nep-cna New Economics Papers
on China
Issue of 2019‒05‒13
thirteen papers chosen by
Zheng Fang
Ohio State University

  1. What Causes Chinese Listed Firms To Switch Bank Loan Provider? Evidence From A Survival Analysis By Huang, Jiayi; Matthews, Kent; Zhou, Peng
  2. Multi-scale assessment of the economic impacts of flooding:: evidence from firm to macro-level analysis in the Chinese manufacturing sector By Hu, Xi; Pant, Raghav; Hall, Jim W.; Surminski, Swenja; Huang, Jiashun
  3. Are exporters more environmentally friendly? A re-appraisal that uses China's micro-data By Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
  4. Can Health Savings Account Reduce Health Spending?: Evidence from China By Tianxu Chen
  5. Evaluation of the sophistication of Chinese industries using the information-geometric decomposition approach By Takanori Minamikawa
  6. Global Commodity Markets and Rebalancing in China: The Case of Copper By Jeannine Bailliu; Doga Bilgin; Kun Mo; Kurt Niquidet; Benjamin Sawatzky
  7. Measuring China's patent quality: Development and validation of ISR indices By Böing, Philipp; Müller, Elisabeth
  8. Rise of Bank Competition: Evidence from Banking Deregulation in China By Haoyu Gao; Hong Ru; Robert Townsend; Xiaoguang Yang
  9. Trade policy repercussions: the role of local product space -Evidence from China By Julien Gourdon; Laura Hering; Stéphanie Monjon; Sandra Poncet
  10. China’s grains policy: Impacts of alternative reform options By Shingo Kimura; Stephan Hubertus Gay; Wusheng Yu
  11. Assessing Global Potential Output Growth: April 2019 By Fares Bounajm; Jean-Philippe Cayen; Michael Francis; Christopher Hajzler; Kristina Hess; Guillaume Poulin-Bellisle; Peter Selcuk
  12. New Kid on the Block? China vs the US in World Oil Markets By Jamie Cross; Bao H. Nguyen; Bo Zhang
  13. Economic Effects of the USA - China Trade War: CGE Analysis with the GTAP 9.0a Data Base By Enkhbayar Shagdar; Tomoyoshi Nakajima

  1. By: Huang, Jiayi (Cardiff Business School); Matthews, Kent (Cardiff Business School); Zhou, Peng (Cardiff Business School)
    Abstract: This paper analyses the duration of firm-bank relationships and examines what drives firms in China to change from one bank loan provider to another. Matched data of firm-loan-duration to bank provides a unique panel data set of relationship between China's listed firms and their lending banks consisting of 2,102 firms listed on both the Shanghai Stock Exchange and Shenzhen Stock Exchange in the period of 1996-2016. The Cox proportional hazard model is used to allow for a semiparametric hazard function after parametrically controlling for firm specific financial factors, industry factors, ownership characteristics, internal management changes, and external macroeconomic changes. In addition, we explore the impact of the 2008 financial crisis, bank-financial and ownership characteristics. The main finding of this study is that in an environment of growing ommercialisation of relationships the firm-bank relationship between state-owned enterprises (SOEs) and state-owned banks (SOBs) in China remains super-stable. However, a change in the CEO of a firm even of a SOE increases the probability of the loan-provider being changed.
    Keywords: Firm-Bank Switch, China, Survival analysis, Hazard Function
    JEL: G21 D22
    Date: 2019–05
  2. By: Hu, Xi; Pant, Raghav; Hall, Jim W.; Surminski, Swenja; Huang, Jiashun
    Abstract: We present an empirical study to systemically estimate flooding impacts, linking across scales from individual firms through to the macro levels in China. To this end, we combine a detailed firm-level econometric analysis of 399,356 firms with a macroeconomic input-output model to estimate flood impacts on China's manufacturing sector over the period 2003-2010. We find that large flooding events on average reduce firm outputs (measured by labor productivity) by about 28.3% per year. Using an input-output analysis, we estimate the potential macroeconomic impact to be a 12.3% annual loss in total output, which amounts to 15,416 RMB billion. Impacts can propagate from manufacturing firms, which are the focus of our empirical analysis, through to other economic sectors that may not actually be located in floodplains but can still be affected by economic disruptions. Lagged flood effects over the following two years are estimated to be a further 5.4% at the firm level and their associated potential effects are at a 2.3% loss in total output or 2,486 RMB billion at the macro-level. These results indicate that the scale of economic impacts from flooding is much larger than microanalyses of direct damage indicate, thus justifying greater action, at a policy level and by individual firms, to manage flood risk.
    Keywords: China; flooding; indirect economic impact; manufacturing firms; natural disasters; ES/K006576/1
    JEL: N0
    Date: 2019–04–01
  3. By: Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
    Abstract: Is a firm's ability to export an important determinant of environmental performance? To answer this question, we construct a unique micro dataset that merged two rich firm-level datasets for China for 2007. When combining this new dataset with well-received empirical specifications, we found that both export status and export intensity are associated with lower sulfur dioxide (SO2) emissions intensity. In addition to the traditional OLS estimation, we verified this association by using the propensity score matching method. Our findings show that the baseline result still holds. In short, exporters are more environmentally friendly than non-exporters,which is in line with previous evidence reported for developed economies. We further discuss mechanisms that explain the observed pattern and show that exporters realize higher abatement efforts compared to non-exporters. This study complements the literature in terms of providing China's micro evidence on SO2 abatement efforts. It also serves as a first step toward a better understanding of the impact of trade on the environment, especially in developing countries.
    Keywords: Exporters and the environment,firm heterogeneity,SO2 emissions,abatement
    JEL: F18 Q53 Q56
    Date: 2019
  4. By: Tianxu Chen (University of Connecticut)
    Abstract: Health care costs are high and rising in most major economies, and health savings account (HSA) is often viewed as an appealing way to contain health care costs because it can potentially solve the moral hazard spending caused by traditional health insurance. In this paper, I use the China Household Finance Survey to empirically examine the effectiveness of HSAs in containing medical expenses and reducing moral hazard. I find that HSAs that restrict the use of funds may lead enrollees to discount the value and thus spend more on health care. In addition, I find that the positive effect of HSAs on medical expenses is larger for the relatively healthier group, which may suggest that moral hazard behavior exists with regard to the use of HSA funds. The empirical estimates of the effect of HSAs on medical expenses are robust when a set of covariates are controlled, and HSA balances are instrumented using housing savings account balances.
    Keywords: Health savings account; medical expense; risk behavior; China
    JEL: I13 I12 I18 I14 J1
    Date: 2019–05
  5. By: Takanori Minamikawa (Economic Research Institute for Northeast Asia (ERINA))
    Abstract: Since the Open Door Policy was implemented in 1978, China economy has maintained a high economic growth. During this period, although the reform of state-owned enterprises and the introduction of foreign direct investments might cause the change of the industrial structure, the common recognition, about how those factor has changed Chinese industrial structure, has not been obtained. This paper applied information geometric decomposition to Input-Output tables of China in the period 1981 to 2010, and extracted the factors of the technological changes in the whole industry in China. This paper examines the different of evaluation of industrial structure between input coefficient index and information geometry approach. Furthermore based on the factors, two industrial sophistication indicators, which are about degree of Mechanization and degree of ICT introducing, respectively are constructed. The empirical results suggests that the degree of mechanization and included ICT has different characteristics for each other. Regarding mechanization, the mechanized manufacturing sectors showed increases in sophistication in the 1980s and 2000s; however, mechanized tertiary sectors showed increases in sophistication in the 1990s. Regarding ICT input, while manufacturing sectors showed a high level of sophistication in ICT input in the 2000s, tertiary sectors showed a high level of sophistication in ICT input in the 1990s.
    Keywords: Input-Output tables, Industrial structure, RAS method, Foreign Direct Investment, Innovation
    Date: 2018–03
  6. By: Jeannine Bailliu; Doga Bilgin; Kun Mo; Kurt Niquidet; Benjamin Sawatzky
    Abstract: Given that China accounts for about half of global copper consumption, it is reasonable to expect that any significant change in Chinese copper consumption will have an impact on the global market. This paper examines the likely impact of the rebalancing of the Chinese economy on its copper consumption over the next decade, focusing on the relationship between the copper intensity of GDP and the share of investment in GDP. We use a panel smooth transition regression model to account for potential non-linearities in this relationship at different levels of urbanization and income. Our findings suggest that there is indeed a significant relationship between a country’s copper intensity of GDP and its investment share. Our baseline rebalancing scenario for China implies that copper intensity in China has already peaked and is expected to decline steadily through the next decade. This anticipated reduction in Chinese copper intensity is the result of the dampening impact of rebalancing and higher per capita income on copper intensity, which more than offsets the upward pressure stemming from the ongoing process of urbanization. An exploration of alternative rebalancing scenarios suggests that China’s rebalancing path could have a significant impact on global copper consumption.
    Keywords: Econometric and statistical methods; International topics
    JEL: O13 O14 Q02
    Date: 2019–04
  7. By: Böing, Philipp; Müller, Elisabeth
    Abstract: Because China has become one of the largest applicants of PCT patents, it is of interest to compare the quality of Chinese and non-Chinese applications. We extend a quality index based on internationally comparable citation data from international search reports (ISR) to consider foreign, domestic, and self citations. Whereas foreign citations show that Chinese PCT patent applications reach only a third of the non-Chinese quality benchmark, the extension towards domestic and self citations suggests a higher quality level that converges to or even surpasses the benchmark. We investigate these differences based on firm-level regressions and find that in China, only foreign citations, but not domestic and self citations, have a significant and positive relation to R&D stocks. Using Germany as a representative country without policy support for patenting, we show that all three citations types may be used as economic indicators if policy distortion is not a concern. Our results show that domestic and self citations suffer from an upward bias in China and should be employed with caution if they are to be interpreted as a measure of patent quality.
    Keywords: patent quality,cross-country comparison,China
    JEL: O34 O3
    Date: 2019
  8. By: Haoyu Gao; Hong Ru; Robert Townsend; Xiaoguang Yang
    Abstract: Using proprietary individual level loan data, this paper explores the economic consequences of the 2009 bank entry deregulation in China. Such deregulation leads to higher screening standards, lower interest rates, and lower delinquency rates for corporate loans from entrant banks. Consequently, in deregulated cities, private firms with bank credit access increase asset investments, employment, net income, and ROA. In contrast, the performance of state-owned enterprises (SOEs) does not improve following deregulation. Deregulation also amplifies bank credit from productive private firms to inefficient SOEs due mainly to SOEs’ soft budget constraints. This adverse effect accounts for 0.31% annual GDP losses.
    JEL: G21 G28 L50 O40
    Date: 2019–05
  9. 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
  10. By: Shingo Kimura (OECD); Stephan Hubertus Gay (OECD); Wusheng Yu (University of Copenhagen)
    Abstract: Reforming China’s grain policy could have significant implications for both domestic and international markets. China has begun to reform its price support policies for several commodities, replacing them with commodity specific area payments. The assessment of policy reform scenarios for grains, using two partial equilibrium models, show that China would maintain more than 80% of self-sufficiency in wheat and maize, and more than 95% in rice. The increase in its grain imports could increase international prices, in particular for wheat and rice. A gradual approach to reforming market price support with compensatory payments would smooth the potential impacts on domestic and world commodity markets, as well as on domestic farm income. While the reform of price support policies benefit consumers the most, more decoupled area payments could also have a greater impact on farm income without increasing the overall cost to society as well as environmental performance of agriculture. Lower costs of managing public grain stocks would equally reduce the budgetary cost of reforms.
    JEL: Q11 Q17 Q18 F14
    Date: 2019–05–13
  11. By: Fares Bounajm; Jean-Philippe Cayen; Michael Francis; Christopher Hajzler; Kristina Hess; Guillaume Poulin-Bellisle; Peter Selcuk
    Abstract: This note presents the updated estimates of potential output growth for the global economy through 2021. Global potential output is expected to grow by 3.3 per cent per year over the projection horizon. Two common themes are weighing on potential output growth across regions: trade disputes, which are reducing total factor productivity growth in the United States and China; and aging, which is having a negative impact on labour force participation in the United States, China, the euro area and Japan. While potential output growth is expected to remain fairly stable in the United States, there are offsetting dynamics across other regions. In emerging-market economies, potential growth is projected to strengthen, mainly due to a recovery of investment as well as structural reforms contributing to total factor productivity growth. Potential output is expected to slow in Japan, China and the euro area, as the effects on growth of population aging and declining labour inputs intensify in these regions over the next three years. A moderation in investment growth will also contribute to slower potential growth in China.
    Keywords: International topics; Potential output; Productivity
    JEL: E10 E20 O4
    Date: 2019–05
  12. By: Jamie Cross; Bao H. Nguyen; Bo Zhang
    Abstract: China has recently overtaken the US to become the world largest importer of crude oil. In light of this fact, we formally compare contributions of demand shocks from China, the US and the rest of the world. We find that China's in fluence on the real price of oil has increased over the past two decades and surpassed that of the US. Despite this result, oil prices are more sensitive to demand shocks from the US than China. Finally, we document that demand shocks from China alone were too small to have caused the mid 2003-2008 price surge. Instead, oil specific demand shocks are found to be the major determinant of the real oil price during this period.
    Keywords: China, US, oil markets
    Date: 2019–04
  13. By: Enkhbayar Shagdar (Economic Research Institute for Northeast Asia (ERINA)); Tomoyoshi Nakajima (Economic Research Institute for Northeast Asia (ERINA))
    Abstract: An analysis of the economic effects of the ongoing USA-China trade war using the standard CGE Model and GTAP Data Base 9.0a revealed that both parties will be worse-off from this trade friction, having welfare losses and real GDP contractions regardless of international capital mobility status—i.e. whether the capital is internationally mobile or not. Moreover, the results indicated that the negative economic and trade impacts on China would be larger compared to those of the USA. Although, other countries and regions would be better-off having positive changes in their welfare and real GDP, their magnitudes were much lower than losses of the USA and China. Therefore, as a whole, the global economy will be worse-off as a result of this trade war between the world’s two largest economies, the USA and China.
    Keywords: Trade policy, CGE models
    JEL: F13 C68
    Date: 2018–12

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