nep-cna New Economics Papers
on China
Issue of 2020‒09‒21
nine papers chosen by
Zheng Fang
Ohio State University

  1. Bank Diversification and Focus in Disruptive Times: China, 2007–2018 By Minzhi Wu; Emili Tortosa-Ausina
  2. Monetary Stimulus Amidst the Infrastructure Investment Spree: Evidence from China's Loan-Level Data By Kaiji Chen; Haoyu Gao; Patrick C. Higgins; Daniel F. Waggoner; Tao Zha
  3. Alternative lenses for viewing how China has built its accounting and auditing profession By Macve, Richard
  4. Psychological Suffering Owing to Lockdown or Fear of Infection? Evidence from the COVID-19 Outbreak in China By Beomsoo Kim; Yang Zhao
  5. Constructing a rental housing index and identifying market segmentation in the case of Beijing, China By Song, Zisheng; Wilhelmsson, Mats; Yang, Zan
  6. Trade Liberalization and the Gender Employment Gap in China By Wang, Feicheng; Kis-Katos, Krisztina; Zhou, Minghai
  7. Does Drought Increase Carbon Emissions? Evidence from Southwestern China By Jie Yang; Yijing Huang
  8. China’s Overseas Lending By Horn, Sebastian; Reinhart, Carmen M.; Trebesch, Christoph
  9. Analyzing the Tradeoff between the Economic and Environmental Performance: the Case of Chinese Manufacturing Sector By Zhiyang SHEN; Michael VARDANYAN; Tomas BALEZENTIS; Jianlin WANG

  1. By: Minzhi Wu (Department of Economics, Universitat Jaume I, Castellón, Spain); Emili Tortosa-Ausina (IVIE, Valencia and Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: Bank diversification and focus strategies are becoming crucial issues for commercial banks’ future viability, due to their links with the emergence of new products, services and competitors. We investigate the effects of such strategies for Chinese banks during 2007–2018, a particularly turbulent period for both macroeconomic reasons (the impact of the 2007/08 international financial crisis) as well as others related to innovation in the industry—such as the rise of FinTech. For this, we construct measures of diversification from both the two main perspectives taken into account so far by the literature, namely, incomebased indicators and asset-based indicators. In the case of income-based indicators, we consider further categories—non-interest income ratio, the Herfindahl-Hirschman index, and the entropy index. We evaluate the impact of the different indicators considered on measures of risk and profitability, and whether this impact varies depending on the type of bank—state-owned banks, national shareholding commercial banks, and city commercial banks. We argue that the links can be too intricate to be captured by linear models and, complementing the previous literature, evaluate them considering semiparametric specifications. Overall results indicate that Chinese banks do not benefit to a great deal in terms of profitability and risk by following neither income nor asset diversification strategies, although the former are higher than the latter.
    Keywords: bank, China, diversification, focus, semiparametric regression
    JEL: G21 G28 C14
    Date: 2020
  2. By: Kaiji Chen; Haoyu Gao; Patrick C. Higgins; Daniel F. Waggoner; Tao Zha
    Abstract: We study the impacts of the 2009 monetary stimulus and its interaction with infrastructure spending on credit allocation. We develop a two-stage estimation approach and apply it to China's loan-level data that covers all sectors in the economy. We find that except for the manufacturing sector, monetary stimulus itself did not favor SOEs over non-SOEs in credit access. Infrastructure investment driven by non-monetary factors, however, enhanced the monetary transmission to bank credit allocated to LGFVs in infrastructure and at the same time weakened the impacts of monetary stimulus on bank credit to non-SOEs in sectors other than infrastructure.
    JEL: C13 C3 E02 E5
    Date: 2020–08
  3. By: Macve, Richard
    Abstract: Purpose: The paper reviews some theoretical approaches that have been adopted for understanding the drivers and achievements of the Chinese professional project and the challenges it faces for the future, as a complement and a contrast to previous histories of China and to studies of other developing economies. Design/methodology/approach: Based mainly on evaluating the information as obtained from the interviews in mainland China, in Hong Kong and in London reported by Macve (2020), complemented by other published histories. Findings: China remains a paradox. Since the “reform and open” policy began in 1978 it has been transformed from one of the poorest countries to one of the economically most powerful in just some 40 years. However it remains (per capita) a “developing country”/”emerging economy” and ideologically a Communist country. While the accounting profession in the USA and UK has developed “from the bottom up” over more than a century and a half, the Chinese profession has effectively been created “from the top down” in under 25 years. The paper outlines alternative theorizations of the major stages in this achievement, in the context of the continuing rapid growth of China's economy and its stock markets, and of the overseas expansion of its manufacturing and increasingly service-oriented base. Research limitations/implications: Space has restricted the analysis here to a general overview. Application of Gramsci's hegemony theory is argued to be inappropriate in the context of understanding China's professional project. Instead, this study is framed within the neo-institutional theory of “linked ecologies” originally developed to examine “Western” developments and extended to the emergence of glocalization, while offering a comparison with related theorization of Russia's post-Communist development. Further theoretical development outside the Western neo-liberal context is called for. Originality/value: The paper demonstrates how accounting and auditing's development in this globally significant context has differed from that in other developing and transitional economies, reflecting in particular the proactive agency of the state. Given China's economic power, fuller understanding of the interrelated factors shaping its development is important for understanding the likely future shaping of the worldwide profession.
    Keywords: Chinese auditing profession; Chinese audit regulation; glocalization; hegemony; linked ecologies
    JEL: M40
    Date: 2020–07–06
  4. By: Beomsoo Kim (Department of Economics, Korea University, Seoul, Republic of Korea); Yang Zhao (Department of Economics, Korea University, Seoul, Republic of Korea)
    Abstract: This study aimed to estimate the impact of city lockdown on mental health of residents in 15 cities in the Hubei Province, China. Given the lack of epidemiological data on mental health and suicide during the COVID-19 period, we used the Baidu keyword search index as an indicator of mental health and applied Difference-In-Difference estimation using data from the same period in 2019 as the control group. We found that people in Wuhan and in other cities in Hubei showed different patterns/changes in internet keyword search frequency; for the keywords of depression, scared, fear, anxiety, stress, nervous, and fatigue in other cities in Hubei, there was an increase of 225%, 235%, 216%, 371%, 335%, and 92%, respectively, in 2020 compared with 2019. In Wuhan, there was an increase of 20%, 49%, 75%, 36%, 31%, and 45%, respectively, in 2020 compared with 2019. In Wuhan, there were no significant search frequency changes for the self-harm and suicide keywords in 2020 compared with 2019. Although the other cities in Hubei experienced a relatively smaller number of confirmed cases compared with Wuhan, these two keywords showed significant changes in these cities in 2020 compared with 2019.
    Keywords: COVID-19; Lockdown; Mental Health; Baidu Index; Difference-in-Differences
    Date: 2020
  5. By: Song, Zisheng (Department of Real Estate and Construction Management, Royal Institute of Technology); Wilhelmsson, Mats (Department of Real Estate and Construction Management, Royal Institute of Technology); Yang, Zan (Hang Lung Centre for Real Estate Studies Department of Construction Management Tsinghua University, Beijing, China)
    Abstract: Although the rental market is relatively small in China, rental housing is an integral part of the housing market as a whole and plays a vital role in reducing pressure from the owner-occupied housing sector. In general, knowledge about the functioning of the rental market and rental dynamics over space and time is relatively limited. The rent index is a useful indicator of the variation of rent and the rental housing market dynamics. Therefore, the primary aim of this paper is to construct a rental-housing index by employing the hedonic model approach. Clustering analysis will be used to identify different rental housing market segmentations. The case study is the rental housing market in Beijing, China, over the period 2016-2018. In summary, we can conclude that a more scientific approach to segmenting the housing market better accounts for the heterogeneity in the market than traditional administrative boundaries.
    Keywords: Rent Index; Hedonic Model; Cluster Analysis; Accessibility
    JEL: C43 C51 C52 R30 R32
    Date: 2020–09–16
  6. By: Wang, Feicheng; Kis-Katos, Krisztina; Zhou, Minghai
    Abstract: This paper investigates the impact of import liberalization induced labor demand shocks on male and female employment in China. Combining data from population and firm censuses between 1990 and 2005, we relate prefecture-level employment by gender to the exposure to tariff reductions on locally imported products. Our empirical results show that increasing import competition has kept more females in the workforce, reducing an otherwise growing gender employment gap in the long run. These dynamics were present both in local economies as a whole and among formal private industrial firms. Examining channels through which tariff reductions differentially affect males and females, we find that trade-induced competitive pressures contributed to a general expansion of female-intensive industries, a shift in sectoral gender segregation, reductions in gender discrimination in the labor market, technological upgrading through computerization, and general income growth.
    Keywords: Trade liberalization,Import competition,Gender employment gap,China
    JEL: F13 F14 F16 F66 J16
    Date: 2020
  7. By: Jie Yang (University of Toyama); Yijing Huang (Peking University)
    Abstract: This study estimates the impact of the 2009/2010 drought in southwestern China on economic activities and CO2 emissions. We focus on the economic outcomes of the power and energyintensive sectors to investigate the substitution between hydropower and thermal power during this extreme drought. Panel data for 97,387 firms from 2006 to 2013 are used to examine the responses of firms to this extreme climatic event. We find that severe drought reduces hydropower generation, as well as the economic outputs of energy-intensive sectors, while it increases the power generated by coal-fired power plants. As a result, the net emissions of carbon dioxide between 2009 and 2013 increased by 443,425 tons. The findings suggest that climate disasters may increase carbon emissions, thereby posing a threat to further climate change.
    Date: 2020–09
  8. By: Horn, Sebastian; Reinhart, Carmen M.; Trebesch, Christoph
    Abstract: Compared with China's pre-eminent status in world trade, its role in global finance is poorly understood. This paper studies the size, characteristics, and determinants of China's capital exports building a new database of 5000 loans and grants to 152 countries, 1949-2017. We find that 50% of China's lending to developing countries is not reported to the IMF or World Bank. These "hidden debts" distort policy surveillance, risk pricing, and debt sustainability analyses. Since China's overseas lending is almost entirely official (state-controlled), the standard "push" and "pull" drivers of private cross-border flows do not apply in the same way.
    Keywords: China,trade finance,external debt,international capital flows,official lending,hidden debts,sovereign risk,Belt and Road initiative
    JEL: F21 F34 F42 F6 G15 H63 N25
    Date: 2020
  9. By: Zhiyang SHEN (Beijing Institute of Technology, Beijing, China); Michael VARDANYAN (IESEG School of Management, Lille, France); Tomas BALEZENTIS (Lithuanian Institute of Agrarian Economics, Vilnius, Lithuania); Jianlin WANG (Dongbei University of Finance and Economics, Dalian, China)
    Abstract: The so-called by-production approach, introduced by Murty and Russell (2002) and Murty et al. (2012), has provided researchers with an improved methodology for approximating polluting production technologies. However, since the original by-production model does not impose any relationship between its economic and environmental sub-technologies, it is not capable of addressing the potential tradeoff between the economic and environmental performance. Although this link has been recently proposed in the extensions to the original by-production approach, the tradeoff framework remains ambiguous with respect to the weights to be assigned to the economic and environmental sub-objectives. This paper proposes a novel approach for estimating the green productivity growth in the Chinese manufacturing sector based on the scenario analysis simulating policy preferences. Our model allows us to measure the tradeoff between faster economic growth and better environmental protection, providing policy-makers with insights on how to steer the Chinese industry towards a more environmentally friendly development path in the future.
    Keywords: : Tradeoff analysis; By-production technology; Carbon emissions; Green productivity; Chinese manufacturing.
    JEL: O47 Q5 O2
    Date: 2020–06

This nep-cna issue is ©2020 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.