conditions and recruitment challenges.This paper intends to help employment services to explore new approaches to service delivery to meet increasing demand. Partnerships should not be a substitute for the proper funding of public employment services. On the contrary: collaborative partnerships offer the possibility of combining the experience, knowledge, and resources of a variety of actors in implementing solutions that respond to local needs. |
| Keywords: | employment service, good practices, case study, China |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994983593202676&r=cna |