nep-cna New Economics Papers
on China
Issue of 2020‒02‒17
twelve papers chosen by
Zheng Fang
Ohio State University

  1. Monetary Stimulus Policy in China: the Bank Credit Channel By Min Zhang; Yahong Zhang
  2. Elite School Designation and Housing Prices: Quasi-Experimental Evidence from Beijing, China By Huang, Bin; He, Xiaoyan; Xu, Lei; Zhu, Yu
  3. Does a Data Quirk Inflate China’s Travel Services Deficit? By Anna Wong; Matthew Higgins; Thomas Klitgaard
  4. The Retirement Migration Puzzle in China By Chen, Simiao; Jin, Zhangfeng; Prettner, Klaus
  5. Estimating the Impact of Social Medical Insurance Schemes on Children’s Health and Hospital Use: The Chinese Case By Jing Guana; J.D. Tena
  6. The Notional and the Real in China?s Pension Reforms By Lu,Bei; Piggott,John; Zheng,Bingwen
  7. The Impact of China's Fiscal and Monetary Policy Responses to the Great Recession: An Analysis of Firm-Level Chinese Data By Jason Taylor; Wenjun Xue; Hakan Yilmazkuday
  8. Social mobility in China: A case study of a quantitative sociological approach to social mobility research in the Global South By Li Yaojun
  9. Trade and Political Fragmentation on the Silk Roads: The Economic Effects of Historical Exchange between China and the Muslim East By Blaydes, Lisa; Paik, Christopher
  10. Hard to get: The scarcity of women and the competition for high-income men in urban China By Ong, David; Yang, Yu; Zhang, Junsen
  11. The Effects of Prenatal Exposure to Temperature Extremes on Birth Outcomes By Chen, Xi; Tan, Chih Ming; Zhang, Xiaobo; Zhang, Xin
  12. China’s Housing Bubble, Infrastructure Investment, and Economic Growth By Shenzhe Jiang; Jianjun Miao; Yuzhe Zhang

  1. By: Min Zhang (East China Normal University, Faculty of Economics and Management, School of Economics); Yahong Zhang (Department of Economics, University of Windsor)
    Abstract: This paper develops a novel while plausible way to model the Chinese monetary transmission via open market operations (OMOs). In the model, monetary injections through OMOs, together with differentiated collateral regulation in the banking sector, directly affect banks' loan capacities, which then influences sectoral investments and aggregate GDP. The quantitative analysis shows that the 2009--2010 monetary expansion explains nearly 90 percent of the rise in GDP growth. Moreover, balancing credit allocation across sectors and applying unified banking regulations jointly enhance the GDP growth rate by 2.15 percentage points, with the contribution of the unified banking regulations proving more important.
    Keywords: Monetary stimulus, Bank credit channel, Open market operation rule, Chinese economy
    JEL: E32 E44 E52
    Date: 2020–02
  2. By: Huang, Bin (Nanjing University of Finance and Economics); He, Xiaoyan (Nanjing University of Finance and Economics); Xu, Lei (National Institute of Economic and Social Research (NIESR)); Zhu, Yu (University of Dundee)
    Abstract: We explore recent policy changes which aim to equalize access to elite elementary schools in Beijing, to identify the effect of access to quality education on house prices based on a unique dataset. Using property transaction records from Beijing over the period 2013-2016, we construct a balanced 4-wave panel of residential complexes, each of which linked to its designated primary schools. Whereas the multi-school dicing policy involves randomly assigning previously ineligible pupils to key elementary schools through lotteries, the policy of school federation led by elite schools consolidates ordinary primary schools through alliance with elite schools. Moreover, the designated primary school for a residential complex can change from an ordinary primary school to a key elementary school without involving neighbouring schools in surrounding residential complexes through a "pure" re-designation effect. We allow for systemic differences between the treated and non-treated residential complexes using the Matching Difference-in-Differences (MDID) approach. Our estimates indicate that the effect on house prices of being eligible to enrol in a municipal-level key primary school is about 4-6%, while the premium for being eligible for a less prestigious district-level key primary school is only about 2-3%. Our findings are robust to an alternative measure of primary school prestige based on an unofficial ranking from a popular parenting support website, which is shown to be closely related to the number of awards in academic tournaments.
    Keywords: quality school designation, house price premium, Matching DID, China
    JEL: R21 I28 H44
    Date: 2020–01
  3. By: Anna Wong (University of Chicago; Board of Governors of the Federal Reserve System (U.S.)); Matthew Higgins (National Bureau of Economic Research; Georgia Institute of Technology; Federal Reserve Bank of New York; College of Management); Thomas Klitgaard
    Abstract: Chinese residents are increasingly traveling to see the rest of the world, logging a total of 162 million foreign visits in 2018, up from 57 million in 2010. Increased travel spending by Chinese residents is acting to reduce the country's trade surplus because such spending is counted as a services import. However, there appears to be a quirk in the Chinese data that results in a significant understatement of the offsetting spending by visitors to China (a services export). According to other Chinese data, this understatement totaled $85 billion in 2018. If so, China's deficit in travel services is smaller than officially reported, and its trade surplus correspondingly larger.
    Keywords: China international trade service balance of payments imports exports tourism current account balance
    JEL: F00
  4. By: Chen, Simiao; Jin, Zhangfeng; Prettner, Klaus
    Abstract: We examine whether and how retirement affects migration decisions in China. Using a regression discontinuity (RD) design approach combined with a nationally representative sample of 228,855 adults aged between 40 and 75, we find that retirement increases the probability of migration by 12.9 percentage points. Approximately 38% of the total migration effects can be attributed to inter-temporal substitution (delayed migration). Retirement-induced migrants are lower-educated and have restricted access to social security. Household-level migration decisions can reconcile different migration responses across gender. Retirees migrate for risk sharing and family protection mechnisms, reducing market production of their families in the receiving households.
    Keywords: Retirement,Migration decision,Regression discontinuity design
    JEL: J14 J26 J61
    Date: 2020
  5. By: Jing Guana; J.D. Tena
    Abstract: This study investigates the causal impact of acquiring social medical Insurance on hospital utilization and health status for children under 16 years old in China from 2010 to 2016. We consider the China Family Panel Studies (CFPS), a longitudinal database which allows us to control for the effect of unobserved individual heterogeneity by means of difference-in-difference regressions combined with matching regression techniques. Our findings suggest that participating in social medical insurance schemes significantly increases children’s yearly hospital use, especially for low income and rural children. Moreover, this increase is not significantly different for people who were not previously sick. It is also found that social medical insurance schemes have no effect or even a marginally negative effect on children’s health status in some cases. We discuss some potential explanations for this result.
    Keywords: China; Social Medical Insurance; Health Outcomes; Difference-in-difference; Propensity Score Matching
    JEL: I13
    Date: 2018–11
  6. By: Lu,Bei; Piggott,John; Zheng,Bingwen
    Abstract: This paper discusses the potential expansion of the role of the notional defined contribution (NDC) paradigm in the ongoing reforms of retirement provision in China. It finds that mature age life expectancy is remarkably uniform among formal sector workers at the time of retirement, although greater heterogeneity does exist for Rural and Urban Residents Pension Scheme members. The implications of a stylized NDC structure are examined covering China?s major pension systems, calibrated to be actuarially neutral. Each system has a different contribution rate and retirement age, consistent with different life expectancies. A complementary social pension is also proposed. The paper concludes that an increased presence of the NDC paradigm has the potential to raise aggregate welfare.
    Keywords: Population&Development,Pensions&Retirement Systems,Social Protections&Assistance,Adolescent Health,Law and Justice Institutions
    Date: 2019–04–01
  7. By: Jason Taylor (Department of Economics, Central Michigan University); Wenjun Xue (Department of Economics and Finance, Shanghai University); Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: This paper investigates the effects of Chinese financial and fiscal policies designed to counter the worldwide Great Recession of 2008. We examine how policies designed to increase bank credit and health (i.e., asset liquidity, capital adequacy ratio, profitability, and bad loan ratio) influenced firm-level output, employment and investment. We also explore the impact of China’s expansionary fiscal policy with regard to these firm-level variables. We find that the policy effects varied based on firm-level characteristics such as size, liability ratio, profitability, ownership and the industry in which the firm operates. With respect to the dynamic effects, our results suggest that Chinese financial and fiscal policies were generally effective in the short run, but their positive impacts ceased within two years.
    Keywords: Banking System, 2008 Economic Stimulus Plan, The Great Recession, Chinese Recovery, Panel VAR Model, Firm-Level Investigation
    JEL: E32 E62 G21
    Date: 2020–02
  8. By: Li Yaojun
    Abstract: This study analyses intergenerational class mobility in China as a case study of a quantitative sociological approach to social mobility research in the Global South.Drawing on national representative surveys collected between 2010 and 2015 in China, the analysis focuses on absolute and relative mobility rates for men and women across four birth cohorts.With regard to absolute mobility, we find rising levels of mobility, with upward mobility prevailing over downward mobility. With regard to relative mobility, we find constancy for the older cohorts but a growing rigidity for the youngest cohort of men.The urban-rural divide is increasingly blurred, but class differences are becoming more salient, especially between the professional-managerial salariat and the rest of society in occupational and educational attainment.
    Date: 2020
  9. By: Blaydes, Lisa; Paik, Christopher
    Abstract: The Silk Roads stretched across Eurasia, connecting East and West for centuries. At its height, the network of trade routes enabled merchants to travel from China to the Mediterranean Sea, carrying with them high-value commercial goods, the exchange of which encouraged urban growth and prosperity. We examine the extent to which urban centers thrived or withered as a function of shocks to trade routes, particularly political fragmentation along natural travel paths. We find that political fragmentation along the roads to Aleppo and historic Chang'an - major terminus locations for cross-regional trade - damaged city growth. These conclusions contribute to our understanding of how a pre-modern international system operated through an examination of exchange between the two most developed world regions of the medieval and early modern periods, China and the Muslim East.
    Date: 2020–01
  10. By: Ong, David; Yang, Yu; Zhang, Junsen
    Abstract: Reports of the difficulties of elite women in finding suitable mates have been increasing despite the growing availability and value of men in China. We rationalize this “leftover women” phenomenon within the directed/competitive search framework, which uniquely allows for equilibrium crowding out. Within this framework, we show that the leftover women phenomenon can be the result of women’s aversion to men who have a lower income than themselves (hereafter, ALM) and the long-predicted complementarity between women’s non-market traits (in particular, beauty) and male earnings. For high-income (h-)women, even when high-income (H-)men are more plentiful and richer, the direct effect of the greater number of desirable men can be overwhelmed by the indirect effect of competitive ‘entry’ by low-income (l-)women, particularly, the beautiful. We test for these competitive search effects using online dating field experimental, Census, and household survey data. Consistent with the competitive entry of l-women, when sex ratio and H-men’s income increase, the search intensity of beautiful l-women for H-men increases. In response to this competitive entry, plain h-women, who are constrained by their ALM to search predominantly for H-men, also increase the search intensity. However, only their marriage probability decreases. Our evidence is consistent with intra-female competitive search for spouses who can cover the labor market opportunity cost of marriage and childbirth, which increases with a woman’s income.
    Keywords: directed search, marriage, sex ratio, online dating, aversion to lower income men, beauty
    JEL: C93 J01 J12
    Date: 2020
  11. By: Chen, Xi (Yale University); Tan, Chih Ming (University of North Dakota); Zhang, Xiaobo (Peking University); Zhang, Xin (Beijing Normal University)
    Abstract: This paper investigates the effects of prenatal exposure to extreme temperatures on birth outcomes – specifically, the log of birth weight and an indicator for low birth weight – using a nationally representative dataset in rural China. During the span of our data (i.e., 1991–2000), indoor air-conditioning was not widely available and migration was limited, allowing us to address identification issues endemic in the climate change literature related to adaptation and location sorting. We find substantial heterogeneity in the effects of extreme temperature exposure on birth outcomes. In particular, prenatal exposure to heat waves has stronger negative effects than exposure to cold spells on survivors.
    Keywords: climate change, cold weather, heat waves, birth weight, low birth weight, China
    JEL: I15 Q54 Q51
    Date: 2020–01
  12. By: Shenzhe Jiang (Peking University); Jianjun Miao (Boston University); Yuzhe Zhang (Texas A&M University)
    Abstract: China’s housing prices have been growing rapidly over the past few decades, despite low growth in rents. We study the impact of housing bubbles on China’s economy, based on the understanding that local governments use land-sale revenue to fuel infrastructure investment. We calibrate our model to the Chinese data over the period 2003-2013 and find that our calibrated model can match the declining capital return and GDP growth, the average housing price growth, and the rising infrastructure to GDP ratio in the data. We conduct two counterfactual experiments to estimate the impact of a bubble collapse and a property tax.
    Keywords: Housing Bubble, Infrastructure, Economic Growth, Chinese Economy, Property Tax
    JEL: O11 O16 O18 P24 R21 R31
    Date: 2019–12

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