nep-cna New Economics Papers
on China
Issue of 2019‒05‒20
five papers chosen by
Zheng Fang
Ohio State University

  1. Wage growth and inequality in urban China: 1988–2013 By Gustafsson Björn; Wan Haiyuan
  2. China’s growth miracle in the context of Asian transformation By Lin Justin
  3. The long-term evolution of income inequality and poverty in China By Sicular Terry; Chuliang Luo; Shi Li
  4. Impacts of agricultural price support policies on price variability and welfare: evidence from China’s soybean market By Wang, Wenting; Wei, Longbao
  5. Predicting China’s Monetary Policy with Forecast Combinations By Pauwels, Laurent

  1. By: Gustafsson Björn; Wan Haiyuan
    Abstract: We investigate the evolution of wage levels, wage inequality, and wage determinants among urban residents in China using China Household Income Project data from 1988, 1995, 2002, 2007, and 2013.Average wage grew impressively between each pair of years. Wage inequality had long been on the increase, but between 2007 and 2013 no clear changes occurred. In 1988, age and wages were positively related throughout working life, but more recently older workers’ wages have been lower than those of middle-aged workers.The relationship between education and wages was weak in 1988 but strengthened rapidly thereafter—a process that came to a halt in 2007. During the period in which China was a planned economy the gender wage gap was small in urban China, but it widened rapidly between 1995 and 2007.We also report the existence of a premium for being employed in a foreign-owned firm or in the state sector.
    Keywords: Income inequality,Labour market,Wage function,Wage growth,Wages
    Date: 2018
  2. By: Lin Justin
    Abstract: Myrdal did not cover China in his Asian Drama. If he did, he would have been most likely pessimistic about China, as he was about other Asian countries in his book. However, China has achieved miraculous growth since the transition from a planned economy to a market economy at the end of 1978.This paper provides answers to the questions: Why was China trapped in poverty before 1978? How was it possible for China to achieve an extraordinary performance during its transition? Why did most other transition economies fail to achieve a similar performance? What price did China pay for its success? Can China continue its dynamic growth in the coming decades? What lessons can we draw from China’s development experiences in view of Asian Drama.The paper concludes on a positive note: if a developing country adopts a pragmatic approach to developing its economy along its comparative advantages in a market economy and taps into the potential of latecomer advantages with a facilitating state, the country can grow dynamically like China.
    Keywords: Transitional economies,Economic growth,Poverty
    Date: 2018
  3. By: Sicular Terry; Chuliang Luo; Shi Li
    Abstract: By using the five waves of the China Household Income Project surveys conducted during 1988–2013, this paper investigates long-term changes in income inequality and poverty in China.Income inequality rose before 2007 and then fell by a small amount. The main reason for the rise in income inequality was that high-income percentiles had faster income growth than lower percentiles; the fall in income inequality implies faster income growth among low-income percentiles.The paper also indicates a considerable poverty reduction during China’s economic transition, mainly because of the growth effect of poverty decomposition.
    Keywords: Gini decomposition,Income inequality,Poverty decomposition,Poverty
    Date: 2018
  4. By: Wang, Wenting; Wei, Longbao
    Abstract: As the world’s largest importer of agricultural commodities, China’s agricultural policies have significant implications for the world agricultural market. For the first time, we develop an aggregate structural econometric model of China’s soybean market with linkage to the rest of the world to analyze the worldwide impacts of China’s soybean price support policies from 2008 to 2016. We investigate the impacts of China’s policies on the variability of their domestic and world prices, and adopt a Monte Carlo simulation to evaluate the distributional and aggregate welfare effects. Results indicate that (a) China’s soybean price support policies play an effective role in stabilizing their domestic price, while its increasing imports absorb world production surplus and reduce world price swings; (b) China’s producers gain at the expense of consumers and budgetary costs, and the net welfare change in their domestic market is negative; (c) Soybean exporting countries experience considerable welfare gains, and the world net welfare change is positive. Our findings provide new insights for future trade negotiations and agricultural market reforms in developing countries.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2019–07
  5. By: Pauwels, Laurent
    Abstract: China’s monetary policy is unconventional and constantly evolving as a result of its rapid economic development. This paper proposes to use forecast combinations to predict the People’s Bank of China’s monetary policy stance with a large set of 73 macroeconomic and financial predictors covering various aspects of China’s economy. The multiple instruments utilised by the People’s Bank of China are aggregated into a Monetary Policy Index (MPI). The intention is to capture the overall monetary policy stance of the People’s Bank of China into a single variable that can be forecasted. Forecast combination assign weights to predictors according to their forecasting performance to produce a consensus forecast. The out-of-sample forecast results demonstrate that optimal forecast combinations are superior in predicting the MPI over other models such as the Taylor rule and simple autoregressive models. The corporate goods price index and the US nominal effective exchange rate are the most important predictors.
    Keywords: Monetary policy indicators; China; forecast combination; optimal weights
    Date: 2019–05–14

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