nep-cna New Economics Papers
on China
Issue of 2019‒04‒08
seven papers chosen by
Zheng Fang
Ohio State University

  1. The Effect of Cryptocurrency on Exchange Rate of China: Case Study of Bitcoin By Riska Dwi, Astuti; Nadia, Fazira
  2. The Impact of Rapid Aging and Pension Reform on Savings and the Labor Supply By Hui He; Lei Ning; Dongming Zhu
  3. The Chinese are Here: Firm Level Analysis of Import Competition and Performance in Sub-Saharan Africa By Darko, Christian K.; Occhiali, Giovanni; Vanino, Enrico
  4. Trade policy repercussions: the role of local product space -Evidence from China By Julien Gourdon; Laura Hering; Stéphanie Monjon; Sandra Poncet
  5. China’s Evolving Exchange Rate Regime By Sonali Das
  6. How BLUE is the Sky? Estimating the Air Quality Data in Beijing During the Blue Sky Day Period (2008-2012) by the Bayesian LSTM Approach By Han, Y.; Li, V.; Lam, J., Pollitt, M.; Pollitt, M.
  7. How to Make a Miracle? Ludwig Erhard’s Post-War Price Liberalisation in China’s 1980s Reform Debate By Isabella M. Weber

  1. By: Riska Dwi, Astuti; Nadia, Fazira
    Abstract: In recent years, there have been many significant changes in commercial transactions. Not only e-commerce continues to grow, but also the form of payment services and service providers are consistently growing, such as virtual currency. One of virtual currency that quite popular is cryptocurrency especially Bitcoin. China became the country with the largest Bitcoin market in the world in the past few years. However, due to the concerns about money laundering and threats to China's financial stability and affecting the domestic currency, the Chinese government has formed a strict policy on Bitcoin. Therefore, nowadays, China is no longer the largest Bitcoin market in the world. Regarding the recently implemented policy, this study aims to analyze whether Bitcoin does affect China's exchange rate. The main independent variables in this research are specified to Bitcoin price volatility from BTCE, and controlled with the variable of the current account, inflation, and money supply. Monthly time series data from November 2012 until July 2017 is analyzed using autoregressive distributed lag (ARDL). The estimation results show that Bitcoin price volatility significantly affects the exchange rate in the long run. The higher of Bitcoin price volatility implies higher risk. The negative sign in the coefficient suggests that when Bitcoin's price volatility increases, investors tend to switch their investments on real currency will be preferable so that the exchange rate will be appreciated.
    Keywords: Cryptocurrency, Bitcoin, Exchange Rate, ARDL, China
    JEL: E52 G15 G18
    Date: 2018–09–12
  2. By: Hui He; Lei Ning; Dongming Zhu
    Abstract: We study, both empirically and quantitatively, the role of savings and the labor supply in self-insurance channels over the life cycle when one faces not only idiosyncratic income risks, but also changes in longevity risk and pension benefits. We pick China as a case study since China has undergone a dramatic process of rapid aging and a tremendous reduction in social security benefits for the period 1995-2009. We find that both savings and the labor supply are quantitatively important self-insurance channels in responding to changes in longevity risk and pension benefits, and the responses via adjustment to savings and labor supply have significant macroeconomic implications. Applying the model to China, we find that the pension reform and rapid aging together contribute 55 percent of the increase in the household saving rate from 1995 to 2009, and they jointly capture about 64 percent of the drastic increase in the labor supply for the same period.
    Date: 2019–03–18
  3. By: Darko, Christian K.; Occhiali, Giovanni; Vanino, Enrico
    Abstract: This study uses firm level data on 19 Sub-Saharan Africa countries between 2004 and 2016 to provide a rigorous analysis on the impact of Chinese import competition on productivity, skills, and performance of firms., We measure import competition and ports accessibility at the city-industry level to identify the relevance of firms’ location in determining the impact of Chinese imports competition. To address endogeneity concerns, a time-varying instrument for Chinese imports based on the interaction between an exogenous geographic characteristic and a shock in transportation technology is developed. The results show that imports competition has a positive impact on firm performance, mainly in terms of productivity catch-up and skills upgrading. Of particular interest is the finding that the effects of import competition from China are stronger for more remote firms that have lower port accessibility, an indication that Chinese imports in remote areas improves productivity of laggard firms, employment, and intensity of skilled workers. Our findings indicate that African firms are improving their performance as a consequence of the higher Chinese import intensity, mainly through direct competition and the use of higher quality inputs of production sourced from China.
    Keywords: Research Methods/ Statistical Methods
    Date: 2018–05–24
  4. By: Julien Gourdon (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique); Laura Hering (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); Stéphanie Monjon (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Sandra Poncet (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)
    Abstract: Our study shows that the relatively under-studied VAT export rebate system is a major industrial policy of the Chinese authorities to support exports. We use city-specific export-quantity data at the HS6-product level over the 2003-12 period to assess how changes in the VAT export tax have affected China's export performance. We are particularly interested in how the impact of this policy varies within products across cities depending on how well connected the targeted product is to the local productive structure. Our difference-indifference estimates exploit an eligibility rule disqualifying some export flows from the rebates. Our results suggest that a one percent rise in the VAT export tax leads to a 6.6% relative decrease in eligible export quantities. We then show that the effectiveness of this export tax policy is magnified when it applies to products with denser links with the local productive structure. Hence export benefits from VAT export rebates are greater for cities that have the necessary capabilities and resources to carry out the activities supported by this rebate policy.
    Keywords: VAT system,policy evaluation,export tax,export performance,trade elasticity,product relatedness,China
    Date: 2019–03–13
  5. By: Sonali Das
    Abstract: China’s exchange rate regime has undergone gradual reform since the move away from a fixed exchange rate in 2005. The renminbi has become more flexible over time but is still carefully managed, and depth and liquidity in the onshore FX market is relatively low compared to other countries with de jure floating currencies. Allowing a greater role for market forces within the existing regime, and greater two-way flexibility of the exchange rate, are important steps to build on the progress already made. This should be complemented by further steps to develop the FX market, improve FX risk management, and modernize the monetary policy framework.
    Date: 2019–03–07
  6. By: Han, Y.; Li, V.; Lam, J., Pollitt, M.; Pollitt, M.
    Abstract: Over the last three decades, air pollution has become a major environmental challenge in many of the fast growing cities in China, including Beijing. Given that any long-term exposure to high-levels of air pollution has devastating health consequences, accurately monitoring and reporting air pollution information to the public is critical for ensuring public health and safety and facilitating rigorous air pollution and health-related scientific research. Recent statistical research examining China’s air quality data has posed questions regarding data accuracy, especially data reported during the Blue Sky Day (BSD) period (2000 – 2012), though the accuracy of publicly available air quality data in China has improved gradually over the recent years (2013 – 2017). To the best of our understanding, no attempt has been made to re-estimate the air quality data during the BSD period. In this paper, we put forward a machine-learning model to re-estimate the official air quality data during the BSD period of 2008 – 2012, based on the PM2.5 data of the Beijing US Embassy, and the proxy data covering Aerosol Optical Depth (AOD) and meteorology. Results have shown that the average re-estimated daily air quality values are respectively 64% and 61% higher than the official values, for air quality index (AQI) and AQI equivalent PM2.5, during the BSD period of 2008 to 2012. Moreover, the re-estimated BSD air quality data exhibit reduced statistical discontinuity and irregularity, based on our validation tests. The results suggest that the proposed data re-estimation methodology has the potential to provide more justifiable historical air quality data for evidence-based environmental decision-making in China.
    Keywords: Blue Sky Day (BSD), Air Quality, Beijing, Data Irregularity, Bayesian LSTM, Data Estimation
    JEL: C53 C63 Q53
    Date: 2019–03–21
  7. By: Isabella M. Weber (Goldsmiths, University of London)
    Abstract: This paper develops a comparative and connected history of the debates over transition to a market economy in West-Germany after World War II and in China during the first decade of reform and opening up under Deng Xiaoping (1978-1988). At both historical moments the political aim was to reintroduce market mechanisms into a dysfunctional command economy. The question what kind of price reform this required was subject to heated debates among economists. This paper shows how the West-German 1948 currency and price reform was introduced into the Chinese reform debate by German ordoliberals and neoliberals like Friedman. It traces how the West-German case study was mystified as “Erhard Miracle” and became a metaphor for the shock therapy of universal overnight price liberalisation in China.
    Keywords: Ordoliberalism, price reform, socialism, China, market transition, Ludwig Erhard
    Date: 2019–03

This nep-cna issue is ©2019 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.