nep-cna New Economics Papers
on China
Issue of 2018‒07‒09
twelve papers chosen by
Zheng Fang
Ohio State University

  1. Three Generations of Changing Gender Patterns of Schooling in the People’s Republic of China By McGarry, Kathleen; Sun, Xiaoting
  2. The Development and Transformation of the People’s Republic of China’s Financial System By Tobin, Damian; Volz, Ulrich
  3. China, Europe and the Great Divergence: A Study in Historical National Accounting, 980-1850 By Stephen Broadberry; Hanhui Guan; David Daokui Li
  4. E-commerce Development and Entrepreneurship in the People’s Republic of China By Huang, Bihong; Shaban, Mohamed; Song, Quanyun; Wu, Yu
  5. The Impact of Exogenous Demand Shock on the Housing Market: Evidence from the Home Purchase Restriction Policy in the People’s Republic of China By Cao, Xiaping; Huang, Bihong; Lai, Rose Neng
  6. Impact of Exchange Rate on Vietnam-China Bilateral Trade: Findings from ARDL Approach By Pham, Tuan; Tran, Thi Ha
  7. Structural Change with Public Educational Expenditure: Evidence from the People’s Republic of China By Zhang, Xun
  8. The development of Chinese accountingand bookkeeping before 1850:insights from the Tŏng Tài Shēngbusiness account books (1798-1850) By Yuan, Weipeng; Macve, Richard; Ma, Debin
  9. International Joint Ventures and Internal vs. External Technology Transfer: Evidence from China By Kun Jiang; Wolfgang Keller; Larry D. Qiu; William Ridley
  10. Asymmetric response to PMI announcements in China's stock returns By Yingli Wang; Xiaoguang Yang
  11. The emergence of the RMB: A "New Normal" for China's exchange rate system? By Kunze, Frederik; Basse, Tobias; Wegener, Christoph; Spiwoks, Markus
  12. Ageing, the socioeconomic burden, labour market and migration. The Chinese case in an international perspective By Bruni, Michele

  1. By: McGarry, Kathleen (Asian Development Bank Institute); Sun, Xiaoting (Asian Development Bank Institute)
    Abstract: The phenomenon of son preference in the People’s Republic of China and throughout much of Asia has been well documented. However, changing economic conditions, such as increases in educational attainment and employment opportunities for women and the rise in the prevalence of one-child families, have likely changed the incentives for parents to invest in daughters. We take advantage of data spanning three generations of Chinese families to examine the evolution of educational attainment for boys and girls and importantly the relative levels of schooling of each gender. We also use variation in the timing of compulsory schooling laws and the implementation of the one-child policy to assess the effect of these policy measures on the relative educational levels. We find a substantial narrowing of the gap between the schooling of boys and girls, so much so that girls now have more schooling on average than boys. In addition, public policy initiatives had a larger effect in rural than urban areas.
    Keywords: compulsory schooling; one-child policy; gender differences in education
    JEL: I20 J13 J16
    Date: 2018–04–24
  2. By: Tobin, Damian (Asian Development Bank Institute); Volz, Ulrich (Asian Development Bank Institute)
    Abstract: We look at the development and transformation of the People’s Republic of China (PRC)’s financial system since the start of economic and financial reforms in 1978. We describe how despite the rapid development of capital markets since the 1990s, the PRC’s financial system continues to be dominated by bank lending. Reforms have not eliminated the credit expansion impetus of large commercial banks, while the effectiveness of capital-based constraints and administrative measures is far below potential. Large state-owned banks have become important players in bond and equity markets, as well as important sources of liquidity provision for smaller commercial banks and a range of non-bank financial institutions through a combination of inter-bank funding activities, wealth management products, and shadow banking/grey capital market activities. The importance of non-bank financial institutions has also continued to grow. Off-shore markets have increased the overseas holdings of financial assets, but their potential remains limited by capital controls and the fragility of the domestic financial system. An unintended consequence of this is that although the PRC’s state run financial system has become more complex and more interconnected domestically, foreign participation remains low.
    Keywords: China; financial markets; financial institutions; economic transformation
    JEL: G01 G02 O16 P34
    Date: 2018–03–20
  3. By: Stephen Broadberry; Hanhui Guan; David Daokui Li
    Abstract: Abstract Chinese GDP per capita fluctuated at a high level during the Northern Song and Ming dynasties before trending downwards during the Qing dynasty. China led the world in living standards during the Northern Song dynasty, but had fallen behind Italy by 1300. At this stage, it is possible that parts of China were still on a par with the richest parts of Europe, but by 1750 the gap was too large to be bridged by regional variation within China and the Great Divergence had already begun before the Industrial Revolution.
    Keywords: GDP Per Capita; Economic Growth; Great Divergence; China; Europe
    JEL: E10 N35 O10
    Date: 2017–04–24
  4. By: Huang, Bihong (Asian Development Bank Institute); Shaban, Mohamed (Asian Development Bank Institute); Song, Quanyun (Asian Development Bank Institute); Wu, Yu (Asian Development Bank Institute)
    Abstract: We utilize an e-commerce development indicator in tandem with big data to measure the variations of e-commerce development across counties in the People’s Republic of China and assess its impact on entrepreneurship in both rural and urban areas. We find that households living in counties with higher levels of e-commerce development are more likely to run their own businesses. Further study indicates that e-commerce development not only significantly increases the entry of new startups but also decreases the exit of incumbent businesses. We also find that e-commerce development induces sectoral change of household entrepreneurship. It promotes entrepreneurship in the manufacturing and wholesale sectors, but reduces the entrepreneurship in the retail, hotel, and catering sectors. We also show that e-commerce prosperity fuels entrepreneurship by alleviating the financial constraints and moderates the reliance of household entrepreneurship on social networks.
    Keywords: e-commerce development; big data; entrepreneurship
    JEL: L81
    Date: 2018–03–22
  5. By: Cao, Xiaping (Asian Development Bank Institute); Huang, Bihong (Asian Development Bank Institute); Lai, Rose Neng (Asian Development Bank Institute)
    Abstract: To deal with the rampant increase in housing prices, the Government of the PRC implemented the home purchase restriction (HPR) policy to curb speculation and prevent housing bubbles. This policy triggered an exogenous demand shock to the housing market. Employing a two-step difference-in-differences approach, we find significantly negative policy effects on property transaction volume but a small impact on housing prices. Cities that rely heavily on land sales for fiscal revenue experience a considerably higher increase in property investments after implementing the HPR policy.
    Keywords: home purchase restriction policy; demand shock; housing bubble; land financing
    JEL: G12 G18 H83
    Date: 2018–03–19
  6. By: Pham, Tuan; Tran, Thi Ha
    Abstract: Using both aggregate and disaggregate data, the purpose of this study was to examine the effects of VND/CNY exchange rate (including exchange rate level and volatility) on trade flows between Vietnam and China. For this analysis, Autoregressive Distributed Lag (ARDL) model is applied. In the disaggregate models, long-run results indicate that 9 import commodities (approximately 28.67% of total import value) are sensitive to real exchange rate level, and 9 export commodities (approximately 39,146% of total export value) also respond to changes in exchange rate level. Most of unaffected commodities are raw, intermediate, and simply processed products (the biggest component in total import volume). In addition, the study found that export commodities are more sensitive to exchange rate volatility than import commodities. Notably, the results of aggregate model indicate that there is no statistical evidence of any linkage between exchange rate and trade (export and import). In other words, exchange rate is likely to be ineffective to improve trade balance between Vietnam and China. This is noticeable signal in term of effective coordination between the monetary and trade policy of Vietnam
    Keywords: Vietnam, China, Exchange Rate, Import, Export, ARDL
    JEL: E3 E4 E5 E6 F1 F4
    Date: 2018–06–18
  7. By: Zhang, Xun (Asian Development Bank Institute)
    Abstract: We make an early attempt to analyze the comprehensive relationship between public educational expenditure and structural change, which is often measured by labor transfer from agricultural sector to industrial sector in developing economies. We construct a two-sector general equilibrium model, showing that in the short term, public educational expenditure mainly acts to crowd out industrial capital accumulation and thus temporarily hinders structural change, while there is an inverted-U relationship between them in the long run, as public educational expenditure helps reduce educational cost of rural residents permanently. The hukou system of the People’s Republic of China (PRC) provides appropriate data to empirically identify this comprehensive relationship. The empirical evidence confirms the theoretical interpretations when we control for confounding factors, take endogeneity of public educational expenditure into account, and investigate the mechanisms behind the relationship. The PRC’s current level of public educational expenditure is still far from its optimal value, as indicated by the inverted-U relationship with structural change, suggesting that the PRC should increase spending on public education, especially for rural residents.
    Keywords: public educational expenditure; structural change; crowding-out effect; human capital; People’s Republic of China
    JEL: I28 O11 O15
    Date: 2018–04–05
  8. By: Yuan, Weipeng; Macve, Richard; Ma, Debin
    Abstract: Claims have repeatedly been made for the importance of double-entry bookkeeping (‘DEB’) for capitalism’s development in the West, so it is valuable to explore the book-keeping and accounting practices of economically successful organizations elsewhere. Our paper reports our exploration into the original account books contained in the archive of Tŏng Tài Shēng (‘TTS’), a substantial Chinese ‘grocery / merchant-banking’ business whose surviving books span a period from the late 18th century to the middle of the 19th century. The TTS archive is the most complete and integrated surviving merchant archive from before China’s forced opening to the West in the mid-19th century. Our findings about its accounting processes and records (of which we give illustrations) shed critical light on the nature of indigenous Chinese bookkeeping and business organization and on the larger questions about Chinese commercial culture and the path of its development, for comparison with those about the West. We find no evidence in the surviving account books of TTS to support previous arguments in the literature that at this period Chinese accounting practice for successful businesses (must have) had its own 'Chinese double entry bookkeeping' ('CDEB') comparable to Western DEB.
    Keywords: Chinese accounting archives of late Qīng era; Chinese business history; Sūzhōu măzì; double-entry bookkeeping (DEB)
    JEL: N0 M40
    Date: 2017–06–07
  9. 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 international technology transfer not only to the joint venture itself but also to the Chinese joint venture partner firm. Third, with technology spillovers typically outweighing negative competition effects, joint ventures generate 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.
    Keywords: international joint ventures, partner selection, technology spillovers, foreign direct investment, competition effects
    JEL: F14 F23 O34
    Date: 2018
  10. By: Yingli Wang; Xiaoguang Yang
    Abstract: Considered an important macroeconomic indicator, the Purchasing Managers' Index (PMI) on Manufacturing generally assumes that PMI announcements will produce an impact on stock markets. International experience suggests that stock markets react to negative PMI news. In this research, we empirically investigate the stock market reaction towards PMI in China. The asymmetric effects of PMI announcements on the stock market are observed: no market reaction is generated towards negative PMI announcements, while a positive reaction is generally generated for positive PMI news. We further find that the positive reaction towards the positive PMI news occurs 1 day before the announcement and lasts for nearly 3 days, and the positive reaction is observed in the context of expanding economic conditions. By contrast, the negative reaction towards negative PMI news is prevalent during downward economic conditions for stocks with low market value, low institutional shareholding ratios or high price earnings. Our study implies that China's stock market favors risk to a certain extent given the vast number of individual investors in the country, and there may exist information leakage in the market.
    Date: 2018–06
  11. By: Kunze, Frederik; Basse, Tobias; Wegener, Christoph; Spiwoks, Markus
    Abstract: We investigate RMB pricing differentials for onshore and offshore trading. Testing for long memory, we find strong persistence in the pricing differential. Hence, the Chinese FX market in its bipolar structure still lacks basic conditions for perfectly integrated markets.
    Keywords: CNY,CNH,RMB internationalization,Market integration,Emerging markets
    JEL: F31 F33 G18 C58
    Date: 2018
  12. By: Bruni, Michele
    Abstract: China still lags behind Europe along the path of the demographic transition and therefore is still much younger. However, due to the speed with which the fertility rate dropped and life expectancy increased, China ageing process will proceed at a very fast space and around the middle of the century the population of China is projected to be as old as that of France and the UK and older than that of the USA. The paper tries to evaluate the labour market and welfare implications of this process, also by an economic indicator of dependency and socioeconomic burden.
    Keywords: Ageing,China,EU,dependency indicators,technological change,migrations
    JEL: J11 J14 J21 F22 O33
    Date: 2018

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