nep-cna New Economics Papers
on China
Issue of 2018‒10‒15
thirteen papers chosen by
Zheng Fang
Ohio State University

  1. Corruption, Government Subsidies, and Innovation: Evidence from China By Lily Fang; Josh Lerner; Chaopeng Wu; Qi Zhang
  2. The Long-Term Consequences of Having Fewer Children in Old Age: Evidence from China’s “Later, Longer, Fewer” Campaign By Yi Chen; Hanming Fang
  3. Chinese Competition and Product Variety of Indian Firms By Pavel Chakraborty; Michael Henry
  4. Better Nutrition, Healthier Mind? – Experimental Evidence from Primary Schools in Rural Northwestern China By Chen, Qihui; Liu, Xiaoyue; Zhao, Qiran
  5. Non-Farm Income and Technical Efficiency in the Uplands of Yunnan, China: A Bayesian Non-Crossing Quantile Regression Approach By Ramsey, Austin F.; Wang, Huaiyu
  6. Does Animal Welfare Matter to Consumers in Emerging Countries? Evidence from China By Chen, Junhong; Ortega, David L.; Wang, Hong Holly
  7. The Size and Destination of China’s Portfolio Outflows By Rose Cunningham; Eden Hatzvi; Kun Mo
  8. Import Protections in China's Grain Market: An Empirical Assessment By Chen, Bowen; Villoria, Nelson B.; Xia, Tian
  9. Collateral Damage? Labour Market Effects of Competing with China – at Home and Abroad By Cabral, Sónia; Martins, Pedro S.; Pereira dos Santos, João; Tavares, Mariana
  10. Production Efficiency of Scaled-up Agricultural Operations in China: An Empirical Analysis By Wang, Yang; Dong, Fengxia; Xu, Jiabin
  11. A Model of Tournament Incentives with Corruption By Bin Wang; Yu Zheng
  12. The Biological Standard of Living in China during the 20th Century: Evidence from the Age at Menarche By Pierre van der Eng; Kitae Sohn
  13. Market Distortions and Labor Share Distributions: Evidence from Chinese Manufacturing Firms By Daniel Berkowitz

  1. By: Lily Fang; Josh Lerner; Chaopeng Wu; Qi Zhang
    Abstract: Governments are important financiers of private sector innovation. While these public funds can ease capital constraints and information asymmetries, they can also introduce political distortions. We empirically explore these issues for China, where a quarter of firms’ R&D expenditures come from government subsidies. Using a difference-in-differences approach, we find that the anticorruption campaign that began in 2012 and the departures of local government officials responsible for innovation programs strengthened the relationship between firms’ historical innovative efficiency and subsequent subsidy awards and depressed the influence of their corruption-related expenditures. We also examine the impact of these changes: subsidies became significantly positively associated with future innovation after the anti-corruption campaign and the departure of government innovation officials.
    JEL: G28 H25 O32
    Date: 2018–09
  2. By: Yi Chen; Hanming Fang
    Abstract: Family planning plays a central role in contemporary population policies. However, little is known about its long-term consequences in old age because of the identification challenge. In this study, we examine how family planning affects the quality of life of the Chinese elderly. The direction of the effect is theoretically unclear. On the one hand, having fewer children allows parents to reallocate more resources to themselves, improving their well-being. On the other hand, having fewer children also leads to less care and companionship from children in old age. To empirically probe the effect of family planning, we identify the causal impact by exploiting the provincial heterogeneity in implementing the “Later, Longer, Fewer” policies in the early 1970s. We find that the policies greatly reduced the number of children born to each couple by 0.85. Parents also receive less support from children in terms of living arrangements, inter vivos transfers, and emotional support. Finally, we find that family planning has drastically different effects on elderly parent's physical and mental well-being. Whereas parents who are more exposed to the family planning policies consume more and enjoy slightly better physical health status, they report more severe depression symptoms. Our study calls for greater attention to the mental health status of the Chinese elderly.
    JEL: H31 I15 I18 J13
    Date: 2018–09
  3. By: Pavel Chakraborty; Michael Henry
    Abstract: Using detailed firm-product-year data across manufacturing industries in India, and exploiting the exogenous nature of China's entry into the WTO in 2001, we investigate the link between the impact of import penetration from China on the product variety of Indian manufacturing firms. We find: (i) robust and significant effect of product drop, with the effect coming only from competitive pressure in the domestic market; (ii) evidence of product drop or 'creative destruction' is robust only for the lower-half of the size distribution; (iii) firms drop their peripheral/marginal products and concentrate on the core ones; and (iv) our result is most strong for firms producing intermediate goods. For an average Indian manufacturing firm, 10 percentage point increase in India's Chinese share of imports in the domestic market reduces the product scope of firms by 1.7-4.4%. In contrast, we find positive effects on product scope as when firms are importing intermediate goods. We also find evidence of significant productivity effects and within-firm factor reallocation. Our results are consistent to a battery of robustness checks and IV estimation.
    Keywords: Chinese Competition, Product Drop, Domestic Market, Small Firms
    JEL: F1 F14
    Date: 2018
  4. By: Chen, Qihui; Liu, Xiaoyue; Zhao, Qiran
    Keywords: Food Safety and Nutrition, Household and Labor Economics, Experimental Economics
    Date: 2018–06–20
  5. By: Ramsey, Austin F.; Wang, Huaiyu
    Keywords: Productivity Analysis and Emerging Technologies, Research Methods/Econometrics/Stats, International Development
    Date: 2018–06–20
  6. By: Chen, Junhong; Ortega, David L.; Wang, Hong Holly
    Keywords: Food and Agricultural Marketing, Food Safety and Nutrition, Demand and Price Analysis
    Date: 2018–06–20
  7. By: Rose Cunningham; Eden Hatzvi; Kun Mo
    Abstract: The size of China’s financial system raises the possibility that the liberalization of its capital account could have a large effect on the global financial system. This paper provides a counterfactual scenario analysis that estimates what the size and direction of China’s overseas portfolio investments would have been in 2015 if China had had no restrictions on these outflows. In such a scenario, China’s holdings of overseas portfolio assets would have been between US$1.5 trillion and US$3.2 trillion (13 to 29 per cent of Chinese GDP), or 5 to 12 times its actual holdings of US$281 billion. Our model estimates that these additional holdings would have been predominantly directed to the world’s deepest financial markets, especially the United States, while emerging-market economies would have received little additional portfolio investment. These results suggest that the liberalization of Chinese portfolio outflows may not prove disruptive to the global financial system, although it could have important implications for China.
    Keywords: Balance of payments and components, Econometric and statistical methods, International topics
    JEL: C23 F21 G15 F32
    Date: 2018
  8. By: Chen, Bowen; Villoria, Nelson B.; Xia, Tian
    Keywords: International Trade, Food and Agricultural Policy Analysis, Demand and Price Analysis
    Date: 2018–06–20
  9. By: Cabral, Sónia (Banco de Portugal); Martins, Pedro S. (Queen Mary, University of London); Pereira dos Santos, João (Nova School of Business and Economics); Tavares, Mariana (Maastricht University)
    Abstract: The increased range and quality of China's exports is a major ongoing development in the international economy with potentially far-reaching effects. In this paper, on top of the direct effects of increased imports from China studied in previous research, we also measure the indirect labour market effects stemming from increased export competition in third markets. Our findings, based on matched employer-employee data of Portugal covering the 1991-2008 period, indicate that workers' earnings and employment are significantly negatively affected by China's competition, but only through the indirect 'market-stealing' channel. In contrast to evidence for other countries, the direct effects of Chinese import competition are mostly non-significant. The results are robust to a number of checks and also highlight particular groups more affected by indirect competition, including women, older and less educated workers, and workers in domestic firms.
    Keywords: international trade, labour market, matched employer-employee data, China, import competition
    JEL: F14 F16 J31
    Date: 2018–08
  10. By: Wang, Yang; Dong, Fengxia; Xu, Jiabin
    Keywords: Production Economics, Productivity Analysis and Emerging Technologies, Rural/Community Development
    Date: 2018–06–20
  11. By: Bin Wang (City University of Hong Kong); Yu Zheng (Queen Mary University of London)
    Abstract: We provide a theory of how growth, corruption, and a low-powered public-sector pay scale coexist in a stable equilibrium in the early stage of China's development. The regionally decentralized authoritarian regime of China features lower-level government officials competing for promotion to a higher level in the government by generating local economic growth, and calls for high-powered incentives to elicit effort from the the officials. However, this is at odds with the generally low-powered public-sector pay scale in China. We propose a principal-agent model, where the principal represents the Chinese people's desire to pursue economic growth and the agents are the government officials delegated with production tasks and organized in a tournament, to address how a low-powered pay scale can effectively elicit effort in a tournament infested with widespread corruption.
    Keywords: Institution; Tournament; Corruption; China
    JEL: D73 J45 O43 P26
    Date: 2018–10–01
  12. By: Pierre van der Eng; Kitae Sohn
    Abstract: This paper uses the mean age at menarche as an indicator of changes in the standard of living in China during the tumultuous 20th century. It discusses the difficulties of using this indicator in terms of the quality of the available data, the processing the basic data, and the interpretation of the results. The paper finds that the mean age at menarche in China stagnated at 16 to 17 years for women born during the 1880s-1930s, although it also finds decreases in some urban areas, such as Beijing and Shanghai, indicative of an improving standard of living. The mean age at menarche increased for 1940s birth cohorts, in part due the negative effects of the China-Japan war and the civil war in the 1940s, but also the famine of 1959-1962 that affected these cohorts during puberty. The mean age at menarche decreased in a sustained way for women born during the 1950s to the early 2000s, to a level of 12.1 in 2000-03. This decrease preceded the acceleration of economic growth in the 1980s. Increased educational attainment since the 1940s explains much of the decrease in the age at menarche, ahead of improvements in nutrition, hygiene and healthcare.
    Keywords: China, living standards, human growth, anthropometrics, menarche
    JEL: I12 I31 N15 O15
    Date: 2018–07
  13. By: Daniel Berkowitz
    Abstract: n China's manufacturing sector, labor shares varied widely across firms, and the mass offirms paying low labor shares increased during 1998-2007. To explain this pattern, we build amodel that connects labor shares with capital-labor ratios and product markups and examinehow firms' responses to market distortions shape labor share distributions. The widely disperseddistributions of capital-labor ratios and markups, combined with estimated high elasticities ofcapital-labor substitution, account for the first three moments of labor share distributions. Thesimultaneous divergence of capital-labor ratios and convergence of markups explains the leftwardshift in labor share distributions over the period.
    Date: 2018–01

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