nep-cna New Economics Papers
on China
Issue of 2018‒09‒10
eight papers chosen by
Zheng Fang
Ohio State University

  1. Size, Determinants, and Consequences of Corruption in China's Provinces: The MIMIC Approach By Hailin Chen; Friedrich Schneider; Qunli Sun
  2. What ails fishery insurance in China? - Evaluating fishermen's willingness to pay in central coastal areas By Hairong Mu; Hui Zheng; Chunyang Wang
  3. The structure of non-tariff measures and its impact on trade: An empirical assessment on China’s pork meat trade By Sanjuan Lopez, A.I.; Peci, J.
  4. How Has the Two-Day Weekend Policy Affected Labour Supply and Household Work in China? By Fang, Tony; Lin, Carl; Tang, Xueli
  5. The Effects of an Anti-Dumping Policy on Stock Prices of the Solar Companies By Bi-Huei Tsai; Pei-Wei Kuo
  6. Unintended Consequences of China's New Labor Contract Law on Unemployment and Welfare Loss of the Workers By Akee, Randall K. Q.; Zhao, Liqiu; Zhao, Zhong
  7. Socio-Economic Inequalities in Tobacco Consumption of the Older Adults in China: A Decomposition Method By Si, Yafei; Zhou, Zhongliang; Su, Min; Wang, Xiao; Li, Dan; Wang, Dan; He, Shuyi; Hong, Zihan; Chen, Xi
  8. Putting China in perspective: a comparative exploration of the ascent of the Chinese knowledge economy By Rodríguez-Pose, Andrés; Wilkie, Callum

  1. By: Hailin Chen; Friedrich Schneider; Qunli Sun
    Abstract: This paper uses a multiple indicators and multiple causes (MIMIC) model and estimates the extent of corruption in 30 Chinese provinces from 1995 to 2015. Treating corruption as an unobserved latent variable, the MIMIC results show that both government size and public investment have significant positive effects on corruption, while fiscal decentralization, citizen education level, average public sector wages, intensity of law enforcement, media supervision, political control and FDI all have significant negative effects on corruption. Among them, education level, size of public investment, intensity of law enforcement and political control are the most important determinants of China’s corruption. Additionally, we find that corruption decreases GDP and residents’ income significantly. In the 30 provinces the corruption index shows a negative trend from 1995 to 2015. Comparing the extent of corruption in the eastern, central and western provinces, we also find that the more developed the region, the lower the extent of corruption.
    Keywords: corruption index, determinants and consequences, MIMIC model, China’s provinces
    JEL: D72 D73 H11 H77 K42
    Date: 2018
  2. By: Hairong Mu (Harper Adams University); Hui Zheng (Ocean University of China); Chunyang Wang (Macau University of Science and Technology)
    Abstract: Despite the remarkable development in its fishery sector, the penetration rate of fishery insurance in China is considerably low. This paper examines the key factors that contribute to the poor performance of fishery insurance in the country and investigates fishermen?s willingness to pay (WTP) for the insurance program, based on a survey of 1,280 fishermen in three coastal cities in China. The results indicate fishermen?s decision on adoption of an insurance scheme depends on various factors, among which the magnitude of loss, insurance awareness and education level all have positive impact, but annual income and years of fishing experience are more likely to have negative effects. In addition, the mean WTP for fishery insurance is estimated to be CNY 579 per family, which is equivalent to 1.5% of fishermen's mean annual income. These results provide several policy implications for not only the government but also researchers and insurance companies.
    Keywords: China, fishery insurance, willingness to pay, double-bounded dichotomous choice contingent valuation method, field survey
    JEL: Q22 H42
    Date: 2018–07
  3. By: Sanjuan Lopez, A.I.; Peci, J.
    Abstract: The objective is to quantify the trade impact and calculate the ad-valorem equivalent (AVE) of the nontariff measures (NTMs) affecting pork meat trade with China. A gravity equation is estimated for this purpose using the Poisson Pseudo Maximum Likelihood (PPML) estimator. The gravity equation is expanded to include the regulatory intensity or frequency of NTMs, which is further split into the 17 categories (to 4-digit), 14 SPS (Sanitary and Phytosanitary) and 3 TBT (Technical Barriers to Trade), currently in place in China. NTMs data comes from the Trade Analysis Information System (TRAINS) accessed through WITS. Eleven categories have a significant impact on trade, six of which have a trade restricting impact. In this sense, our results concur with the recent literature that posits both, restricting and enhancing trade impacts. Besides, AVE calculation posits a clear hierarchy across categories, where most restrictive are higher than Chinese tariffs (34% versus 15%). Furthermore, simulation illustrates that total removal of NTMs would double bilateral trade between the EU and China. While removal maybe unconceivable as it could conflict with domestic policy aiming at safeguarding food safety, the simulation shows a maximum threshold that could be reached by means of harmonization and/or mutual recognition.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2018–07
  4. By: Fang, Tony (Memorial University of Newfoundland); Lin, Carl (Bucknell University); Tang, Xueli (Deakin University)
    Abstract: This paper examines the effects of working time reduction policy on labour supply (hours of work and whether an individual takes a second job) and household production, by exploiting the Chinese Two-Day Weekend Policy, which effectively reduced weekly working days from six to five in May 1995, as a natural experiment. We construct a theoretical model that predicts a decline in labour supply in both private and public sectors as work hours were reduced. In theory, the time spent on household production may increase or decrease or the time spent on the second job may increase or decrease depending on how much agents care about household production or the income from a second job. Using the China Health and Nutrition Survey, we adopt a difference-in-differences strategy to estimate the policy effects on work hours of wage earners in both public and private sectors. Relative to the control group deemed unaffected by the policy change, our estimates show that the Two-Day Weekend Policy significantly reduced the working hours of wage earners by 4 percent and the public sector by 5 percent while increasing the probability of having a second job by 3 percent and reducing the time spent on household work by 98-107 minutes per week. The results are robust to different specifications and a propensity score matching technique.
    Keywords: labour supply, time allocation, work hours, household production, second job, China
    JEL: J22 J28
    Date: 2018–07
  5. By: Bi-Huei Tsai (National Chiao Tung University); Pei-Wei Kuo (National Chiao Tung University)
    Abstract: This study focuses on the reactions of abnormal returns on the Taiwanese solar stocks from eight anti-dumping events to examine the effect of anti-dumping tax on the Taiwanese solar companies. We collects the Taiwanese market reactions to U.S. announced anti-dumping tax on Taiwan, and the Chinese market reactions to U.S. announced anti-dumping tax on China. The purposes of this study are to explore whether abnormal returns are negative during the announcement of anti-dumping tax investigation. Furthermore, we test how abnormal returns change when the verdict of anti-dumping tax is favorable or unfavorable. Finally, we test whether Taiwanese solar stocks abnormal returns are positive during American announcement of anti-dumping tax on China. We find that the abnormal returns are negative during the announcement of anti-dumping tax investigation. The abnormal returns are positive if the verdict of anti-dumping tax is favorable. On the other hand, the abnormal returns are negative if the verdict of anti-dumping tax is unfavorable. Because China and Taiwan ranks top one and two in solar investment respectively, we find positive abnormal returns of Taiwanese companies during American?s announcement of anti-dumping tax on China.
    Keywords: Solar, Anti-dumping, Abnormal Returns, Tax, Verdict
    JEL: G00 H21 Q20
    Date: 2018–07
  6. By: Akee, Randall K. Q. (University of California, Los Angeles); Zhao, Liqiu (Renmin University of China); Zhao, Zhong (Renmin University of China)
    Abstract: China's new Labor Contract Law, which intended to strengthen the labor protection for workers, went into effect on January 1, 2008. The law stipulated that the maximum cumulative duration of successive fixed-term (temporary) labor contracts is 10 years, and employees working for the same employer for more than 10 consecutive years are able to secure an open-ended (permanent) labor contract under the new law, which is highly desirable to employees. However, in order to circumvent the new Labor Contract Law, some employers may have dismissed workers, after the passage of the new law, who had worked in the same firm for more than 10 years. Using data from the 2008 China General Social Survey, we find strong evidence that firms did in fact dismiss their formal-contract employees who have been employed for more than 10 years. Additionally, using a regression discontinuity design based on this exogenous change in unemployment status for this particular group of workers, we show that the dismissed workers suffered significant welfare loss in terms of happiness. Our results are robust to various specifications and placebo tests.
    Keywords: labor contract law, unemployment, happiness, regression discontinuity design, China
    JEL: J41 J64 I31
    Date: 2018–07
  7. By: Si, Yafei (Xi’an Jiaotong University); Zhou, Zhongliang (Xi’an Jiaotong University); Su, Min (Xi’an Jiaotong University); Wang, Xiao (Xi’an Jiaotong Liverpool University); Li, Dan (Xi’an Jiaotong University); Wang, Dan (Xi’an Jiaotong University); He, Shuyi (Xi’an Jiaotong Liverpool University); Hong, Zihan (Xi’an Jiaotong Liverpool University); Chen, Xi (Yale University)
    Abstract: In China, tobacco consumption is a leading risk factor for non-communicable diseases, and understanding the pattern of socio-economic inequalities of tobacco consumption will, thus, help to develop targeted policies of public health control. Data came from the China Health and Retirement Longitudinal Study in 2013, involving 17,663 respondents aged 45 and above. Tobacco use prevalence and tobacco use quantities were defined for further analysis. Using the concentration index (CI) and its decomposition, socio-economic inequalities of tobacco consumption grouped by gender were estimated. The concentration index of tobacco use prevalence was 0.044 (men 0.041; women −0.039). The concentration index of tobacco use quantities among smokers was 0.039 (men 0.033; women 0.038). The majority of the inequality could be explained by educational attainment, age, area, and economic quantiles. Tobacco consumption was more common among richer compared to poorer people in China. Gender, educational attainments, age, areas, and economic quantiles were strong predictors of tobacco consumption in China. Public health policies need to be targeted towards men in higher economic quantiles with lower educational attainment, and divorced or widowed women, especially in urban areas of China.
    Keywords: tobacco consumption, inequality, concentration index, decomposition, China
    JEL: I12 I14 J14
    Date: 2018–07
  8. By: Rodríguez-Pose, Andrés; Wilkie, Callum
    Abstract: This article traces the ascent of China from knowledge economy laggard to world leader over the last two decades, using a comparative perspective. Chinese trends in R&D and patenting are compared to those of the countries of the ‘triad’ (the European Union, Japan and the US), as well as to those of other large emerging economies (Brazil, India, Mexico and South Africa). The analysis demonstrates how both in innovation inputs and outputs China reflects an innovation reality closer to that of the most developed areas of the world than to that of other emerging countries. However, the rapid ascent of Chinese innovation has generated a distinct set of territorial dynamics, with innovation much more geographically concentrated than elsewhere in the world and more reliant on agglomeration forces than on more traditional ‘innovative’ drivers. Such a distinct geography of innovation may have until now facilitated the innovation surge in China, but poses serious future risks in terms of the sustainability of the system.
    Keywords: innovation; knowledge economy; R&D; patenting; regions; China
    JEL: N0
    Date: 2016–11–01

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