nep-cna New Economics Papers
on China
Issue of 2020‒06‒29
ten papers chosen by
Zheng Fang
Ohio State University

  1. Willingness to Pay for Better Air Quality: The case of China By Liu, L-Q.; Yin, Z-L.; Xie, B-C.; Zhou, W.
  2. Spatial Misallocation in Chinese Housing and Land Markets By Yongheng Deng; Yang Tang; Ping Wang; Jing Wu
  3. Short-Run Health Consequences of Retirement and Pension Benefits: Evidence from China By Plamen Nikolov; Alan Adelman
  4. Migrants and Firms : Evidence from China By Imbert, Clément; Seror, Marlon; Zylberberg, Yanos; Zhang, Yifan
  5. Technological Competitiveness of China's Internet Platforms: Comparison of Google and Baidu Using Patent Text Information By MOTOHASHI Kazuyuki; ZHU Chen
  6. How Did China’s COVID-19 Shutdown Affect U.S. Supply Chains? By Sebastian Heise
  7. What effect has the 2015 power market reform had on power prices in China? Evidence from Guangdong and Zhejiang By Xie, B-C.; Xu, J.; Pollitt, M.
  8. Hit by the Silk Road: How Wage Coordination in Europe Mitigates the China Shock By Barth, Erling; Finseraas, Henning; Kjelsrud, Anders; Moene, Karl Ove
  9. Accounting for data uncertainty: Biases in web-scraped Chinese aid data By Christopher Kilby
  10. The Adaptive Investment Effect: Evidence from Chinese Provinces By Mohaddes, K.; Williams, R.

  1. By: Liu, L-Q.; Yin, Z-L.; Xie, B-C.; Zhou, W.
    Abstract: Air pollution is a big threat to human beings and has attract worldwide attention from governments and scholars. Based on the survey of happiness in China, this paper attempts to analyze the impact of local air quality on the happiness of individuals, and to evaluate the monetary value of mitigating air pollution. Through merging individual happiness data in a nationally representative survey with daily air quality index (AQI) according to the date and location of each respondent, it calculates the marginal rate of substitution (MRS) between air quality and income, and then estimates respondents’ willingness to pay (WTP) for better air quality. Moreover, it has further explored the differences of WTPs among groups. This study reaches the conclusion that happiness is positively associated with income but negatively correlated with air pollution. Besides, individual happiness is heavily influenced by income, age, gender, health condition, marital status and other variables. Furthermore, WTPs differ greatly among groups and the estimated average WTP of whole sample is 549.36RMB(or 0.90% of annual household income) per year per family for one unit reduction in AQI.
    Keywords: Happiness, Willingness to pay, Air pollution, China
    JEL: L94
    Date: 2020–05–21
  2. By: Yongheng Deng; Yang Tang; Ping Wang; Jing Wu
    Abstract: Housing and land prices in China have experienced dramatic hikes over the past decade or two. Moreover, housing and land prices have also become more dispersed across Chinese cities. This paper intends to explore how housing and land market frictions may affect not only the aggregate but also the spatial distribution of housing and land prices and hence the extent of spatial misallocation. We first document the spatial variations of housing and land market frictions. In particular, larger tier-1 cities receive less housing and land subsidies, compared to tier-2 and tier-3 cities, whereas land frictions have been mitigated over time. We then embed both types of market frictions into a dynamic competitive spatial equilibrium framework featured with endogenous rural-urban migration. The calibrated model can reasonably mimic the price hikes in the data. Our counterfactual analysis reveals that, in a frictionless economy, the levels of housing and land prices would both be higher; while the housing price hike would slow down, the land price would grow more rapidly. Moreover, the housing price would not be slow down unless housing frictions can be largely mitigated.
    JEL: E20 R20
    Date: 2020–05
  3. By: Plamen Nikolov; Alan Adelman
    Abstract: This paper examines the impact of the New Rural Pension Scheme (NRPS) in China. Exploiting the staggered implementation of an NRPS policy expansion that began in 2009, we use a difference-in-difference approach to study the effects of the introduction of pension benefits on the health status, health behaviors, and healthcare utilization of rural Chinese adults age 60 and above. The results point to three main conclusions. First, in addition to improvements in self-reported health, older adults with access to the pension program experienced significant improvements in several important measures of health, including mobility, self-care, usual activities, and vision. Second, regarding the functional domains of mobility and self-care, we found that the females in the study group led in improvements over their male counterparts. Third, in our search for the mechanisms that drive positive retirement program results, we find evidence that changes in individual health behaviors, such as a reduction in drinking and smoking, and improved sleep habits, play an important role. Our findings point to the potential benefits of retirement programs resulting from social spillover effects. In addition, these programs may lessen the morbidity burden among the retired population.
    Date: 2020–06
  4. By: Imbert, Clément (University of Warwick and JPAL); Seror, Marlon (University of Bristol, DIAL, Institut Convergences Migrations); Zylberberg, Yanos (Chinese University of Hong Kong); Zhang, Yifan (University of Bristol, CESifo, the Alan Turing Institute)
    Abstract: How does rural-urban migration shape urban production in developing countries? We use longitudinal data on Chinese manufacturing firms between 2001 and 2006, and exploit exogenous variation in rural-urban migration induced by agricultural price shocks for identification. We find that, when immigration increases, manufacturing production becomes more labor-intensive in the short run. In the longer run, firms innovate less, move away from capital-intensive technologies, and adopt final products that use low-skilled labor more intensively. We develop a model with endogenous technological choice, which rationalizes these findings, and we estimate the effect of migration on factor productivity and factor allocation across firms. JEL Classification: D24 ; J23 ; J61 ; O15
    Date: 2020
  5. By: MOTOHASHI Kazuyuki; ZHU Chen
    Abstract: Internet platforms in China (BAT: Baidu, Alibaba, Tencent) are receiving growing attention in terms of their technological competitiveness compared to US players (GAFA: Google, Amazon, Facebook, Apple). Using text information of patent information in China and the US, this study analyzes Baidu's technological catching up process with Google. Based on document-level embedding results, we conduct cluster analysis and generate new indicators of technology cumulativeness and impact based on neighbor patents in the content space. The results reveal that Baidu follows a trend of US rather than Chinese technology which suggests Baidu is aggressively seeking to catch up with US players in the process of its technological development. At the same time, the impact index of Baidu patents increases over time, reflecting its upgrading of technological competitiveness.
    Date: 2020–05
  6. By: Sebastian Heise
    Abstract: The COVID-19 pandemic has had a significant impact on trade between the United States and China so far. As workers became sick or were quarantined, factories temporarily closed, disrupting international supply chains. At the same time, the trade relationship between the United States and China has been characterized by rising protectionism and heightened trade policy uncertainty over the last few years. Against this background, this post examines how the recent period of economic disruptions in China has affected U.S. imports and discusses how this episode might impact firms’ supply chains going forward.
    Keywords: COVID-19; supply chains; trade
    JEL: F00 F1
    Date: 2020–05–12
  7. By: Xie, B-C.; Xu, J.; Pollitt, M.
    Abstract: This paper presents an analysis of the impact of the recent power market reform process in China – following the No.9 Document of March 2015 – on the industrial price of electricity. We do this by picking a typical power price for a medium sized industrial customer in two of China’s leading reform provinces: Guangdong and Zhejiang. We find that power market reform, which is characterised by the introduction of wholesale electricity markets, has substantially reduced prices. Our detailed analysis shows that these price falls have come from a number of different sources: falls in the prices paid to generators, reductions in grid charges and falls in government taxes and additional charges. We show that the regulated price falls by 26.4% in Guangdong and by 26.9% in Zhejiang. The market price falls even further by 27.7% in Guangdong and 30.4% in Zhejiang. We conclude that while the impact of the power markets is significant, the associated changes to network charges and other government determined components of the price are more significant.
    Keywords: Chinese power market reform, electricity prices, No.9 Document
    JEL: L94
    Date: 2020–05–21
  8. By: Barth, Erling (Institute for Social Research, Oslo); Finseraas, Henning (Norwegian University of Science and Technology (NTNU)); Kjelsrud, Anders (University of Oslo); Moene, Karl Ove (University of Oslo)
    Abstract: Coordination in collective wage setting can constrain potential monopoly gains to unions in non-traded-goods industries. Countries with national wage coordination can thus stabilize overall employment against fluctuations and shocks in the world economy. We test this theory by exploring within-country variation in exposure to competition from China in 13 European countries. Our causal estimates demonstrate that in countries with uncoordinated wage setting, regions with higher import exposure from China experienced a marked fall in employment, while countries with wage-coordination experienced no such employment effects. We test our main mechanism against other explanations, and show that our findings are robust to alternative measures of wage coordination, industry classifications, and trade exposure.
    Keywords: wage-coordination, employment, globalization, China-shock
    JEL: F16 F66 J51 J60
    Date: 2020–05
  9. By: Christopher Kilby (Department of Economics, Villanova School of Business, Villanova University)
    Abstract: Most foreign aid research uses data donors report to the OECD’s Development Co-operation Directorate (OECD DAC). In the last two decades, China has become a major donor but neither reports to the OECD DAC nor publishes its own figures. Accounting for Chinese aid is important since China follows a different strategy than other large donors and so could undermine attempts to use aid to leverage change in regimes with poor governance or economic policy. A widely used dataset on Chinese development finance assembled by AidData, a research lab at the College of William and Mary, employs an army of undergrads to scour the web for information on individual Chinese aid projects from media and other sources. This leads to the question: Does this novel approach introduce systematic bias, if, for example, web-scraping by predominantly English-speaking undergraduates works better for countries with more press freedom, more postings in English, or more internet access? In cases with known underreporting, I explore what statistical methods can incorporate this information to yield more reliable results.
    Keywords: China; foreign aid; data collection bias
    JEL: C81 F35
    Date: 2020–06
  10. By: Mohaddes, K.; Williams, R.
    Abstract: This paper investigates the so-called “adaptive investment effect", a redirection of investment in productive capital towards adaptive capital with a view to mitigating the negative effects of climate change. We estimate the costs associated with the adaptive investment effect using data on Chinese provinces and find that the impact of investment on economic growth is reduced by between 27% and 37% in provinces investing more in adaptive capital. This implies that the social cost of carbon is higher than existing studies suggest, making it more urgent for policymakers to take action against climate change.
    Keywords: Climate change, adaptation, investment, China
    JEL: C33 O40 O53 Q51 Q54
    Date: 2020–04–24

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