nep-cna New Economics Papers
on China
Issue of 2020‒03‒23
ten papers chosen by
Zheng Fang
Ohio State University

  1. The Gender Gap in Peer-to-Peer Lending: Evidence from the People’s Republic of China By Chen, Xiao; Huang, Bihong; Ye, Dezhu
  2. Do Banks Price Environmental Risk? Evidence from a Quasi Natural Experiment in the People’s Republic of China By Huang, Bihong; Punzi, Maria Teresa; Wu, Yu
  3. Development of High-Speed Rail in the People’s Republic of China By Haixiao, Pan; Ya, Gao
  4. Exposure of Belt and Road Economies to China Trade Shocks By Paulo Bastos
  5. Policies, regulatory framework and enforcement for air quality management: The case of China By Chan Yang
  6. Sector connectedness in the Chinese stock markets By Ying-Ying Shen; Zhi-Qiang Jiang; Jun-Chao Ma; Gang-Jin Wang; Wei-Xing Zhou
  7. Land plot size, machine use and agricultural intensification in China By Liu, Yanyan; Zhou, Yuan
  8. The sources of the evolution of China's provincial economic gap: A green economic growth accounting perspective By Yang, Wenju; Long, Ruiyun
  9. The Collateral Channel of Monetary Policy: Evidence from China By Hanming Fang; Yongqin Wang; Xian Wu
  10. Climate policies under dynamic international economic cycles: A heterogeneous countries DSGE model By Xiao, Bowen; Guo, Xiaodan; Fan, Ying; Voigt, Sebastian; Cui, Lianbiao

  1. By: Chen, Xiao (Asian Development Bank Institute); Huang, Bihong (Asian Development Bank Institute); Ye, Dezhu (Asian Development Bank Institute)
    Abstract: We document and analyze the gender gap in the online credit market. Using data from Renrendai, a leading peer-to-peer lending platform in the People’s Republic of China (PRC), we show that lending to female borrowers is associated with better loan performance, including a lower probability of default, a higher expected profit, and a lower expected loss than for their male peers. However, despite the higher creditworthiness, we don’t find any measurable gender impact on funding success rate, meaning that female borrowers have to compensate lenders by providing higher profitability to achieve a similar funding probability to their male peers. This evidence indicates the existence of a gender gap that discriminates against female borrowers. Further analysis implies that this gender gap is independent of the amount of information disclosed by borrowers.
    Keywords: P2P lending; gender gap; loan performance
    JEL: G20 G21 J16
    Date: 2019–07–10
  2. By: Huang, Bihong (Asian Development Bank Institute); Punzi, Maria Teresa (Asian Development Bank Institute); Wu, Yu (Asian Development Bank Institute)
    Abstract: This paper maps the risk arising from the transition to a low-emission economy and studies its transmission channels within the financial system. The environmental dynamic stochastic general equilibrium (E-DSGE) model shows that tightening environmental regulations deteriorates firms' balance sheets as it internalizes the pollution costs, which consequentially accelerates the risks that the financial system faces. This empirical study, which employs the Clean Air Action that the Chinese government launched in 2013 as a quasi-experiment, supports the theoretical implications. The analysis of a unique dataset containing 1.3 million loans shows that the default rates of high-polluting firms rose by around 50% along their environmental policy exposure. At the same time, the loan spread charged to such firms increased by 5.5% thereafter.
    Keywords: environmental DSGE Model; Clean Air Action; lending spread; default rate
    JEL: E32 E50 H23 Q43
    Date: 2019–07–05
  3. By: Haixiao, Pan (Asian Development Bank Institute); Ya, Gao (Asian Development Bank Institute)
    Abstract: High-speed rail (HSR) construction is continuing at a rapid pace in the People’s Republic of China (PRC) to improve rail’s competitiveness in the passenger market and facilitate inter-city accessibility. To take advantage of spillover effects, bring economic cohesion at the local level, and recover the local matching investment in infrastructure, all cities have planned new towns around HSR stations. Speeding up HSR construction has required the development of many standardized technologies and processes. Plans for HSR stations usually situate them in suburbs, far from city centers, to reduce the cost of property right of way relating to the removal of housing or industry as well as to lower the complexities in negotiations. However, city centers remain the main starting and destination terminals for most HSR passengers, especially businessmen who use HSR frequently. Besides, large railway stations in suburbs, providing a comfortable waiting space for passengers, have prolongate the travel time for HSR users. A reliable and high-quality public transit service, connecting an HSR station and the city center at the launch of HSR operations, is essential to curb the increase in car/taxi use. Studies have also suggested that, instead of building one big HSR station in the suburb of a metropolis, constructing multiple stations in the vicinity of city centers will greatly reduce the access/egress time, thereby enhancing travel efficiency.
    Keywords: high-speed rail; multimodal intercity transport; People’s Republic of China
    JEL: L92 R11 R40 R58
    Date: 2019–05–24
  4. By: Paulo Bastos
    Abstract: This paper uses international trade data to assess the degree of exposure of Belt and Roadeconomies to China trade shocks. It finds that the growth of China’s trade following its internal transformation and accession to the WTO significantly impacted the export performance ofBelt and Road economies in the period 2000-2015. The increase in China’s imports significantlyboosted the exports of these economies. However, this effect was attenuated by increased compe-tition from China in export markets. The effects of China’s demand shocks were stronger in more upstream industries, while those of competition shocks were stronger in industries that producegoods that are closer to final use. The effects of competition shocks were also relatively stronger in countries that are relatively poorer and geographically closer to China. Building on these find-ings, the paper documents the current degree of exposure of Belt and Road economies to Chinatrade shocks.
    Keywords: Belt and Road Initiative; China; Trade shocks
    JEL: F1
    Date: 2020–03
  5. By: Chan Yang (OECD)
    Abstract: Four decades of rapid economic expansion in China has generated enormous pressure on the environment, natural resources and public health. Alarming smog outbreaks during the 2010-13 period prompted the government to introduce a number of reforms to control air pollution, including a re-organisation of environmental institutions, improving the coordination and integrity of enforcement actions across levels of government, and the rolling out of a permit system for all stationary pollution sources. This paper reviews these recent developments, and discusses key remaining challenges. The paper complements two case studies on air quality policies in Korea and Japan, and a third case study on international regulatory cooperation on air quality in North America, Europe and North-East Asia.
    Keywords: air pollution, China, monitoring and enforcement, regulatory policy
    JEL: Q52 Q53 Q58
    Date: 2020–03–13
  6. By: Ying-Ying Shen (ECUST); Zhi-Qiang Jiang (ECUST); Jun-Chao Ma (ECUST); Gang-Jin Wang (HNU); Wei-Xing Zhou (ECUST)
    Abstract: Uncovering the risk transmitting path within economic sectors in China is crucial for understanding the stability of the Chinese economic system, especially under the current situation of the China-US trade conflicts. In this paper, we try to uncover the risk spreading channels by means of volatility spillovers within the Chinese sectors using stock market data. By applying the generalized variance decomposition framework based on the VAR model and the rolling window approach, a set of connectedness matrices is obtained to reveal the overall and dynamic spillovers within sectors. It is found that 17 sectors (mechanical equipment, electrical equipment, utilities, and so on) are risk transmitters and 11 sectors (national defence, bank, non-bank finance, and so on) are risk takers during the whole period. During the periods with the extreme risk events (the global financial crisis, the Chinese interbank liquidity crisis, the Chinese stock market plunge, and the China-US trade war), we observe that the connectedness measures significantly increase and the financial sectors play a buffer role in stabilizing the economic system. The robust tests suggest that our results are not sensitive to the changes of model parameters. Our results not only uncover the spillover effects within the Chinese sectors, but also highlight the deep understanding of the risk contagion patterns in the Chinese stock markets.
    Date: 2020–02
  7. By: Liu, Yanyan; Zhou, Yuan
    Abstract: China has experienced unprecedented economic achievement for more than three decades and remains one of the fastest growing economies in the world. Rapid urbanization and development of the non-farm economy have led to massive movements of labor from rural to urban areas, leaving agricultural production mostly in the hands of female and senior farmers. Due to considerable surplus labor in rural areas, these changes did not raise concerns about agricultural production until recently, when the rural real wage experienced a sharp rise, signaling the exhaustion of this surplus. Since 2010, China has changed from a net exporter to a net importer of grains. Currently, China’s self-sufficiency ratio of wheat, rice and corn is about 95%. About 80% of consumed soybean and other agri-products, such as milk and sugar, are imported. As the world's most populous country, further reduction of self-sufficient ratio of major agri-products could lead to problems in food security world-wide. In order to maintain agricultural production as labor costs continue to rise, agricultural labor input will need to be substituted with machine input. China's farming system, like that of many Asian Countries, is characterized by small landholdings, a high degree of land fragmentation, and high intensification at both the intensive and extensive margin. Although China has experienced rapid farm mechanization in recent decades thanks to the rapid development of machinery rental markets, the extent to which mechanization can be realized in China's farming system remains a critical question. Small plot size poses serious constraints for mechanization because of scale economies of machine. In addition, a considerable amount of China's land is located in hills or mountains, posing further difficulties for mechanization. Recently we completed a study to explore the extent to which small plot size deters mechanization in China and the implications for agricultural production, specifically the number of cultivating seasons per year. In our field trips in China, we often observed that small plots were less frequently cultivated; the farmers we interviewed attributed this reduced intensification to the difficulty of using machines on small plots, especially if these plots are in mountainous and hilly areas. Cultivating in these small plots become less worthwhile when labor costs increase.
    Keywords: CHINA, EAST ASIA, ASIA, agricultural production, field size, plot size, land, mechanization, machine use, land plot size, agricultural intensification,
    Date: 2019
  8. By: Yang, Wenju; Long, Ruiyun
    Abstract: The inter-provincial economic gap in China is obvious and tends to expand, although it is still unclear why this occurs. This paper combines DEA-based green economic growth accounting, growth convergence test and distribution dynamic analysis to show that China's inter-provincial labor productivity demonstrated significant growth convergence between 1997 and 2016, while it was significantly promoted by capital deepening and obviously inhibited by technological progress and human capital accumulation, and the effect of technological efficiency change remained unclear. In addition, the gap of labor productivity level in China's provinces widened significantly, which can be largely attributed to the combined effects of technological progress and capital deepening. The economic growth accounting analysis ignoring Energy and environmental factors tends to overestimate the relative contribution of factor accumulation and underestimate that of TFP changes, while ignoring human capital will lead to opposite biased results, but both of which do not change the qualitative conclusions mentioned above.
    Keywords: counterfactual analysis,distribution dynamic analysis,green economic growth accounting,multimodal test,non-parametric test
    JEL: O18 O47 R11
    Date: 2020
  9. By: Hanming Fang; Yongqin Wang; Xian Wu
    Abstract: Collateral-based monetary policy tools have been used extensively by major central banks. Lack of proper policy counterfactuals, however, makes it difficult to empirically identify their causal effects on the financial market and the real economy. We exploit a quasi-natural experiment in China, where dual-listed bonds are traded in two mostly segmented markets: the interbank market regulated by the Central Bank, and the exchange market regulated by the securities regulator. During a policy shift in our study period, China's Central Bank included a class of previously ineligible bonds in the interbank market to become eligible collateral for financial institutions to borrow money from its Medium-Term Lending Facility (MLF). This policy shift allows us to implement a triple-difference strategy to estimate the causal impact of the collateral-based unconventional monetary policy. We find that in the secondary market the policy reduced the spreads of the newly collateralizable bonds in the treatment market (the interbank market) by 42-62 basis points. We also find that there is a pass-through effect from the secondary market to the primary market: the spreads of the treated bonds newly issued in the interbank market were reduced by 54 basis points.
    JEL: E44 E52 E58 G12
    Date: 2020–02
  10. By: Xiao, Bowen; Guo, Xiaodan; Fan, Ying; Voigt, Sebastian; Cui, Lianbiao
    Abstract: In light of increased economic integration and global warming, addressing critical issues such as the role of multilateral climate policies and the strategic interaction of countries in climate negotiations becomes paramount. We thus established for this paper an open economy environmental dynamic stochastic general equilibrium model with heterogeneous production sectors, bilateral climate policies, asymmetric economies, and asymmetric stochastic shocks, using China and the EU as case studies in order to analyze the interaction and linking of international carbon markets under dynamic international economic cycles. This led us to some major conclusions. First, with various methods we verified that, due to deadweight loss, the efficiency of the separate carbon market is lower than that of the joint carbon market. Second, the intensity of the spillover effects depends partly on different climate policies. This means that, in terms of supply-side shocks, the EU's economy in a joint carbon market is more sensitive because its cross-border spillover effects are enhanced, while demand-side shocks have a stronger impact on the EU's economy under a separate carbon market. Third, the Ramsey policy rule revealed that both China's and the EU's emission quotas should be adjusted pro-cyclically under separate carbon markets. The cross-border spillover effects of the joint carbon market, however can change the pro-cyclical characteristics of foreign (EU's) optimal quotas.
    Keywords: International economic cycle,Carbon market,China,the European Union (EU),Dynamic Stochastic General Equilibrium (DSGE)
    JEL: E32 F41 Q53 Q56 Q58
    Date: 2020

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