nep-cna New Economics Papers
on China
Issue of 2020‒09‒14
ten papers chosen by
Zheng Fang
Ohio State University

  1. Collateral Damage? Labour Market Effects of Competing with China – at Home and Abroad By Cabral, Sónia; Martins, Pedro S.; Pereira dos Santos, João; Tavares, Mariana
  2. The health consequence of rising housing prices in China By Xu, Yuanwei; Wang, Feicheng
  3. Housing Market and Entrepreneurship: Micro Evidence from China By Han, Bing; Han, Lu; Zhou, Zhengyi
  4. Fertility Cost, Intergenerational Labor Division, and Female Employment By Haiyue Yu; Jin Cao; Shulong Kang
  5. Peak China Housing By Kenneth S. Rogoff; Yuanchen Yang
  6. Gains from trade or from catching-up? Value creation and distribution in the era of China's WTO accession By Giovanni Dosi; Maria Enrica Virgillito; Xiaodan Yu
  7. How do individual politicians affect privatization? Evidence from China By Ru, Hong; Zou, Kunru
  8. China-Middle East Economic Relations and the Belt and Road Initiative By Nader Habibi
  9. Improving Management through Worker Evaluations: Evidence from Auto Manufacturing By Jing Cai; Shing-Yi Wang
  10. Occupational Dualism and Intergenerational Educational Mobility in the Rural Economy: Evidence from China and India By Emran, M. Shahe; Ferreira, Francisco H. G.; Jiang, Yajing; Sun, Yan

  1. By: Cabral, Sónia; Martins, Pedro S.; Pereira dos Santos, João; Tavares, Mariana
    Abstract: The increasing range and quality of China’s exports is a major development internationally with potentially far-reaching effects. In this paper, on top of the direct labour market effects of imports from China studied in previous research, we also measure the indirect effects stemming from increased export competition in third markets. Our findings, based on matched employeremployee data of Portugal covering the 1991-2008 period, indicate that workers’ earnings and employment are significantly negatively affected by China’s competition, but only through the indirect ’market-stealing’ channel. In contrast to earlier evidence, the direct effects of Chinese imports are mostly non-significant. The results are robust to a number of checks and also highlight particular groups more affected by indirect competition, including women, older and less educated workers, and workers in larger, older and domestic firms.
    Keywords: International trade,Labour market,Matched employer-employee data,China,Import competition
    JEL: F14 F16 F66 J31
    Date: 2020
  2. By: Xu, Yuanwei; Wang, Feicheng
    Abstract: China has experienced a rapid boom in real estate prices in the last few decades, leading toa substantial increase in living costs and heavy financial burdens on households. Usingan instrumental variable approach, this paper exploits spatial and temporal variation inhousing price appreciation linked to individual-level health data in China from 2000 to 2011.We find robust evidence that increases in housing prices significantly raise the probability ofresidents having chronic diseases. This negative health impact is more pronounced amongindividuals from low-income families, households that purchased rather than inheritedor was allocated the home, and those who migrated from rural to urban areas. We alsofind evidence that marriage market competition exacerbates these negative health effects,particularly for males and parents with young adult sons. Further empirical results suggestthat housing price appreciation induces negative health consequences through increasedwork intensity, higher mental stress, and reduced sleep time. This paper provides a novelexplanation to the increased prevalence of chronic diseases in China.
    Keywords: Housing Prices,Chronic Diseases,Health,Marriage Competition,China
    JEL: I10 I12 R21 R31
    Date: 2020
  3. By: Han, Bing; Han, Lu; Zhou, Zhengyi
    Abstract: Using a unique survey data of Chinese households, we study the impact of house price growth and house price risk on entrepreneurship. House price risk, measured as the sensitivity of house price growth to local GDP growth, negatively impacts the entrepreneurship of homeowners relative to renters. This finding is concentrated only among sophisticated households and is consistent with the portfolio effect when housing and occupational choices are integral parts of the household portfolio. Moreover, a high past house price growth reduces the entrepreneurship of homeowners relative to renters. This holds for both sophisticated and unsophisticated households. We propose a new economic channel based on extrapolative belief and provide further supportive evidence.
    Keywords: Entrepreneurship; Housing market; Extrapolative belief
    JEL: D10 G11 L26 R21 R31
    Date: 2020–06–06
  4. By: Haiyue Yu (Dongbei University of Finance and Economics, Interdisciplinary Center for Social & Behavioral Studies); Jin Cao (Norges Bank); Shulong Kang (Dongbei University of Finance and Economics School of Finance)
    Abstract: China has set to increase the minimum retirement age, to ease the pressure from pension expenditure and the falling labor supply caused by the aging population. However, policy debates have so far neglected the crucial fact that families in China largely rely on retired grandparents for childcare. Using novel and high-quality survey data, we demonstrate that intrafamily downward labor transfer towards childcare significantly increases young females’ labor force participation rate and their labor income, and such effects do not exist for males. Furthermore, we show that the positive effects from grandparental childcare are higher for better-educated, urban females with younger children. This paper thus reveals a large, hidden cost in the new retirement policy — the reduced feasibility of grandparental support, due to postponed retirements, may crowd out productive labor of young females, — and rationalizes a series of social protection policies to accompany the phase-in of the new retirement scheme.
    Keywords: intergenerational labor division, grandparental childcare, female employment, human capital accumulation, minimum retirement age
    JEL: C24 J13 J22
    Date: 2019–01–16
  5. By: Kenneth S. Rogoff; Yuanchen Yang
    Abstract: China’s real estate has been a key engine of its sustained economic expansion. This paper argues, however, that even before the Covid-19 shock, a decades-long housing boom had given rise to severe price misalignments and regional supply-demand mismatches, making an adjustment both necessary and inevitable. We make use of newly available and updated data sources to analyze supply-demand conditions in the fast-moving Chinese economy. The imbalances are then compared to benchmarks from other economies. We conclude that the sector is quite vulnerable to a sustained aggregate growth shock, such as Covid-19 might pose. In our baseline calibration, using input-output tables and taking account of the very large footprint of housing construction and real-estate related sectors, the adjustment to a decline in housing activity can easily trim a cumulative 5-10 percent from the level of output (over a period of years).
    JEL: F39 G01 R3
    Date: 2020–08
  6. By: Giovanni Dosi; Maria Enrica Virgillito; Xiaodan Yu
    Abstract: In this article we focus on the role of exports in Chinese economic development in the era of WTO accession. We address a series of different, although connected, questions. First, do Chinese exporting and non-exporting firms differ in terms of their productivity performance and paid wages? Second, to what extent exporting and non-exporting firms have contributed to the process of convergence and catching-up? Third, does the productivity-wage pass-through differ between exporting and non-exporting firms? Overall our findings downplay the role of exporting firms as both carriers of labour productivity and wage growth for the Chinese economy. In this respect, ''gains from catching-up'' outweigh any ''gain from trade''.
    Keywords: Export; Wage; Productivity; Trade; Event studies
    Date: 2020–09–01
  7. By: Ru, Hong; Zou, Kunru
    Abstract: This paper investigates how politicians’ patronage connections affect privatizations in China. The connections to top political leaders (i.e., Central Committee of the Communist Party of China) make local politicians engage more in rent-seeking by selling state-owned enterprises (SOEs) at substantial discounts. These connected local politicians are also more protected in anti-corruption investigations, thus extracting more rents by selling SOE assets at substantial discounts. Consequently, the privatizations conducted by the local politicians with patronage connections achieve significantly lower gains in efficiency and performance. To identify the role of patronage connection in privatization, we use the mandatory retirement age cut-offs of Central Committee members in the regression discontinuity design. We find drops in price discounts of privatization deals and jumps in efficiency for privatized SOEs when local politicians lose connections to Central Committee members around the retirement age cut-offs.
    JEL: D73 G30 L3
    Date: 2020–09–01
  8. By: Nader Habibi (Brandeis University)
    Abstract: While many Middle Eastern countries maintain strong military and strategic relations with the United States and Europe, they have significantly increased their trade and investment ties with China since 2000. China has emerged the largest trade partner and crude oil customer for most MENA countries. Now China is offering investment and financial incentive to Middle Eastern countries to join its Belt and Road global connectivity project. In Israel, Egypt and GCC countries China’s investments are oriented toward development of seaports and economic free zones near them. In Iran and Iraq, China is developing railways and highways to enhance their transit and transport connectivity in the Belt and Road land transport network. The Covid-19 pandemic has led to a setback in China’s infrastructure investments in MENA countries but it is using the health crisis to enhance its digital, telecommunication and healthcare related investments in the region. So far China has managed to maintain a policy and non-interference and neutrality in multiple conflicts among Middle Eastern countries and develop good relations with both sides of each conflict such as Iran and Saudi Arabia. China has also been very cautious about respecting the U.S. strategic interests in the region. The escalation of tensions between the United States and China might force China to change this strategy. China might react to recent attempts by the United States to prevent some MENA countries from awarding investment contracts to Chinese firms. China might also show more willingness to develop closer ties with the regional adversaries of the United States such as Iran and the Syrian regime.
    JEL: Q43 F55 O10
    Date: 2019–09
  9. By: Jing Cai; Shing-Yi Wang
    Abstract: Using a randomized experiment with an automobile manufacturing firm in China, we measure the effects of letting workers evaluate their managers on worker and firm outcomes. In the treatment teams, workers evaluate their supervisors monthly. We find that providing feedback leads to significant reductions in worker turnover and increases in team-level productivity. In addition, workers report higher levels of happiness and positive mood. The evidence suggests that these results are driven by changes in the behavior of managers and an overall better relationship between managers and workers.
    JEL: D22 O1
    Date: 2020–08
  10. By: Emran, M. Shahe (George Washington University); Ferreira, Francisco H. G. (London School of Economics); Jiang, Yajing (Charles River Associates); Sun, Yan (World Bank)
    Abstract: This paper extends the Becker-Tomes model of intergenerational educational mobility to a rural economy characterized by farm-nonfarm occupational dualism and provides a comparative analysis of rural China and rural India. The model builds a micro-foundation for the widely used linear-in-levels estimating equation. Returns to education for parents and productivity of financial investment in children's education determine relative mobility, as measured by the slope, while the intercept depends, among other factors, on the degree of persistence in nonfarm occupations. Unlike many existing studies based on coresident samples, our estimates of intergenerational mobility do not suffer from truncation bias. The sons in rural India faced lower educational mobility compared with the sons in rural China in the 1970s to 1990s. To understand the role of genetic inheritance, Altonji et al. (2005) biprobit sensitivity analysis is combined with the evidence on intergenerational correlation in cognitive ability in economics and behavioral genetics literature. The observed persistence can be due solely to genetic correlations in China, but not in India. Father's nonfarm occupation was complementary to his education in determining a sons' schooling in India, but separable in China. There is evidence of emerging complementarity for the younger cohorts in rural China. Structural change in favor of the nonfarm sector contributed to educational inequality in rural India. Evidence from supplementary data on economic mechanisms suggests that the model provides plausible explanations for the contrasting roles of occupational dualism in intergenerational educational mobility in rural India and rural China.
    Keywords: educational mobility, rural economy, occupational dualism, farm-nonfarm, complementarity, coresidency bias, China, India
    JEL: O12 J62
    Date: 2020–07

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