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on China |
| By: | Emmanuel Farhi; Matteo Maggiori |
| Abstract: | Currently both the International Monetary System (IMS) and the International Price Systems (IPS) are dominated by the U.S. The emergence of China, both as reserve currency and as a currency of invoicing, is likely to disrupt this status quo. We provide a framework to understand the forces that will shape this transition and identify sources of instability. We highlight the risk of an abrupt shift triggered by a run on the dollar. |
| JEL: | D42 E12 E42 E44 F3 F55 G15 G28 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25469&r=all |
| By: | Yang Yang |
| Abstract: | This paper examines the impact of highway expansion on aggregate productivity growth and sectoral reallocation between cities in China. To do so, I construct a unique dataset of bilateral transportation costs between Chinese cities, digitized highway network maps, and firm-level census. I first derive and estimate a market access measure that summarizes all direct and indirect impact of trade costs on city productivity. I then construct an instrumental variable to examine the causal impact of highways on economic outcomes and the underlying channels. The results suggest that highways promoted aggregate productivity growth by facilitating firm entry, exit and reallocation. I also find evidence that the national highway system led to a sectoral reallocation between cities in China. |
| Date: | 2018–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/276&r=all |
| By: | Ann Harrison; Marshall Meyer; Peichun Wang; Linda Zhao; Minyuan Zhao |
| Abstract: | The majority of state-owned enterprises (SOEs) in China were privatized through ownership reforms over the last two decades. Using a comprehensive dataset of all medium and large enterprises in China between 1998 and 2013, we show that privatized SOEs continue to benefit from government support relative to private enterprises. Compared to private firms that were never state-owned, privatized SOEs are favored by low interest loans and government subsidies. These differences are more salient with the Chinese government’s trillion-dollar stimulus package introduced after the 2008 global financial crisis. Moreover, both SOEs and privatized SOEs significantly under-perform in profitability compared to private firms. Nevertheless there are clear improvements in performance post-privatization. The tiger can change its stripes; however, the government’s behavior seems to be sticky. |
| JEL: | L3 L33 O31 O32 O33 P31 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25475&r=all |
| By: | Lin, Carl (Bucknell University); van der Meulen Rodgers, Yana (Rutgers University) |
| Abstract: | This study uses migrant household survey data from 2008 and 2009 to examine how parental migration decisions are associated with the nutritional status of children in rural and urban China. Results from instrumental variables regressions show a substantial adverse effect of children's exposure to parental migration on height-for-age Z-scores of left-behind children relative to children who migrate with their parents. Additional results from a standard Blinder-Oaxaca decomposition, a quantile decomposition, and a counterfactual distribution analysis all confirm that children who are left behind in rural villages – usually because of the oppressive hukou system – have poorer nutritional status than children who migrate with their parents, and the gaps are biggest at lower portions of the distribution. |
| Keywords: | migration, China, children, health, nutrition |
| JEL: | I10 J61 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11986&r=all |
| By: | Clement Imbert; Marlon Seror; Yifan Zhang; Yanos Zylberberg |
| Abstract: | This paper estimates the causal effect of rural-urban migration on urban production in China. We use longitudinal data on manufacturing firms between 2001 and 2006 and exploit exogenous variation in rural-urban migration due to agricultural price shocks. Following a migrant inflow, labor costs decline and employment expands. Labor productivity decreases sharply and remains low in the medium run. A quantitative framework suggests that destinations become too labor-abundant and migration mostly benefits low- productivity firms within locations. As migrants select into high-productivity destinations, migration however strongly contributes to the equalization of factor productivity across locations. |
| Keywords: | rural-urban migration, structural transformation, urban production |
| JEL: | D24 J23 J61 O15 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7440&r=all |
| By: | Hong Cheng; Hanbing Fan; Takeo Hoshi; Dezhuang Hu |
| Abstract: | The Chinese government has been using various subsidies to encourage innovations by Chinese firms. This paper examines the allocation and impacts of innovation subsidies, using the data from the China Employer Employee Survey (CEES). We find that the innovation subsidies are preferentially allocated to state owned firms and politically connected firms. Of these two (state ownership and political connection), political connection is more important in determining the allocation. We also find that the firms that receive innovation subsidies file and receive more patents, are more likely to introduce new products, but do not necessarily file and receive more patents abroad. Finally, the firms that receive innovation subsidies do not have higher productivity, more profits, or larger market shares. Overall, the results point to inefficiency of allocation of innovation subsidies and show that the subsidies encourage only incremental innovations and not radical ones. |
| JEL: | O25 O38 P48 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25432&r=all |
| By: | Eugenio M Cerutti; Maurice Obstfeld |
| Abstract: | A cross-country comparative analysis shows that there is substantial room for further integration of China into global financial markets, especially in the case of the international bond market. A further successful liberalization of the Chinese bond market would encompass not only loosening bond market regulations, but also further developing of other markets, notably the foreign exchange market. Even though the increased integration of China into international capital markets would increase its exposure to the global financial cycle, the costs in terms of monetary autonomy would not be large given China’s size and especially under a well-articulated macroeconomic framework. |
| Keywords: | Globalization;Asia and Pacific;China;International financial markets;Bond Market, Market Integration, Financial Aspects of Economic Integration, International Business Cycles |
| Date: | 2018–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/253&r=all |
| By: | Ding Ding; Weicheng Lian |
| Abstract: | In this paper we analyze the fundamental drivers of China’s residential investment as a share of its GDP. Our analysis indicates that the economic structural changes that led to rebalancing toward consumption were the key driver of the rising residential investment to GDP ratio in China. We project that residential investment would moderate from the current level of 9 percent of GDP to around 6 percent by 2024, and its contribution to real GDP growth would decline gradually from currently about half percent of GDP to slightly negative over this period, barring policy intervention. The decline in the growth contribution of residential investment reflects the projected somewhat slower pace of rebalancing going forward and the envisaged increases in labor costs due to demographic changes. |
| Keywords: | Asia and Pacific;China, People's Republic of;Central banks and their policies;China housing market, residential investment, rebalancing, Bayesian Analysis, Time-Series Models, Monetary Policy (Targets, Instruments, and Effects) |
| Date: | 2018–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/261&r=all |
| By: | Robertson, Raymond (Texas A&M University); Halliday, Timothy J. (University of Hawaii at Manoa); Vasireddy, Sindhu (University of Hawaii at Manoa) |
| Abstract: | China's exports reduce wages in importing countries, but few studies have looked at competition in third party markets. We examine labor market outcomes in Mexico's apparel and textile sectors associated with U.S. apparel and textile imports from China. Using data on U.S. imports in conjunction with quarterly Mexican labor force surveys, we show that U.S. imports from China are associated with a reduction of employment in Mexico's textile and apparel sectors. These effects are the most pronounced for the least educated. Wages were not impacted on net except for the poorest indicating stronger local labor market ties in the left tail of the wage distribution. Notably, reductions in labor demand due to reduced textile imports had spill-overs beyond these sectors. Finally, the effects of trade-induced demand shocks dissipate after about two quarters indicating low firm-level adjustment costs. |
| Keywords: | apparel, China, Mexico, trade, wages, inequality |
| JEL: | F16 J31 |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12002&r=all |
| By: | Mengjia Ren; Lee G. Branstetter; Brian K. Kovak; Daniel E. Armanios; Jiahai Yuan |
| Abstract: | Since 2005, the Chinese government has engaged in an ambitious effort to move China’s energy system away from coal and towards more environmentally friendly sources of energy. However, China’s investment in coal power has accelerated sharply in recent years, raising concerns of massive overcapacity and undermining the central policy goal of promoting cleaner energy. In this paper, we ask why China engaged in such a pronounced investment boom in coal power in the mid-2010s. We find the protective rules under which China’s coal power industry has historically operated have made excessive investment extremely likely unless the central government serves as a “gatekeeper,” slowing and limiting investment in the face of incentives for socially excessive entry. When coal-power project approval authority was decentralized from the central government to local governments at the end of 2014, the gate was lifted and approval time considerably shortened, allowing investment to flood into the market. We construct a simple economic model that elucidates the effects of key policies on coal power investment, and examine the model’s predictions using coal-power project approval records from 2013 to 2016. We find the approval rate of coal power is about 3 times higher when the approval authority is decentralized, and provinces with larger coal industries tend to approve more coal power. We estimate that local coal production accounts for an additional 54GW of approved coal power in 2015 (other things equal), which is about 1/4 of total approved capacity in that year. |
| JEL: | Q40 Q48 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25437&r=all |