|
on China |
| By: | Hanming Fang; Long Wang; Yang Yang |
| Abstract: | We quantify the causal impact of human mobility restrictions, particularly the lockdown of the city of Wuhan on January 23, 2020, on the containment and delay of the spread of the Novel Coronavirus (2019-nCoV). We employ a set of difference-in-differences (DID) estimations to disentangle the lockdown effect on human mobility reductions from other confounding effects including panic effect, virus effect, and the Spring Festival effect. We find that the lockdown of Wuhan reduced inflow into Wuhan by 76.64%, outflows from Wuhan by 56.35%, and within-Wuhan movements by 54.15%. We also estimate the dynamic effects of up to 22 lagged population inflows from Wuhan and other Hubei cities, the epicenter of the 2019-nCoV outbreak, on the destination cities' new infection cases. We find, using simulations with these estimates, that the lockdown of the city of Wuhan on January 23, 2020 contributed significantly to reducing the total infection cases outside of Wuhan, even with the social distancing measures later imposed by other cities. We find that the COVID-19 cases would be 64.81% higher in the 347 Chinese cities outside Hubei province, and 52.64% higher in the 16 non-Wuhan cities inside Hubei, in the counterfactual world in which the city of Wuhan were not locked down from January 23, 2020. We also find that there were substantial undocumented infection cases in the early days of the 2019-nCoV outbreak in Wuhan and other cities of Hubei province, but over time, the gap between the officially reported cases and our estimated “actual” cases narrows significantly. We also find evidence that enhanced social distancing policies in the 63 Chinese cities outside Hubei province are effective in reducing the impact of population inflows from the epicenter cities in Hubei province on the spread of 2019-nCoV virus in the destination cities elsewhere. |
| JEL: | I10 I18 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26906&r=all |
| By: | Hongbo Duan (School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190, China); Qin Bao (Center for Forecasting Science, Chinese Academy of Sciences, Beijing 100190, China); Kailan Tian (Faculty of Economics and Business, University of Groningen, 9700 AV Groningen, The Netherlands); Yuze (Center for Forecasting Science, Chinese Academy of Sciences, Beijing 100190, China); Shouyang Wang (School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190, China and Center for Forecasting Science, Chinese Academy of Sciences, Beijing 100190, China); Cuihong Yang (School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190, China, Center for Forecasting Science, Chinese Academy of Sciences, Beijing 100190, China, and Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing 100190, China); Zongwu Cai (Department of Economics, The University of Kansas, Lawrence, KS 66045, USA); Xi Ming (School of Economics and Trade, Hunan University, Changsha 410006, China) |
| Abstract: | Broke out at the end of 2019, the novel coronavirus pneumonia (COVID-19) has been spreading in over 185 countries and territories, leading to more than 1,350,000 confirmed infections and 74,000 fatalities; the dismal performance of the global stock market and the collapse of oil prices are mostly attributed to this outbreak. Motivated by this, we evaluate the economic impacts of COVID-19 outbreak on both national and industrial levels by employing quarterly computable general equilibrium (CGE) model. Our results reveal that the epidemic may lower China’s economic growth in 2020 by 1.2%, versus 1.9% and 0.2% for consumption and investment, respectively. The service industry suffers the most from the outbreak, and the Accommodation-Food-Beverage service, Entertainment, Wholesale-Retail Trade are identified as the most vulnerable sectors, with the negative impact on output reaching as high as 5.6%. This study indicates that implementing effective measures for preventing and controlling the epidemic and policies for post-disease economic recovery play critical role in curbing the potential economic damage. |
| Keywords: | coronavirus pneumonia (COVID-19); Damage assement; Economic impacts; Economy recovery; Global stock market; SARS. |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:kan:wpaper:202008&r=all |
| By: | Fei Liu; Aaron Page; Sarah A. Strode; Yasuko Yoshida; Sungyeon Choi; Bo Zheng; Lok N. Lamsal; Can Li; Nickolay A. Krotkov; Henk Eskes; Ronald van der A; Pepijn Veefkind; Pieternel Levelt; Joanna Joiner; Oliver P. Hauser |
| Abstract: | China's policy interventions to reduce the spread of the coronavirus disease 2019 have environmental and economic impacts. Tropospheric nitrogen dioxide indicates economic activities, as nitrogen dioxide is primarily emitted from fossil fuel consumption. Satellite measurements show a 48% drop in tropospheric nitrogen dioxide vertical column densities from the 20 days averaged before the 2020 Lunar New Year to the 20 days averaged after. This is 20% larger than that from recent years. We relate to this reduction to two of the government's actions: the announcement of the first report in each province and the date of a province's lockdown. Both actions are associated with nearly the same magnitude of reductions. Our analysis offers insights into the unintended environmental and economic consequences through reduced economic activities. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2004.06542&r=all |
| By: | Alessandro Sforza; Marina Steininger |
| Abstract: | The economic effects of a pandemic crucially depend on the extend to which countries are connected in global production networks. In this paper we incorporate production barriers induced by COVID-19 shock into a Ricardian model with sectoral linkages, trade in intermediate goods and sectoral heterogeneity in production. We use our model to quantify the welfare effect of the disruption in production that started in China and then quickly spread across the world. We find that the COVID-19 shock has a considerable impact on most economies in the world, especially when a share of the labor force is quarantined. Moreover, we show that global production linkages have a clear role in magnifying the effect of the production shock. Finally, the economic effects of the COVID-19 shock are heterogeneous across sectors, regions and countries, depending on the geographic distribution of industries in each region and country and their degree of integration in the global production network. |
| Keywords: | COVID-19 shock, globalization, production barrier, sectoral interrelations, computational general equilibrium |
| JEL: | F10 F11 F14 F60 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8184&r=all |
| By: | Maliszewska,Maryla; Mattoo,Aaditya; Van Der Mensbrugghe,Dominique |
| Abstract: | The virus that triggered a localized shock in China is now delivering a significant global shock. This study simulates the potential impact of COVID-19 on gross domestic product and trade, using a standard global computable general equilibrium model. It models the shock as underutilization of labor and capital, an increase in international trade costs, a drop in travel services, and a redirection of demand away from activities that require proximity between people. A baseline global pandemic scenario sees gross domestic product fall by 2 percent below the benchmark for the world, 2.5 percent for developing countries, and 1.8 percent for industrial countries. The declines are nearly 4 percent below the benchmark for the world, in an amplified pandemic scenario in which containment is assumed to take longer and which now seems more likely. The biggest negative shock is recorded in the output of domestic services affected by the pandemic, as well as in traded tourist services. Since the model does not capture fully the social isolation induced independent contraction in demand and the decline in investor confidence, the eventual economic impact may be different. This exercise is illustrative, because it is still too early to make an informed assessment of the full impact of the pandemic. But it does convey the likely extent of impending global economic pain, especially for developing countries and their potential need for assistance. |
| Date: | 2020–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9211&r=all |
| By: | P. B. Lerner |
| Abstract: | This paper proposes and motivates a dynamical model of the Chinese stock market based on a linear regression in a dual state space connected to the original state space of correlations between the volume-at-price buckets by a Fourier transform. We apply our model to the price migration of executed orders by the Chinese brokerages in 2009-2010. We use our brokerage tapes to conduct a natural experiment assuming that tapes correspond to randomly assigned, informed and uninformed traders. We did not notice any spike of illiquidity transmitting from the US Flash Crash in May 2010 to trading in China. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2004.06200&r=all |
| By: | Peng Yue (ECUST); Yaodong Fan (UTS); Jonathan A. Batten (UUM); Wei-Xing Zhou (ECUST) |
| Abstract: | Information diffusion within financial markets plays a crucial role in the process of price formation and the propagation of sentiment and risk. We perform a comparative analysis of information transfer between industry sectors of the Chinese and the USA stock markets, using daily sector indices for the period from 2000 to 2017. The information flow from one sector to another is measured by the transfer entropy of the daily returns of the two sector indices. We find that the most active sector in information exchange (i.e., the largest total information inflow and outflow) is the {\textit{non-bank financial}} sector in the Chinese market and the {\textit{technology}} sector in the USA market. This is consistent with the role of the non-bank sector in corporate financing in China and the impact of technological innovation in the USA. In each market, the most active sector is also the largest information sink that has the largest information inflow (i.e., inflow minus outflow). In contrast, we identify that the main information source is the {\textit{bank}} sector in the Chinese market and the {\textit{energy}} sector in the USA market. In the case of China, this is due to the importance of net bank lending as a signal of corporate activity and the role of energy pricing in affecting corporate profitability. There are sectors such as the {\textit{real estate}} sector that could be an information sink in one market but an information source in the other, showing the complex behavior of different markets. Overall, these findings show that stock markets are more synchronized, or ordered, during periods of turmoil than during periods of stability. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2004.07612&r=all |
| By: | Fittje, Jens; Wagner, Helmut |
| Abstract: | The topography of China's financial network is unique. Is it also uniquely robust to contagion? We explore this question using network theory. We find that networks that are more concentrated are less fragile when connectivity is low. However, they remain in a robust-yet-fragile state longer than decentralized networks, when connectivity is increased. We implement Chinese characteristics into our model and simulate it numerically. The simulations show, that the large state-controlled banks act as effective stop-gaps for contagion, which makes the Chinese network relatively robust. This robustness is significantly reduced, if a significant share of the smaller banks are high-risk institutions. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ceames:172020&r=all |
| By: | Murach, Michael; Wagner, Helmut |
| Abstract: | We study the effects of external shocks on the business cycle in China and its sectors (agriculture, industry, and services) in terms of real GDP growth using several small dimensional VAR models with Cholesky identification for the period 1996--2014. We show that China - in particular its industrial sector - is susceptible to shocks, which can be related to a trade channel, a financial channel, and a confidence channel of business cycle transmission from major trading partner countries to the Chinese economy. We extend the previous literature by explicitly focusing on response of the Chinese economy at the sectoral level and investigating the presence of confidence channels by analyzing the reaction in Chinese business and consumer confidence. If interpreted from the perspective of ongoing structural change and rebalancing in China, our findings can be interpreted as the result of a still very dominant industrial sector, and a previously export- and investment-driven growth model. Tertiarization in China could be one way of increasing the economy's future resilience to external shocks. However, the future structure of both the industrial and service sectors may be very decisive. |
| Keywords: | International transmission channels,Transmission of shocks,Structural vector autoregression,Structural change |
| JEL: | F43 F44 C32 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ceames:12016&r=all |
| By: | Willem THORBECKE; Nimesh SALIKE; CHEN Chen |
| Abstract: | Tariffs, currency wars, and protectionism pose risks for Chinese firms. In theory, tariffs and exchange rates exert equivalent effects on export volumes. In practice, tariffs deter trade more than appreciations. This paper estimates exchange rate elasticities for China's four-digit export categories, and uses these to infer lower bounds for the impact of tariffs on exports. The results indicate the China's flagship industries such as electronics and machinery are exposed to exchange rate appreciations and tariffs. The paper then considers how China can promote freer trade to mitigate risks and reduce uncertainty. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:20011&r=all |
| By: | Junxue Jia (Renmin University of China); Yongzheng Liu (Renmin University of China); Jorge Martinez-Vazquez (International Center for Public Policy, Georgia State University, USA); Kewei Zhang (Boston University, USA) |
| Abstract: | Based on a Chinese city-level panel dataset, this paper examines the effects of vertical fiscal imbalances (VFI) on local fiscal indiscipline in a partial fiscal decentralization setting. We find that higher VFI induces a form of fiscal indiscipline: a reduction of tax collection effort by local governments. In addition, by exploiting the unique Chinese fiscal institution of “extra-budgetary” revenues, we show that in this case higher VFI does not alter local governments’ tax collection efforts. Even though local governments also possess full taxing power for “extra-budgetary” revenues, these revenues do not contribute to the determination of central fiscal transfers to local governments, thus creating very different incentives for local governments’ response to VFI. Our results shed light on the working mechanism of VFI and provide significant implications for improving the design of fiscal decentralization policy in China and elsewhere. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper2006&r=all |
| By: | Frietsch, Rainer |
| Abstract: | This discussion paper addresses policy learning and policy implementation in China since about 2006. In particular, the potential change of research and innovation policy under Xi Jinping is discussed, as well as core policies and strategies to further improve the Chinese innovation system and to shift it from a low-cost to an innovation-driven economy. The Internet Plus strategy and Made in China 2025 (MIC2025) as the most well-known policies that support the overall and most central "Innovation Driven Devel-opment Strategy" are briefly introduced. A first section, however, discusses policy-making processes and policy learning processes in China in general. It tries to sketch the current debate in the scientific literature, if the reform era ended and if the new au-thoritarianism under Xi Jinping is hampering policy implementation and policy learning as well as the future economic development. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisidp:63&r=all |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hohdps:032020&r=all |
| By: | Yining Geng |
| Abstract: | The investments parents make in their children can be gender specific. I study the impact of family planning policies on gender-specific outcomes. Empirically, this paper uses China’s Family Planning Policy (FPP), enacted in 1971, to understand how a reduction in the number of children in a family can generate gender-specific outcomes. I mainly use the diff-in-diff strategy to compare the educational outcomes of boys and of girls born before and after the FPP was implemented. I find that while post-FPP-born children generally complete higher levels of education, this effect is particularly stronger for girls. This finding is robust to (1) using the diff-in-diff-in-diff strategy by incorporating another dimension of variation: different fertility constraints imposed by the FPP on the ethnic majority Han than those imposed on ethnic minorities; and (2) using a different measure of educational outcomes: the probability of pursuing an education beyond the compulsory education period. In addition, I document that the FPP also has an impact on changing women’s preference for their child’s gender. Post-FPP-born women show a more pronounced change in gender attitudes and exhibit less son preference than their male counterparts. |
| Keywords: | Family Planning Policy; Fertility; Education; Gender Inequality. |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:liv:livedp:202008&r=all |
| By: | Alicia García-Herrero; Jianwei Xu |
| Abstract: | This paper was prepared for the seminar ‘Trade relations between the EU, China and Russia’, co-organised by the delegation of the European Union to Russia and Bruegel with the support of the EU Russia Expert Network on Foreign Policy (EUREN). The seminar was funded by the European Union. The content of this paper is the sole responsibility of the author and does not represent the official position of the European... |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:33317&r=all |
| By: | Kroll, Henning; Neuhäusler, Peter |
| Abstract: | Based on a newly compiled set of Chinese data, this paper puts established assump-tions on the role of technological variety in perspective. It does so from two main an-gles. First, by documenting whether, in China, technological variety has played a simi-lar role for regional development as in Western economies. Second, by exploring how, more recently, this may change as China transitions towards an innovation driven economy. In summary, its findings suggest that, while technological variety has indeed so far mattered differently for China's regional development, more recently, first traces of systemic change can be identified in the both evolution of related variety and its emerging impact on aspects of regional development. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisidp:61&r=all |
| By: | Anabel González; Nicolas Véron |
| Abstract: | The authors prepared the text of this Working Paper in their personal capacities as a study under a contract with the Greens/EFA Group in the European Parliament. China’s rapid rise and unique economic system, and the United States’ increasingly disruptive trade policy, threaten the global rules-based trade and economic system. The European Union has so far been comparatively spared from the US-China trade war, but must nevertheless safeguard its critical... |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:32427&r=all |
| By: | Murach, Michael; Wagner, Helmut; Kim, Jungsuk; Park, Donghyun |
| Abstract: | We analyze and compare the patterns of economic growth and development in China, Korea, and Japan in the post-war period. The geographical proximity and cultural affinity between the three countries, as well as the key role of the development state in the economies, suggest that an analytical comparison would be a meaningful and valuable exercise. Furthermore, Korea and Japan are two of the few economies that have jumped from middle income to high income in a short period and thus offer potentially valuable lessons for China. China is following a structural change that Korea and Japan underwent decades ago. We use Cobb--Douglas production functions to assess the long-run equilibrium relationships between per capita GDP, capital, and labor as well as the features of structural change by means of cointegrated vector autoregressive (CVAR) models. We show that such equilibrium relationships cannot be rejected for all three countries, while the evidence is stronger for China and Korea than for Japan. Our hypothesis tests show that the estimated Cobb--Douglas production functions display coefficients of capital and employment that sum up to one and broken linear trends that can be attributed to structural breaks and (changes in) total factor productivity (TFP) growth. We observe a striking similarity between the Korean and the Chinese experience, which gives some optimism that China may be capable of graduating to high income, like Korea. |
| Keywords: | aggregate production function,comparative economic growth,China,Korea,Japan,economic development |
| JEL: | E23 O47 O53 O57 P52 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ceames:162020&r=all |
| By: | Bekkers, Eddy; Schroeter, Sofia |
| Abstract: | This paper provides an economic analysis of the trade conflict between the US and China, providing an overview of the tariff increases, a discussion of the background of the trade conflict, and an analysis of the economic effects of the trade conflict, based both on empirics (ex post analysis) and on simulations (ex ante analysis). Bilateral tariffs have increased on average to 17% between the US and China, and the Phase One Agreement signed in January 2020 between the two countries only leads to minor reductions in the tariffs to 16%. The trade conflict has led to a sizeable reduction in trade between the US and China in 2019 and is accompanied by considerable trade diversion to imports from other regions, leading to a reorganization of value chains in (East) Asia. The simulation analysis shows that the direct effects of the tariff increases on the global economy are limited (0.1% reduction in global GDP). The impact of the Phase One Agreement on the global economy is even smaller, although the US is projected to turn real income losses into real income gains because of the Chinese commitments to buy additional US goods. The biggest impact of the trade conflict is provoked by rising uncertainty about trade policy and the paper provides a framework to analyze the uncertainty effects. |
| Keywords: | Trade conflict,Economic simulations,Trade effects of tariffs |
| JEL: | F12 F13 F14 F17 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd202004&r=all |
| By: | Xiaoling Tan; Jichang Zhao |
| Abstract: | The stock market of China experienced an abrupt crash in 2015 and evaporated over one third of the market value. Given its associations with fear and fine-resolutions in frequency, the illiquidity of stocks may offer a promising perspective of understanding and even signaling the market crash. In this study, by connecting stocks that mutually explain illiquidity fluctuations, a illiquidity network is established to model the market. It is found that as compared to non-crash days, the market is more densely connected on crash days due to heavier but more homogeneous illiquidity dependencies that facilitate abrupt collapses. Critical socks in the illiquidity network, in particular the ones in sector of finance are targeted for inspection because of their crucial roles in taking over and passing on the losing of illiquidity. The cascading failures of stocks in market crash is profiled as disseminating from small degrees to high degrees that usually locate in the core of the illiquidity network and then back to the periphery. And by counting the days with random failures in previous five days, an early single is implemented to successfully warn more than half crash days, especially those consecutive ones at early phase. Our results would help market practitioners like regulators detect and prevent risk of crash in advance. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2004.01917&r=all |
| By: | Uri Dadush; Marta Domínguez-Jiménez; Tianlang Gao |
| Abstract: | China and the European Union have an extensive and growing economic relationship. The relationship is problematic because of the distortions caused by China’s state capitalist system and the diversity of interests within the EU’s incomplete federation. More can be done to capture the untapped trade and investment opportunities that exist between the parties. China’s size and dynamism, and its recent shift from an export-led to a domestic demand-led growth model,... |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:bre:wpaper:33353&r=all |
| By: | Huimin Peng |
| Abstract: | We analyze actively managed mutual funds in China from 2005 to 2017. We develop performance measures for asset allocation and selection. We find that stock selection ability from holding-based model is positively correlated with selection ability estimated from Fama-French three-factor model, which is price-based regression model. We also find that industry allocation from holding-based model is positively correlated with timing ability estimated from price-based Treynor-Mazuy model most of the time. We conclude that most actively managed funds have positive stock selection ability but not asset allocation ability, which is due to the difficulty in predicting policy changes. |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2004.05322&r=all |