nep-cna New Economics Papers
on China
Issue of 2019‒10‒21
ten papers chosen by
Zheng Fang
Ohio State University

  1. Depression in the House: The Effects of Household Air Pollution from Solid Fuel Use in China By Liu, Yan; Chen, Xi; Yan, Zhijun
  2. Social Capital Inequality and Subjective Wellbeing of Older Chinese By Appau, Samuelson; Awaworyi Churchill, Sefa; Smyth, Russell; Zhang, Quanda
  3. Extreme Weather and Long-term Health: Evidence from Two Millennia of Chinese Elites By Lee, Wang-Sheng; Li, Ben G.
  4. On the measurement of population weighted relative indices of mobility and convergence, with an illustration based on Chinese data By Elena Bárcena-Martin; Elena Jacques Silber; Yuan Zhang
  5. Tax Policy and Lumpy Investment Behavior: Evidence from China's VAT Reform By Zhao Chen; Xian Jiang; Zhikuo Liu; Juan Carlos Suárez Serrato; Daniel Xu
  6. Fundamental Analysis in China: An Empirical Study of the Relationship between Financial Ratios and Stock Prices By Lijuan Ma; Marcel Ausloos; Christophe Schinckus; H. L. Felicia Chong
  7. Housing Prices, Inter-generational Co-residence, and “Excess” Savings by the Young: Evidence using Chinese Data By R.; Junsen Zhang
  8. Foreign Competition and Domestic Innovation: Evidence from U.S. Patents By Autor, David; Dorn, David; Hanson, Gordon H.; Pisano, Gary; Shu, Pian
  9. Accounting for Differences in Female Labor Force Participation between China and India By Azam, Mehtabul; Han, Luyi
  10. Scientific Competition between Countries: Did China Get What It Paid for? By Pierre Courtioux; François Métivier; Antoine Reberioux

  1. By: Liu, Yan (Beijing Institute of Technology); Chen, Xi (Yale University); Yan, Zhijun (Beijing Institute of Technology)
    Abstract: While adverse health effects of ambient air pollution have been well documented, there is scarce evidence on the impact of household air pollution (HAP) on mental health. We investigated the causal link between HAP exposure from the use of solid fuel on depressive symptoms using a nationally representative dataset of middle-aged and older population in China. Employing the propensity match score method (PSM), matching and adjusting for potential confounders, we found significantly higher Center for Epidemiological Studies Depression Scale (CES-D) score and risk of depressive symptoms among solid fuel users than clean fuel users. These associations were especially stronger for older females who were less educated, of lower income, of higher body mass index, or had chronic diseases.
    Keywords: depression, household solid fuel use, household air pollution, propensity score matching, CHARLS
    JEL: I31 Q51 Q53
    Date: 2019–09
  2. By: Appau, Samuelson; Awaworyi Churchill, Sefa; Smyth, Russell; Zhang, Quanda
    Abstract: Using longitudinal data from the China Family Panel Studies (CFPS), this study provides insights on comparative wellbeing outcomes for older people who are institutionally segregated into clusters that produce uneven social capital. We present the first study that examines how institutionalized social capital inequality, measured by the social capital gap generated by hukou (household registration) status in China, affects the wellbeing of older people. Our results show that high levels of social capital inequality are associated with lower subjective wellbeing, measured by life satisfaction. This general conclusion is robust to a number of sensitivity checks including alternative ways of measuring subjective wellbeing and inequality. We also find that the negative relationship between social capital inequality and subjective wellbeing is strongest for people with a non-urban hukou living in urban areas. Our findings highlight the need for policies aimed at narrowing the social capital gap and the dismantling of institutional structures that hinder upward social capital mobility.
    Keywords: social capital, social networks, trust, social capital inequality, hukou, China
    JEL: I31 J14 O18
    Date: 2019–10–08
  3. By: Lee, Wang-Sheng (Deakin University); Li, Ben G. (University of Massachusetts Lowell)
    Abstract: Modern technology empowers human beings to cope with various extreme weather events. Using Chinese historical data, we examine the impact of extreme weather on long-term human health in an environment where individuals have no access to modern technology. By combining life course data on 5,000 Chinese elites with historical weather data over the period 1-1840 AD, we find a significant and robust negative impact of droughts in childhood on the longevity of elites. Quantitatively, encountering three years of droughts in childhood reduces an elite's life span by about two years. A remarkably important channel of the childhood drought effect is the deterioration of economic conditions caused by droughts.
    Keywords: longevity, weather, early-life conditions, elites, history of China
    JEL: I15 N35
    Date: 2019–09
  4. By: Elena Bárcena-Martin (Universidad de Málaga, Spain); Elena Jacques Silber (Bar-Ilan University, Israel); Yuan Zhang (Fudan University, Shanghai, China)
    Abstract: This paper extends previous work on income-weighted measures of distributional change by defining in a unified framework population weighted and relative indices of structural and exchange mobility and measures of $\sigma$- and $\beta$-convergence. The analysis focuses on both the anonymous (comparison of cross- sections) and non-anonymous case (panel data) and unconditional as well conditional measures of pro-poor growth are defined. The empirical illustration, based on urban China data of non-retired individuals from the China Family Panel Studies, compares incomes in 2010 and 2014 and shows the usefulness of the tools introduced in the present study. It turns out that, during the period examined, there was $\beta$-convergence and slight $\sigma$-divergence, non-anonymous growth was pro-poor while anonymous growth was not. Income growth favored individuals with low levels of education as well as younger people in the non-anonymous case, but not in the anonymous case.
    Keywords: $\beta$-convergence, $\sigma$-divergence, exchange mobility, structural mobility, pro-poor growth, China.
    JEL: D31 I32 O15
    Date: 2019–09
  5. By: Zhao Chen; Xian Jiang; Zhikuo Liu; Juan Carlos Suárez Serrato; Daniel Xu
    Abstract: A universal fact of firm-level data is that investment is lumpy: firms either replace a considerable fraction of their existing capital (spike) or do not invest at all (inaction). This paper incorporates the lumpy nature of investment into the study of how tax policy affects investment behavior. We show that tax policy can directly impact the lumpiness of investment and that the effectiveness of tax incentives in stimulating investment depends crucially on interactions with investment frictions. We illustrate these results by studying one of the largest tax incentives for investment in recent history: China's 2009 VAT reform. Using administrative tax data and a difference-in-differences design, we document that the reform increased investment by 36% and that this effect is driven by additional investment spikes. We then simulate the fiscal cost of stimulating investment through different tax policies using a dynamic investment model that is consistent with the reduced-form effects of the reform. Policies that directly reduce the likelihood of firm inaction (e.g., investment tax credits) are more effective at stimulating investment than policies that only reduce the tax cost of investment (e.g., corporate income tax cuts).
    JEL: E22 H25
    Date: 2019–10
  6. By: Lijuan Ma; Marcel Ausloos; Christophe Schinckus; H. L. Felicia Chong
    Abstract: The informational context is regularly questioned in a transitional economic regime like the one implemented in China or Vietnam. This article investigates this issue and the predictive power of fundamental analysis in such context and more precisely in a Chinese context with an analysis of 3 different industries (media, power, and steel). Through 3 different kinds of correlation, we examine 25 financial determinants for 60 Chinese listed companies between 2011 and 2015. Our results show that fundamental analysis can effectively be used as an investment tool in transitional economic context. Contrasting with the EMH for which the accounting information is instantaneously integrated into the financial information (stock prices), our study suggests that these two levels of information are not synchronized in China opening therefore a door for a fundamental analysis based prediction. Furthermore, our results also indicate that accounting information illustrates quite well the economic reality since financial reports in each industry can disclose a part of stock value information in line with the economic situation of the industry under consideration.
    Date: 2019–10
  7. By: R.; Junsen Zhang
    Abstract: In many countries of the world the co-residence of young adults aged 25-34 with their parents is not uncommon and in some countries the savings rates of these age groups exceed those of the middle-aged contrary to the standard model of life-cycle savings. In this paper we examine the role of housing prices in affecting the living arrangements of adult family members and their individual savings rates by age. Using unique data from China that enable the re-construction of whole families and identify individual savings regardless of who within the family co-resides in the same household, and exploiting the Chinese government rules determining the supply of land for residential housing, we find that increases in housing prices significantly increase inter-generational co-residence and elevate the savings rates of the young relative to the middle-aged, conditional on income, in part due to the subsidies to the young from sharing housing with parents. Based on our estimates of the effects of housing prices on co-residence and the effects of co-residence on individual savings, we find that the savings rates of the young in China would be 21% lower if housing prices were at the same ratio to disposable incomes as that observed in the United States.
    Keywords: savings, family, housing price, co-residence
    JEL: D91 D19 R31
    Date: 2019–10
  8. By: Autor, David (MIT); Dorn, David (University of Zurich); Hanson, Gordon H. (University of California, San Diego); Pisano, Gary (Harvard University); Shu, Pian (Georgia Institute of Technology)
    Abstract: Manufacturing accounts for more than three-quarters of U.S. corporate patents. The competitive shock to this sector emanating from China's economic ascent could in theory either augment or stifle U.S. innovation. Using three decades of U.S. patents matched to corporate owners, we quantify how foreign competition affects domestic innovation. Rising import exposure intensifies competitive pressure, reducing sales, profitability, and R&D expenditure at U.S. firms. Accounting for confounding sectoral patenting trends, we find that U.S. patent production declines in sectors facing greater import competition. This adverse effect is larger among initially less profitable and less capital-intensive firms.
    Keywords: innovation, patents, trade
    JEL: F14 O30
    Date: 2019–09
  9. By: Azam, Mehtabul (Oklahoma State University); Han, Luyi (Oklahoma State University)
    Abstract: Although, the male labor force participation rate is comparable in China and India, female labor force participation rate remains very low in India. In this paper, we examine the factors responsible for the difference in female labor force participation rate between the two countries by carrying out decomposition exercise at three points of time covering two decades. We find that the differences in female labor force participation rate are not explained by the differences in characteristics across the two countries in each of the three year studied. The differences in returns to these characteristics explain most of the differences in participation rate.
    Keywords: female labor force, China, India, oaxaca-blinder decomposition
    JEL: J16 J82
    Date: 2019–10
  10. By: Pierre Courtioux (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); François Métivier (IPGP - Institut de Physique du Globe de Paris - UPMC - Université Pierre et Marie Curie - Paris 6 - INSU - CNRS - Institut national des sciences de l'Univers - IPG PARIS - UPD7 - Université Paris Diderot - Paris 7 - UR - Université de La Réunion - CNRS - Centre National de la Recherche Scientifique); Antoine Reberioux (LADYSS - Laboratoire dynamiques sociales et recomposition des espaces - UP1 - Université Panthéon-Sorbonne - UP8 - Université Paris 8 Vincennes-Saint-Denis - UPN - Université Paris Nanterre - UPD7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper examines the rise of China's relative standing in the global academic science marketplace. We first develop a simple theoretical model, based on the aggregation of individual knowledge production functions. This model predicts the existence of a stable power (scaling) law, relating the world share of countries' scientific production to their world share of public investment in scientific research. We test and confirm this prediction, using bibliometric crosscountry longitudinal data for OECD and non-OECD countries, over the 1996-2015 period. This analysis allows for China's impressive catch-up, and for the West's decline to be accounted for, in the science marketplace, over the last two decades.
    Abstract: Cet article analyse la montée en puissance de la Chine et l'évolution de sa place relative sur le marché scientifique mondial. Tout d'abord, nous développons un modèle théorique simple basé sur l'agrégation de fonctions de production de savoir individuelles. Ce modèle prédit l'existence d'une loi de puissance stable entre la part d'un pays dans les publications scientifiques mondiales et sa part dans les investissements de recherche publique mondiaux. Nous testons et confirmons ces prédictions en utilisant des données bibliométriques et des bases de données de l'OCDE sur l'investissement des pays dans la recherche publique. Ces données portent sur la période 1996-2015. Cette analyse permet de rendre compte de l'impressionnant rattrapage de la Chine et du déclin relatif des pays occidentaux sur le marché scientifique mondial, survenus durant les deux dernières décennies.
    Keywords: Economics of science,knowledge production function,international ranking,classements internationaux,Economie de la science,fonction de production de savoir
    Date: 2019–09

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.