nep-cna New Economics Papers
on China
Issue of 2018‒10‒29
thirteen papers chosen by
Zheng Fang
Ohio State University

  1. Privacy concerns in China's smart city campaign: The deficit of China's Cybersecurity Law By Fan Yang and Jian Xu
  2. China’s Capacity Reduction Reform and Its Impact on Producer Prices By Linxi Chen; Ding Ding; Rui Mano
  3. Income Mobility of Farm Households with Land-expropriated in the Process of Industrialization and Urbanization in China By Ding, S.; Yang, J.; Chen, Y.
  4. Sectoral Booms and Misallocation of Managerial Talent: Evidence from the Chinese Real Estate Boom By Yu Shi
  5. Diabetes, Employment and Behavioural Risk Factors in China: Marginal Structural Models versus Fixed Effects Models By Seuring, Till; Serneels, Pieter; Suhrcke, Marc; Bachmann, Max
  6. Long-Run Determinants of Japanese Exports to China and the United States: A Sectoral Analysis By Jacques Jaussaud; Serge Rey
  7. The Context of Service Innovation in Alibaba By Mei-Tai Chu
  8. China's Local Government Bond Market By W. Raphael Lam; Jingsen Wang
  9. The role of factor substitution and technical progress in China's great expansion By Manu, Ana-Simona; McAdam, Peter; Willman, Alpo
  10. Transaction Cost in China's Rural Land Rental Market: Bargaining over the Degree of Contractual Formality By Yang, Ziyan
  11. Long-Run Determinants of Japanese Import Flows from USA and China : A Sectoral Approach By Jacques Jaussaud; Serge Rey
  12. The Impact of China's New Rural Pension Scheme on Family Labor Supply: Does the Beneficiary's Gender Matter? By Lin, Yujie
  13. Monetary policy transmission in systemically important economies and China’s impact By Domenico Lombardi; Pierre L. Siklos; Xiangyou Xie

  1. By: Fan Yang and Jian Xu
    Abstract: Many cities around the world are increasingly embedding technological infrastructure in urban spaces. These infrastructures aim to collect vast amounts of data from citizens with an apparent purpose of improving public services. This article discusses privacy concerns generated by China's nationwide smart city campaign and further investigates why China's latest Cybersecurity Law is not adequate to address the risks to citizens' privacy. We argue that there is no functional privacy law in China that would apply to most data collected by smart city infrastructure; nor is there any law that would protect any personal data collected under this framework. We therefore propose practical suggestions to better protect citizens' data in China's ongoing smart city campaign.
    Keywords: big data, China, Cybersecurity Law, privacy, smart cities
    Date: 2018–10–05
  2. By: Linxi Chen; Ding Ding; Rui Mano
    Abstract: In late 2015, the Chinese authorities launched a policy to reduce capacity in the coal and steel industries under the wider effort of Supply-Side Structural Reforms. Around the same time, producer price inflation in China started to pick up strongly after being trapped in negative territory for more than fifty consecutive months. So what is behind this strong reflation—capacity cuts in coal and steel, or a strengthening of aggregate demand? Our empirical analyses indicate that a pickup in aggregate demand, possibly due to the government’s stimulus package in 2015-16, was the more important driver. Capacity cuts played a role in propping up coal and steel prices, explaining at most 40 percent of their price increase.
    Keywords: Fiscal reforms;Supply-side policy;Producer price indexes;Inflation;China, capacity reduction, supply-side structural reforms, producer price index
    Date: 2018–09–28
  3. By: Ding, S.; Yang, J.; Chen, Y.
    Abstract: Purposes : To investigate income mobility of farm households with land-expropriated in the process of urbanization in China, and explore factors affecting income mobility. Methods: Data derives from a project financially supported by Natural Science Foundation of China in 2013. Using principles of stratified random sampling, 429 farm households are selected. Data: income; endowments; demographic; schemes in supporting land expropriation; risk factors. We use Income Transition Matrix to investigate income mobility, and Ordinal Logistic Regression to explore its determinants. Conclusions: 1) Income mobility has different changing patterns after land expropriation. 2) Working capitals, including land, level of labor force s education and social relations, are linked to income mobility changes. Capital accumulation is important. 3) Households in lower/medium income groups are more likely to flow downward when they have: lower level of education, or weak social capital, or larger land expropriation, or member suffering health risk, or not participate in government "Land for Social Security" scheme. 4) Types of risk are closely associated with income downward flow. Interventions should target at strengthening household working capitals, especially human capital, and at preventing them from suffering risks, and at reforming "Land for Social Security" scheme to support sustainable livelihoods. Key words: Income Mobility, Land expropriation, Farm Households, Capitals, Risks Acknowledgement : Funding for data collection has been provided by the National Natural Science Foundation of China (grant number:71173239). We thank Dr Wu Haitao for valuable comments.
    Keywords: Consumer/Household Economics
    Date: 2018–07
  4. By: Yu Shi
    Abstract: This paper identifies a new mechanism leading to inefficiency in capital reallocation at the extensive margin when an economy experiences a sectoral boom. I argue that imperfections in the financial market and capital barriers to entry in the booming sector create a misallocation of managerial talent. Using comprehensive firm-level data from China, I first provide evidence that more productive firms reallocate capital to the booming real estate sector, and demonstrate that the pattern is likely driven by fewer financial constraints on these firms. I then use a structural estimation to verify the talent misallocation. Finally, I calibrate a dynamic model and find that the without the misallocation, the TFP growth in the manufacturing sector would have improved by 0.5% per year.
    Date: 2018–09–28
  5. By: Seuring, Till (Leibniz Institute for Prevention Research and Epidemiology (BIPS)); Serneels, Pieter (University of East Anglia); Suhrcke, Marc (University of York); Bachmann, Max (University of East Anglia)
    Abstract: A diabetes diagnosis can motivate its recipients to reduce their health risks by changing lifestyles but can adversely affect their economic activity. We investigate the effect of a diabetes diagnosis on employment status and behavioural risk-factors taking into account their potentially intertwined relationships. Longitudinal data from the China Health and Nutrition Survey covering the years 1997 to 2011 are used to estimate the effect of a diabetes diagnosis on employment probabilities, alcohol consumption, smoking cessation, body mass index, physical activity and hypertension. To deal with potential confounding, two complementary statistical techniques - marginal structural and fixed effects models - are applied. The marginal structural and fixed effects models generate similar results despite their different underlying assumptions. Both strategies find patterns distinct for males and females, suggesting a decrease in employment probabilities after the diagnosis for women but not for men. Further, few improvements and even further deterioration of behavioural risk factors are found for women, while for men these risk factors either improve or remain the same. These results suggest differences in the impact of diabetes between sexes in China and highlight the potential of reducing behavioural risk factors for women to narrow these inequities.
    Keywords: China, diabetes, employment, behavioural risk factors, marginal structural model
    JEL: D83 E24 I12 I14 J24
    Date: 2018–09
  6. By: Jacques Jaussaud (CREG - Centre de recherche et d'études en gestion - UPPA - Université de Pau et des Pays de l'Adour, CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Serge Rey (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)
    Abstract: We show that during the period 1971–2007, Japanese sectoral exports to China and the United States have depended on real exchange rate fluctuations and external demand (gross domestic product of the country of destination). This result holds for six sectors: foods, textile, metal products, chemicals, non-metal products, and machinery and equipment, as well as for both geographical destinations. Generally, the real exchange rate fluctuations and GDP have had the expected effects. In particular, a real appreciation of the yen and a bigger uncertainty has reduced the Japanese exports. But there is an important exception, as we find a price inelasticity of the principal Japanese exports to USA, i.e. Machinery and Equipment, which represent 80 percent of total exports to USA. So, a real depreciation of the yen may constitute an inappropriate policy to favor a process of growth export-led.
    Keywords: Exchange rate,Yen,Exports,International Trade,Japan,Long-run relationships
    Date: 2018–09–24
  7. By: Mei-Tai Chu (La Trobe University)
    Abstract: This paper focuses on service innovation through the discovery of Chinese type service innovation in Alibaba. The purpose of service innovation is to provide an effective way to create sustainable competitive advantage for companies. By focusing on or building service strategies can help organizations overcome the barrier of maintaining growth in saturated markets and the problem caused by the effect of digitalization. Firms and industries stand to gain a lot by adopting service based innovation strategies and policy makers and various researchers are becoming increasingly intrigued by service innovations in the East especially China because they have grown exponentially in many industrial economies and are creating a new era in service innovation.Innovation is leading the change in the structure of Chinese economy and the outcomes so far are positive. Alibaba is becoming the prime example of the rise Chinese internet economy in the world. With is global sales of $300 billion dollar, Alibaba has proven itself to be a strong competitor for Amazon. In an interview with Reuters, executives said that by using Alipay, the Chinese consumers? trump card china is planning to attract American partners and enter the US market. This methodology of research includes conducting several in-depth interviews in Hong Kong, Beijing, Hangzhou and Taipei as well as employing the case study of Alibaba?s innovation by collecting public information. It aims to unveil Alibaba?s unique approaches compared to western type innovation.According to experts, it can be difficult to predict whether the Alibaba model is potentially transferrable into other countries. However, the with the rise of the internet of things and development of mobile payment systems, the research outcomes find there is a chance that there will be a new Alibaba era in a few years. The key to success for Alibaba is the fact that the Chinese market is large enough to accommodate a large ecosystem. As Chinese companies are becoming more profitable, they are more interested to invest more, involve mergers and acquisitions, and adopt modern technologies and stating to blow the wind of Chinese innovation to the western world. From the perspective of service innovation, the success of Alibaba helps capture the three aspects of their unique value propositions, profit generation and personnel creativity.
    Keywords: Service Innovation, China, Alibaba
    JEL: O31
    Date: 2018–07
  8. By: W. Raphael Lam; Jingsen Wang
    Abstract: Local governments play a significant role in China’s public finance and fiscal operations. The size of local government debt has grown rapidly over the past years, exceeding the stock of sovereign debt in China. How does this development compare to other countries and what policies can foster the sound development of the bond markets? This paper finds that despite its rapid growth, the local government bond market is still underdeveloped. Severe impediments—low liquidity, weak credit discipline, structural fiscal deficit in local governments—have become more visible. Reforms to develop a sound local government bond market should harmonize tax and regulations, build liquidity, and advance fiscal reforms to tighten off-budget borrowing and address intergovernmental imbalances.
    Date: 2018–09–28
  9. By: Manu, Ana-Simona; McAdam, Peter; Willman, Alpo
    Abstract: We offer a macroeconomic assessment of China’s Reform Period, highlighting several neglected channels underlining its great expansion. Estimating the supply side of the post-Reform economy reveals the relatively high (above unity) value of the elasticity of factor substitution and the time-varying pattern of factor-saving technical change. The latter we relate to trade, human capital and reallocation factors. We then demonstrate how, in addition to factor accumulation and technical progress, the above-unity elasticity of substitution can be a source of growth (the ‘de La Grandville hypothesis’). We then draw upon our estimated framework to rationalize China’s high and rising savings ratio as well as the dynamic nature of its convergence path. JEL Classification: D24, E13, O11
    Keywords: China, de La Grandville hypothesis, factor substitution, growth, optimal savings, reform period, TFP
    Date: 2018–09
  10. By: Yang, Ziyan
    Keywords: Behavioral & Institutional Economics, Rural/Community Development, International Development
    Date: 2018–06–20
  11. By: Jacques Jaussaud (CREG - Centre de recherche et d'études en gestion - UPPA - Université de Pau et des Pays de l'Adour, CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Serge Rey (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)
    Abstract: We analyze the determinants of the sectoral Japanese imports from her two main partners, China and the USA over the period 1971-2007. We estimate cointegration relationships with breaks, using the Saikkonen-Lütkepohl method. For six sectors: foods, raw materials, textile, mineral fuel, chemicals and machinery and equipment, we show that if the domestic demand affects positively the imports, the impact of prices changes can be different whether we retain the relative prices (homogeneity hypothesis) or we consider both domestic and import, while when we decompose the relative prices between imports prices and domestic (corporate) prices, except in one case (textile imports from the USA), we can reject the homogeneity hypothesis. A possible explanation is the greater volatility of import prices compared to domestic prices which leads importers to wait when import prices change, insofar as they don't if these changes are temporary or permanent.
    Keywords: Exchange rate,Yen,Imports,International Trade,Japan,Long-run relationships
    Date: 2018–09–24
  12. By: Lin, Yujie
    Keywords: Household and Labor Economics, Rural/Community Development, Behavioral & Institutional Economics
    Date: 2018–06–20
  13. By: Domenico Lombardi; Pierre L. Siklos; Xiangyou Xie
    Abstract: This paper examines the monetary policy transmission mechanism in four systemically important economies. The impact of monetary policy is found to be broadly comparable for China, the US, the Eurozone, and Japan. Identifying a role for the financial sector is essential to unpacking various channels through which monetary policy operates. Global factors play a significant role and their impact is strongest for China and weakest for Japan. China’s impact is significant with the Eurozone displaying the most interdependence and Japan the least. Time-varying VARs suggest that contrasts in the responses to monetary policy shocks persist highlighting some of the remaining differences in the transmission mechanism. Finally, there is no apparent structural change in the estimated relationships around the time when the Fed intervened after 2008. It is conjectured that Quantitative Easing may well have prevented such a break.
    Keywords: monetary policy transmission, systemically important economies, QE, Factor VAR, time-varying Factor VAR
    JEL: E63 E52 E58 E32 E31
    Date: 2018–10

This nep-cna issue is ©2018 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.