nep-cna New Economics Papers
on China
Issue of 2018‒10‒22
sixteen papers chosen by
Zheng Fang
Ohio State University

  1. Fiscal Incentives and Local Tax Competition: Evidence from China By Yongzheng Liu; Bingyang Lv; Hang Tai; Chenping Yang
  2. Agricultural Land and Rural-Urban Migration in China: A New Pattern By Xiao, Wei; Zhao, Guochang
  3. Non-Labor Income and the Age of Marriage: Evidence from China's Heating Policy By Chu, Junhong; Liu, Haoming; Png, I. P. L.
  4. China’s Progress Towards Green Growth: An International Perspective By Myriam Linster; Chan Yang
  5. Fiscal Decentralization and Government Size: The Role of Democracy By Junxue Jia; Siying Ding; Yongzheng Liu
  6. Health effects associated with marital status transition among elders in China By Sun, Yu; You, Wen
  7. Household Food Demand Analysis in Rural China: Implications for Food Imports By Wang, Haiyan; Zivkovic, Sanja
  8. Bumping, precedents, and de†escalation in South China Sea: Options for the United States and China By Siniša Vuković and Riccardo Alfieri
  9. China between external pressure and domestic policy reforms: In search of a balance By Langhammer, Rolf J.; Liu, Wan-Hsin
  10. High-speed rail and inventory reduction: Firm-level evidence from China By Li, Leona Shao-Zhi; Cui, Chuantao
  11. The Impact of Product-Harm Crisis on International Trade:Evidence from the 2008 Dairy Scandal in China By Dang, Jingqi; Xu, Wei
  12. Price transmission behavior of melons market in Myanmar-China border trade By Lwin, Wuit Yi; Henneberry, Shida Rastegari
  13. The Complex Interdependence of China's Belt and Road Initiative in the Philippines By Aaron Jed Rabena
  14. U.S. county-level impacts of growing agricultural imports from China By Hillberry, Russell; Cheng, Yichuan (Stanley)
  15. Insurance Demand over Varying Coverage Levels: Experimental Evidence From China By Huo, Ran; Colson, Gregory J.
  16. The responses of BRICS Equities to China's Slowdown: A Multi-Scale Causality Analysis By Jamal Bouoiyour; Refk Selmi

  1. By: Yongzheng Liu (Renmin University of China); Bingyang Lv (Renmin University of China); Hang Tai (People’s Bank of China); Chenping Yang (Renmin University of China)
    Abstract: This paper explores how fiscal incentives affect capital tax decisions by local governments in the Chinese context. We develop a model in which local governments, facing different fiscal incentives, compete for mobile capital over corporate taxes. The key prediction of the model, borne out in data from Chinese cities over the years 20042013, is that an increase in the local corporate income tax-sharing ratio, proxying local fiscal incentives, makes city governments’ horizontal tax reactions stronger. Our results contribute to the fiscal federalism literature by providing evidence in support of the argument that fiscal incentives faced by local governments significantly shape their policy choices. Additionally, we provide explicit evidence on local tax competition within provinces in China, which has long been regarded as one of the driving forces of China’s rapid economic growth.
    Date: 2018–09
  2. By: Xiao, Wei (Research Institute of Economics and Management, Southwestern University of Finance and Economics); Zhao, Guochang (Research Institute of Economics and Management, Southwestern University of Finance and Economics)
    Abstract: This paper investigates the effects of agricultural land on rural-urban migration and the labor market outcomes in the context of China. We employ the rural sample of the 2009 RUMiC data, which cover approximately 8000 rural households in 82 counties of China. We find that an increase in the agricultural land of a household tends to increase the household members’ propensity for migration for working in cities. We also find that an increase in land significantly decreases the number of days of migration, increases the number of days of farming work, and decreases the number of days of local non-farming work. More interestingly, the negative effect on time for local non-farming work is much larger than that for non-local non-farming work. The increase in the amount of agricultural land also pushes household members to move further. These results show us a new pattern different from the literature. To explain such a difference, we compare the effect of land among different age-groups and find that the positive link between agricultural land and rural-urban migration only exists for young people. Therefore, our results may reflect the change of the role of agricultural land over time. Our finding that less agricultural land hinders rural-urban migration suggests that, to help rural residents access opportunities in cities, governments should implement policies targeting households with less agricultural land.
    Keywords: Agricultural land, rural-urban migration, time allocation, China; Transport infrastructure; high-speed rail; firm performance; inventory; China
    Date: 2018–10–04
  3. By: Chu, Junhong (National University of Singapore); Liu, Haoming (National University of Singapore); Png, I. P. L. (National University of Singapore)
    Abstract: We exploit China's heating policy to investigate how non-labor income affects marriage. From the mid-1950s, the policy gave substantial subsidies to urban residents north of the Huai River. Applying geographic regression discontinuity, we find that, with the policy, urban men in the north married 15 months earlier than southerners. The difference is substantial compared with the average age of first marriage of 24.9 years for urban men in the south. The effect is larger for later birth cohorts, which is consistent with the progressive implementation of the policy. The effect is smaller among women, consistent with women having less power in the household than men. There is no effect among rural people, who did not benefit from the heating policy.
    Keywords: age at marriage, regression discontinuity, non-labor income, China
    JEL: J12
    Date: 2018–08
  4. By: Myriam Linster (OECD); Chan Yang (OECD)
    Abstract: This report illustrates China’s progress towards green growth from an international perspective, with focus on industry and the interplay between industrial development and environment. It starts with depicting the structural shifts that the Chinese economy, in particular its industry, has undergone since the early 1990s. It briefly discusses the driving forces behind China’s emergence as global manufacturing powerhouse, and the environmental implications of this rapid phase of industrialisation. It also assesses China’s position vis-à-vis green growth using the OECD green growth measurement framework and indicators. The findings suggest that China has made great strides towards improving the environmental and resource productivity of its economy, but more opportunities can be exploited for greater efficiency gains that are vital to the shift to a low carbon, resource efficient and competitive economy. They also indicate that the policies in place, though showing first results, remain insufficient to cope with increasing environmental pressures and with historical and cumulated pollution loads. Further progress will largely depend on the country’s capacity to integrate environmental aspects into decision-making in all policies and sectors, and at all levels, and ensure that industrial and environmental policy objectives and measures are well aligned and mutually supportive.
    Date: 2018–10–19
  5. By: Junxue Jia (Renmin University of China); Siying Ding (Renmin University of China & Indiana University Bloomington); Yongzheng Liu (Renmin University of China)
    Abstract: China initiated a major decentralization reform in recent years to simultaneously improve tax autonomy and scal transfers toward county governments. We use an instrumental variables strategy and a county-level panel dataset for years 1995-2014 to examine the incentive eects of the reform. We nd that the reform signicantly reduced tax enforcement of the county governments, for which the result appears to be driven by the opposing incentive eects of the increased local tax autonomy and scal transfers. In particular, while the reform motivated county governments to improve tax enforcement by enhancing local tax autonomy, it dampened local tax enforcement because of the increased scal transfers. Our ndings provide support to the argument in the decentralization literature that improving local tax autonomy, compared to increasing scal transfers, is a more eective way to nance local governments while strengthening local scal discipline.
    Date: 2018–09
  6. By: Sun, Yu; You, Wen
    Keywords: Household and Labor Economics, Behavioral & Institutional Economics, International Development
    Date: 2018–06–20
  7. By: Wang, Haiyan; Zivkovic, Sanja
    Keywords: Demand and Price Analysis
    Date: 2018–01–15
  8. By: Siniša Vuković and Riccardo Alfieri
    Abstract: The article departs from a much needed clarification about the 2 overlapping conflicts in South China Sea: sovereignty dispute between China and ASEAN countries, and freedom of navigation dispute between China and the United States. Although both are well documented and covered by an extensive range of academic and policy†relevant analyses, the lines between the 2 have often been blurred, yielding a very limited set of options for proper conflict management. This paper looks at the actual reasons behind Chinese defiance toward the United States, and how can this be reversed. In order to avoid a potential clash in the South China Sea, this paper looks at how similar situations, where the United States was challenging the excessive maritime claims of other nuclear powers, were managed peacefully in light of an inevitable clash. A surprisingly underscrutinized precedent of “bumping incident†form 1988, when U.S. Navy vessels were rammed by Soviet ships and “bumped†back to the international waters is used as a template for a potential solution in the ongoing Sino†American conflict. This paper examines the limits and opportunities of this type of solution and shows how another “bumping incident†does not need to happen before a bilateral solution is explored.
    Date: 2018–10–08
  9. By: Langhammer, Rolf J.; Liu, Wan-Hsin
    Abstract: It was probably a combination of the objective of a constructive response to external headwind from the United States (US) and to some extent also from the European Union (EU) as concerns China's investment and trade policies on the one hand and the intrinsic insight that opening up the investment and trade sector in China would support its structural change on the other hand, why China in the first half of 2018 has launched a number of reform measures in inward investment and trade. These reform measures are introduced and discussed in more detail in this policy paper.
    Keywords: China,FDI,trade,tariff,United States
    Date: 2018
  10. By: Li, Leona Shao-Zhi (Faculty of Business Administration, University of Macau); Cui, Chuantao (School of Economics, Sichuan University)
    Abstract: Using a balanced panel of manufacturing firms from China between 2007 and 2013, we estimate that being connected to a high-speed rail system leads to 9.5% reduction in local firms' input inventory spending. The e ect is stronger for downstream industries and private enterprises. A back-of-envelope calculation suggests that each dollar of HSR investment reduces input inventory stock by 12 cents, which is significantly larger than the e ects found in previous studies based on highway or road investment. Declines in transportation and communication cost, as well as agglomeration e ect are identified as plausible mechanisms. Our findings reveal a micro channel through which improved transport infrastructure brings about economic gains, and contribute to the cost-benefit assessment of high-speed rail investment.
    Keywords: Transport infrastructure; high-speed rail; firm performance; inventory; China
    JEL: D21 H54 O18 R4
    Date: 2018–10–04
  11. By: Dang, Jingqi; Xu, Wei
    Keywords: Food Safety and Nutrition, International Trade, Food and Agricultural Marketing
    Date: 2018–06–20
  12. By: Lwin, Wuit Yi; Henneberry, Shida Rastegari
    Keywords: International Trade, Food and Agricultural Marketing, Demand and Price Analysis
    Date: 2018–06–20
  13. By: Aaron Jed Rabena
    Abstract: Complex interdependence refers to the multiple channels of interaction and agenda in interstate relations, which involve domestic (public and private) stakeholders and nonmilitary issues. Since the Belt and Road Initiative (BRI) came into being, most analyses have largely focused on infrastructure development. The BRI not only has the potential to impact a host government's socioeconomic agenda but also its overall bilateral relationship with China. It is therefore imperative to measure the progress and prospects of China's Belt and Road projects in the Philippines, in line with Beijing's strategic goal to deepen complex interdependence with partner†states, against the BRI's five major dimensions of cooperation: (a) policy coordination, (b) infrastructure development and connectivity, (c) trade and investment facilitation, (d) financial coordination and integration, and (e) people†to†people ties and connectivity. These, together with the examination of China's BRI projects in other Asian countries as modes of comparison, are crucial in assessing probable outcomes in the Philippines. The paper includes policy recommendations based on possible pitfalls and risks that may hamper the advancement of the Belt and Road projects in the Philippines and Sino†Philippine bilateral interaction.
    Keywords: Belt and Road Initiative, dimension of cooperation, Dutertenomics, sphere of confluence, strategic partnership
    Date: 2018–10–08
  14. By: Hillberry, Russell; Cheng, Yichuan (Stanley)
    Keywords: International Trade, Rural/Community Development, Production Economics
    Date: 2018–06–20
  15. By: Huo, Ran; Colson, Gregory J.
    Keywords: Risk and Uncertainty, Experimental Economics, Ag Finance and Farm Management
    Date: 2018–06–20
  16. By: Jamal Bouoiyour (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Refk Selmi (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)
    Abstract: Growth in China has been slowing in 2015 below its long-run average. This worsening outlook has been synchronized among emerging markets with sharp slowdown. The paper looks at the responses of four BRICS (Brazil, Russia, India and South Africa) stock markets to deepening worries over slowing growth in the world's second-largest economy. To properly examine the peculiarities of these spillovers, we carry out relatively new methods that rise in signal theory: the causality testing-based Empirical Mode Decomposition (EMD) and the frequency domain causality test. These techniques allow capturing hidden factors driving uncertainty spillovers within BRICS stock markets. The results support robust evidence that the severity of China's slowdown impact was not uniform across BRICS equities. In particular, South Africa hasn't been rattled as badly as Brazil, Russia and India (in this order). The intensity of bilateral trade and investment relationships, the position of market in terms of regulation and securities exchanges, the financial system efficiency, the gold's role as safest haven and the distribution of companies belonging to cyclical and defensive industries in overall stock market indices have been put forward to explain the heterogeneous BRICS responses.
    Keywords: China's slowdown,BRICS equities,Multi-scale causality analysis
    Date: 2018–09–24

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