nep-cna New Economics Papers
on China
Issue of 2018‒07‒23
eight papers chosen by
Zheng Fang
Ohio State University

  1. Economic dispatch in the electricity sector in China: potential benefits and challenges ahead By Chen, H.; Chyong CK.; Kang, J-N.; Wei Y-M.
  2. Carbon emissions intensity reduction target for China¡¯s power industry: An efficiency and productivity perspective By Yujiao Xian; Ke Wang; Xunpeng Shi; Chi Zhang; Yi-Ming Wei; Zhimin Huang
  3. Managing Trade: Evidence from China and the US By Nicholas Bloom; Kalina Manova; Stephen Teng Sun; John Van Reenen; Zhihong Yu
  4. China’s Agricultural Import Potential By Minghao Li; Wendong Zhang; Dermot J. Hayes
  5. Circle of Fortune: The Long Term Impact of Western Customs Institutions in China By Gan Jin
  6. Collective Entry Deterrence and Free Riding: Airbus and Boeing in China By Patrice CASSAGNARD; Pierre REGIBEAU
  7. The US-China Trade Competition: An Overview By K M, SIBY; P, DR.ARUNACHALAM
  8. Growing Against the Background of Colonization? Chinese Labor Market and FDI in a Historical Perspective By Hao Wang; Jan Fidrmuc; Yunhua Tian

  1. By: Chen, H.; Chyong CK.; Kang, J-N.; Wei Y-M.
    Abstract: Unlike the economic dispatch used in most power systems, electricity system dispatch currently used in China is an equal share approach. This form of dispatch has been criticized for its negative influence on system operations, worsening energy security, environmental sustainability and affordability problems. To contribute to on-going electricity market reform discussions, our study employs an optimization model to quantify the economic dispatch savings in the coal-fired power sector. We offer three major findings. First, the heat rates of coal generators in China in 2014 ranged from 273.91 gce/kWh to 348.38 gce/kWh units and as a result of these large differences among generators in different regions, implementing economic (merit order) dispatch will bring economic and environmental benefits. Second, we identify three major political and economic challenges, which hinder the transition from the current dispatch model, namely (i) current running hours are insufficient for cost recovery, (ii) limited cross-border trading due to electricity over-supply and local protectionism, and (iii) political economy problems from generators of different ownership types. Finally, 5.67% of coal used in power generation could be saved if economic dispatch was employed at the provincial level, the value of which equals 0.05% of Chinese GDP in 2014.
    Keywords: Economic dispatch; electricity; power markets; energy saving; China; coal; optimization model
    JEL: P28 Q48 L94 L51 L52
    Date: 2018–06–20
  2. By: Yujiao Xian; Ke Wang; Xunpeng Shi; Chi Zhang; Yi-Ming Wei; Zhimin Huang
    Abstract: This paper proposes a scenario analysis to address whether the national and provincial CO2 emissions intensity reduction target during 2016-2020 would be achievable for China¡¯s power industry with the identification of change on carbon productivity. This productivity indicator is further decomposed to investigate contributions of different sources to productivity growth when there exists technological heterogeneity. Evaluation results show that even if all electricity-generating units in each region were able to adopt the best practice, the nationwide 18% intensity reduction target is not feasible through improving technical efficiency or upgrading technology on electricity generation and carbon abatement in a short or medium term. The existence of regional technological heterogeneity in power generation and associated CO2 emissions reduction processes implies the necessity of more differentiated regulations and policies for emission reduction across China¡¯s regions and inter-regional technology transfer. The emerging national emission trading scheme could easy some challenges in formulating emission policy for heterogeneous regions.
    Keywords: Data Envelopment Analysis (DEA); Endogenous directional distance function (DDF); Meta-technology frontier; Heterogeneity; Technological gap
    JEL: Q54 Q40
    Date: 2018–07–01
  3. By: Nicholas Bloom; Kalina Manova; Stephen Teng Sun; John Van Reenen; Zhihong Yu
    Abstract: We present a heterogeneous-firm model in which management ability increases both production efficiency and product quality. Combining six micro-datasets on management practices, production and trade in Chinese and American firms, we find broad support for the model's predictions. First, better managed firms are more likely to export, sell more products to more destination countries, and earn higher export revenues and profits. Second, better managed exporters have higher prices, higher quality, and lower quality-adjusted prices. Finally, they also use a wider range of inputs, higher quality and more expensive inputs, and imported inputs from more advanced countries. The structural estimates indicate that management is important for improving production efficiency and product quality in both countries, but it matters more in China than in the US, especially for product quality. Panel analysis for the US and a randomized control trial in India suggest that management exerts causal effects on product quality, production efficiency, and exports. Poor management practices may thus hinder trade and growth, especially in developing countries.
    Keywords: management, exports, product quality, productivity
    JEL: F10 F14 F23 L20 O19 O32
    Date: 2018–06
  4. By: Minghao Li (Center for Agricultural and Rural Development (CARD)); Wendong Zhang (Center for Agricultural and Rural Development (CARD)); Dermot J. Hayes (Center for Agricultural and Rural Development (CARD))
    Abstract: As part of the current trade negotiations between the United States and China, China has suggested that it may lower trade barriers and increase agricultural imports from the United States. In this policy brief, we provide an overview of China’s tariff and non-tariff trade barriers and estimate China’s import potential if these barriers are removed. We find that China’s importation of major U.S. commodities has the potential to increase significantly. For example, in our medium-growth scenario, China will potentially increase U.S. pork import value by $8.9 billion if all trade barriers are removed.
    Date: 2018–06
  5. By: Gan Jin (Department of International Economic Policy, University of Freiburg)
    Abstract: This paper studies the persistent impact of good institutions on economic development in China. By exploiting a British-driven institutional switch in part of China's customs stations in 1902, I find that counties that were more affected by the British customs institutions are also better developed today. Moreover, I show that the institutional switch was exogenous to the pre-colonial development, and I provide different estima- tion models to reveal a robust and causal relationship between good institutions and economic development.
    Keywords: Institutions, Economic development, Treaty ports, Chinese Maritime Customs Service (CMCS), China
    JEL: N15 O10 P51
    Date: 2018–07
  6. By: Patrice CASSAGNARD; Pierre REGIBEAU
    Abstract: We propose a simple two-stages duopoly game where two firms produce an homogeneous good to satisfy the demand in a foreign market. First they decide whether to serve this market with exports or with foreign direct investments and then they play a one-shot Cournot-Nash game. This game has been made even more complex by the fact that foreign direct investments induce technological spillovers which imply the possible entry of a third firm. From the complete characterization of the equilibria we show that a small disadvantage of one of the both firms can conduce this firm to invest alone in the foreign country rather than export. In this case, the investment is motivated by the fact that the dissipation risk of both firm-specific assets to a local potential entrant -triopoly payoffs- is beared by the two firms whereas the gain -increased market share in duopoly- is captured by the firm which chooses to invest abroad. We have in mind the competition between Airbus and Boeing in China.
    Keywords: Entry Deterrence ; FDI ; Export ; Cournot duopoly ; Spillovers ; Airbus and Boeing
    Date: 2018–07
    Abstract: An impending trade war between US and China, the world’s two largest economies can cause insurmountable consequences of unfathomable magnitude. It can cause distortions in the complex web of interconnected commodity and value chains sprawled across the boundaries, ultimately leading to suboptimal social welfare of the international community. The present paper intends to provide an overview of the US-China trade imbalance and resulting trade tensions that it begets .The paper analyses various reasons for the US- China trade competition and its implications on world trade quoting world bank data from 1992-2016 and concludes by proposing the likelihood of not getting the scenario escalated.
    Keywords: Trade war, global value chain, economic nationalism, protectionism, isolationism
    JEL: F10 F51
    Date: 2018–06–09
  8. By: Hao Wang; Jan Fidrmuc; Yunhua Tian
    Abstract: This article investigates how the legacy of colonization shapes the impact of inward FDI on employment in the Chinese labor market. The analysis utilizes provincial panel on overall employment and employment in the service sector during 2006-15. We find that inward FDI significantly promotes employment and that this relationship is stronger in regions once colonized by Western countries. Conversely, regions with a legacy of Japanese colonization display a weaker, and even negative, relationship between FDI and employment. These findings are robust to controlling for the length and intensity of colonization, as well as for endogeneity of FDI.
    Keywords: foreign direct investment, colonization, human capital, China
    JEL: F21 F54 O15
    Date: 2018

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