nep-cna New Economics Papers
on China
Issue of 2018‒11‒05
eleven papers chosen by
Zheng Fang
Ohio State University

  1. The Limits (and Human Costs) of Population Policy: Fertility Decline and Sex Selection in China under Mao By Kimberly Singer Babiarz; Paul Ma; Grant Miller; Shige Song
  2. Shadow prices of direct and overall carbon emissions in China¡¯s construction industry: a parametric directional distance function-based sensitive estimation By Ke Wang; Kexin Yang; Yi-Ming Wei; Chi Zhang
  3. Circle of Fortune: The Long Term Impact of Western Customs Institutions in China By Jin, Gan
  4. The Effect of Exchange Rates on Chinese Trade: A Dual Margin Approach By Bin Qiu; Kuntal K. Das; W. Robert Reed
  5. Obesity inequality and the changing shape of the bodyweight distribution in China By Nie, Peng; Ding, Lanlin; Sousa-Poza, Alfonso
  6. Social capital at venture capital firms and their financial performance: Evidence from China By Qi-lin Cao; Hua-yun Xiang; You-jia Mao; Ben-zhang Yang
  7. Estimating the Effect of Physical Exercise on Juveniles' Health Status and Subjective Well-Being in China By J. Guan; J.D. Tena
  8. Accounting for the Sources of the Recent Decline in Korea's Exports to China By Moon Jung Choi; Kei-Mu Yi
  9. Labor Market Returns to Education and English Language Skills in the People's Republic of China: An Update By Asadullah, Niaz; Xiao, Saizi
  10. China’s Selective Two-Child Policy and Its Impact on the Marriage Market By Lu, Di
  11. China and the United States: Trade Conflict and Systemic Competition By C. Fred Bergsten

  1. By: Kimberly Singer Babiarz; Paul Ma; Grant Miller; Shige Song
    Abstract: The vast majority of China’s fertility decline predates the famous One Child Policy – and instead occurred under its predecessor, the Later, Longer, Fewer (LLF) fertility control policy. In this paper, we first study LLF’s contribution to marriage and fertility behavior, finding that the policy reduced China’s total fertility rate by about 0.9 births per woman, explaining only 28% of China’s modern fertility decline. Given son preference, we then consider the parallel issue of sex selection, which also emerged prior to the One Child Policy (when prenatal selection was not technologically feasible). We find that LLF increased the use of male-biased fertility stopping rules from 3.25% to 6.3% of couples – and that it contributed to the early emergence of postnatal neglect of girls in modern China, rising from none to 0.3% of births (implying 210,000 previously unrecognized missing girls). Considering Chinese population policy to be extreme in global experience, our results demonstrate the limits of population policy’s ability to reduce fertility – and its potential for unintended consequences.
    JEL: J1 J12 J13 J18
    Date: 2018–10
  2. By: Ke Wang; Kexin Yang; Yi-Ming Wei; Chi Zhang
    Abstract: Construction industry, together with building materials industries supplying it, is one of China¡¯s largest emitters of CO2. Structural change in construction industry has been promoted to mitigate CO2. This paper estimates CO2 shadow price of construction industry and its supporting materials industries in China so as to help them to mitigate CO2 cost-effectively. A parametric directional distance function model, taking into account all possible directional vectors, is applied to address issues regarding arbitrary selection of direction that will affect estimation of shadow price. Results show that there is larger potential for CO2 reduction in supporting material industries than in construction industry itself and shadow price of overall CO2 is much lower than that of direct CO2. The existence of enlarging heterogeneity in shadow prices among different regions provides strong support for introducing a national carbon trading market, thereby helping construction industry and building materials industries to reduce their abatement costs.
    Keywords: Abatement cost; Building material industry; Construction industry; Shadow price
    JEL: Q54 Q40
    Date: 2018–09–08
  3. By: Jin, Gan
    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 estimation 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 N15 O10 P51
    Date: 2018
  4. By: Bin Qiu; Kuntal K. Das (University of Canterbury); W. Robert Reed (University of Canterbury)
    Abstract: Previous studies investigating the effect of exchange rate changes on a country’s exports have found little evidence that exchange rates matter. This “Exchange Rate Disconnect Puzzle” may stem from the fact that studies have mostly focused on aggregate data. Using HS- 6 digit product-level data for exports from China, we analyze the effect of real exchange rate as well as the volatility of real exchange rate of the Chinese RMB. By decomposing China’s exports into its “extensive” and “intensive” margins, we find that real exchange rate volatility has a significantly impact on overall Chinese exports that operate via both the extensive and the intensive margins of trade. Real exchange rate volatility increases the uncertainty and deters small and new firms from entering the market or force them to exit the market via the extensive margin. As less firms operate in the export market, the export share of the existing firms increase via the intensive margin. The overall effect of this volatility is slightly positive. We find that these effects are dominant for the sub sample of countries that are the minor trading partners of China compared to its major trading partners. We find weak evidence that real exchange rate depreciation affects China’s exports via the extensive margin.
    Keywords: Chinese Trade, Extensive Margin & Intensive Margin, Real Exchange Rate, Volatility
    JEL: F14 F31
    Date: 2018–10–01
  5. By: Nie, Peng; Ding, Lanlin; Sousa-Poza, Alfonso
    Abstract: Using data from the China Health and Nutrition Survey (CHNS), this study analyses changes in bodyweight (BMI and waist circumference) distributions between 1991 and 2011 among adults aged 20+ in China. To do so, we quantify the source and extent of temporal changes in bodyweight and then decompose the increase in obesity prevalence into two components: a rightward shift of the bodyweight distribution (mean growth) and a (re)distributional skewing. Our analysis reveals a clear rightward distributional shift combined with a leftward skewing. Although the relatively large size of this skewing in the first decade analysed reflects an increase in obesity inequality, this inequality growth subsides in the second decade. Nevertheless, over the entire 20-year period, obesity inequality increases significantly, especially among females, younger age groups, rural residents and individuals with low socioeconomic status.
    Keywords: BMI,Waist circumference,Obesity inequality,Decomposition,China
    JEL: D30 D63 I10 I14
    Date: 2018
  6. By: Qi-lin Cao; Hua-yun Xiang; You-jia Mao; Ben-zhang Yang
    Abstract: This paper studies the extent to which social capital drives performance in the Chinese venture capital market and explores the trend toward VC syndication in China. First, we propose a hybrid model based on syndicated social networks and the latent-variable model, which describes the social capital at venture capital firms and builds relationships between social capital and performance at VC firms. Then, we build three hypotheses about the relationships and test the hypotheses using our proposed model. Some numerical simulations are given to support the test results. Finally, we show that the correlations between social capital and financial performance at venture capital firms are weak in China and find that China's venture capital firms lack mature social capital links.
    Date: 2018–10
  7. By: J. Guan; J.D. Tena
    Abstract: This study estimates the causal effect of physical exercise on health and happiness for Chinese junior high school students. We use a longitudinal database from the China Education Panel Survey (CEPS) which allows us to deal with the potential endogeneity of physical exercise by considering the use of instrumental variables and propensity score matching. Our findings suggest that physical exercise has a significantly positive effect on health, and also marginally improves students' happiness. Moreover, these improvements affect all types of students, even those relatively unhappy or in poor health. It is also found that the positive impact on health is higher for females, rural and low-income students and for students attending to schools subjected to high academic pressure.
    Keywords: health;happiness;endogeneity;Instrumental Variables;Propensity score;China
    Date: 2018
  8. By: Moon Jung Choi (Economic Research Institute, The Bank of Korea); Kei-Mu Yi (Economics Department, University of Houston)
    Abstract: Following a two-decade period of double-digit growth, South Korean exports to China have declined since 2013. We investigate the sources of this recent decline using two complementary methodologies, an accounting decomposition and a model-based decomposition. First, we decompose the changes in Korea's exports to China as a share of output into within-industry and between-industry effects using disaggregated industry-level data. Our results show that during the high export growth period of 1990-2009, the within effect dominated; in the export slowdown period of 2010-2014, the within effect contributed to the slowdown in that individual sectors, on net, exported a smaller fraction of their output to China. Second, we apply a dynamic multi-sector, multi-country general equilibrium model to decompose the shocks that cause the decline in Korea's exports to China. The results reveal that in 2013-2016 China experienced a sharp reduction in its desire to accumulate capital and to consume manufactured goods. All else equal, these forces would imply fewer imports by China from Korea of manufactured goods. Given that Korea's exports to China are highly concentrated in manufactured intermediate and capital goods, these shocks could, in principle, explain most of the decline in Korea's exports to China during this period.
    Keywords: Korea, China, Export decline, Shocks, Decomposition
    JEL: F1 F4 O53
    Date: 2018–08–14
  9. By: Asadullah, Niaz (University of Malaya); Xiao, Saizi (University of Malaya)
    Abstract: We re-examine the economic returns to education in the People's Republic of China (PRC) using data from the China General Social Survey 2010. We find that the conventional ordinary least squares estimate of returns to schooling is 7.8%, while the instrumental variable estimate is 20.9%. The gains from schooling rise sharply with higher levels of education. The estimated returns are 12.2% in urban provinces and 10.7% in coastal provinces, higher than in rural and inland areas. In addition, the wage premium for workers with good English skills (speaking and listening) is 30%. These results are robust to controls for height, body weight, and English language skills, and to corrections for sample-selection bias. Our findings, together with a critical review of existing studies, confirm the growing significance of human capital as a determinant of labor market performance in post-reform PRC.
    Keywords: endogeneity bias, language skills, schooling, health
    JEL: J30
    Date: 2018–09
  10. By: Lu, Di
    Abstract: This paper analyzes the effects of the earlier selective two-child policy (TCP) in the 1990s (both parents have to be only children) to explore the impacts of this relaxation on the marriage market as well as the fertility effect due to the marriage choice distortion. By using a difference in differences (DID) design in a subhazard model with competing risks, the results show that the subhazard ratio is 355.06% higher and this treatment effect is significant at a 1% level. The results suggest that the selective TCP increased the probability of the treatment group of choosing an only-child spouse rather than marrying a spouse with siblings or a spouse belonging to an ethnic minority. The marriage effect is stronger in urban areas where OCP was previously implemented more rigorously. The probability of giving birth to a second child is also positive and significant in a DID design, which implies that the fertility preference is binding under the OCP.
    Keywords: China’s two-child policy,marriage distortion,subhazard model,fertility effect
    JEL: J12 J13 C41
    Date: 2018
  11. By: C. Fred Bergsten (Peterson Institute for International Economics)
    Abstract: The current trade war between the United States and China is a central dimension of the emerging Cold War between the two superpowers. The conflict also highlights and threatens to aggravate the contest for global economic leadership between the two countries, which ranges far beyond their disputes over trade balances and level playing fields. Bergsten analyzes the links between the immediate clash and the far more important systemic confrontation and offers three suggestions that could address the two problems simultaneously: First, China should join the current US-EU and US-EU-Japan initiatives to reform the rules of the World Trade Organization to effectively address the systemic issues central to the present trade conflict. Second, China should indicate an interest in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which probably would induce the United States to rejoin the arrangement and provide another venue to open markets and write new rules. Third, the United States and China should work together to reform the International Monetary Fund to shore up its financial resources and amend its governance structure to better reflect the evolving balance of international economic power.
    Date: 2018–10

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