nep-cna New Economics Papers
on China
Issue of 2020‒11‒02
seven papers chosen by
Zheng Fang
Ohio State University

  1. China’s Housing Booms: A Challenge to Bubble Theory By Natacha Aveline-Dubach
  2. Modeling the US-China trade conflict: a utility theory approach By Yuhan Zhang; Cheng Chang
  3. Re-Examining Supplier-Induced Demand in Health Care: Comparisons among Patients Affiliated and Not Affiliated with Healthcare Professionals in China By Si, Yafei; Zhou, Zhongliang; Su, Min; Hu, Han; Yang, Zesen; Chen, Xi
  4. INDUSTRIAL CLUSTERS, NETWORKS AND RESILIENCE TO THE COVID-19 SHOCK IN CHINA By Ruochen Dai; Dilip Mookherjee; Yingyue Quan; Xiaobo Zhang
  5. Dealing with Demand Heterogeneity on Health Care Provider Choice –The Case of Rural China By Martine Audibert; Yong He; Jacky Mathonnat
  6. The misallocation in the Chinese land market By Fei, Xuan
  7. China versus the US in the Pandemic Crisis: The State-People Nexus Confronting Systemic Challenges By Dic Lo; Yuning Shi

  1. By: Natacha Aveline-Dubach (GC (UMR_8504) - Géographie-cités - UP1 - Université Panthéon-Sorbonne - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - UP - Université de Paris)
    Abstract: Over the past two decades, Chinese cities have experienced real estate booms displaying clear signs of "bubble" elements, including, inter allia, prohibitive residential prices, an accumulation of debt, and severe overbuilding. In 2014, many media commentators claimed that Chinese property markets were about to burst. Yet house prices have started to rise again in major cities, and no significant slowdown has been recorded to date. This chapter addresses the challenges posed by China's residential market dynamics to the bubble theory. Adopting a political economy perspective that breaks with the approaches of real estate economics, it highlights the self-fulfilling logic of the housing booms, resulting from pervasive practices of land value capture by local governments. The paper stresses the inadequacy of the bubble framework to distinguish speculative and "fundamental" explanatory factors of price increases, and provides an alternative reading based on André Orléan's theory of conventions. It is argued that the asymmetric nature of the State's regulation of housing markets-a failure to rein in housing price hikes, yet efficiency in managing downturns-has played a crucial role in shaping the common representation of the market by investors. Beyond the challenge to bubble theory, China's experience of housing booms opens the way for the recognition of alternative paths to finance-led regimes of capital accumulation in the built environment.
    Abstract: Au cours des deux dernières décennies, les villes chinoises ont connu un boom immobilier qui a montré des signes évidents d'éléments de "bulle", y compris, entre autres, des prix résidentiels prohibitifs, un gonflement de la dette privée et une importante surproduction. En 2014, de nombreux commentateurs des médias ont affirmé qu'une bulle allait exploser sur les marchés immobiliers chinois Pourtant, les prix de l'immobilier ont recommencé à augmenter dans les grandes villes, et aucun ralentissement significatif n'a été enregistré à ce jour. Ce chapitre aborde les défis posés à la théorie de la bulle par les dynamiques des marchés résidentiels chinois. Adoptant une perspective d'économie politique qui rompt avec les approches de l'économie immobilière, il met en évidence la logique auto-réalisatrice des booms immobiliers, résultant de pratiques de captation de la rente foncière par les gouvernements locaux. L'article souligne l'inadéquation du cadre analytique de la bulles spéculative pour distinguer les facteurs spéculatifs et les facteurs explicatifs "fondamentaux" des hausses de prix, et propose une lecture alternative basée sur la théorie des conventions d'André Orléan. L'auteur soutient que la nature asymétrique de la réglementation des marchés du logement par l'État - une incapacité à contenir les hausses de prix des logements, mais une gestion efficace de prévention de la baisse des prix- a joué un rôle crucial dans la construction d'une représentation partagée du marché par les investisseurs. Au-delà de la remise en cause de la théorie des bulles, l'expérience de la Chine en matière de boom immobilier ouvre la voie à la reconnaissance de voies alternatives aux régimes d'accumulation de capital financier dans l'environnement bâti.
    Date: 2020–01–03
  2. By: Yuhan Zhang; Cheng Chang
    Abstract: This paper models the US-China trade conflict and attempts to analyze the (optimal) strategic choices. In contrast to the existing literature on the topic, we employ the expected utility theory and examine the conflict mathematically. In both perfect information and incomplete information games, we show that expected net gains diminish as the utility of winning increases because of the costs incurred during the struggle. We find that the best response function exists for China but not for the US during the conflict. We argue that the less the US coerces China to change its existing trade practices, the higher the US expected net gains. China's best choice is to maintain the status quo, and any further aggression in its policy and behavior will aggravate the situation.
    Date: 2020–10
  3. By: Si, Yafei (University of New South Wales); Zhou, Zhongliang (Xi’an Jiaotong University); Su, Min (Inner Mongolia University); Hu, Han (Xi’an Jiaotong University); Yang, Zesen (Tsinghua University); Chen, Xi (Yale University)
    Abstract: Doing "more" in healthcare can be a major threat to the delivery of high-quality health care. This study used coarsened exact matching to test the hypothesis of supplier-induced demand (SID) by comparing health care utilization and expenditures between patients affiliated with healthcare professionals and their counterpart patients not affiliated with healthcare professionals. Using the China Labor-force Dynamics Survey (CLDS) in 2014, we identified 806 patients affiliated with healthcare professionals and 22,788 patients not affiliated with healthcare professionals. The matched outpatient proportion of patients not affiliated with healthcare professionals was 0.6% higher (p=.754) than that of their counterparts, and the matched inpatient proportion was 1.1% lower (p =.167). Patients not affiliated with healthcare professionals paid significantly more (680 CNY or 111 USD, p
    Keywords: supplier-induced demand, health care utilization, healthcare professionals, China
    JEL: I11 D82 I12 D90
    Date: 2020–10
  4. By: Ruochen Dai (Central University of Finance and Economics); Dilip Mookherjee (Boston University); Yingyue Quan (Peking University); Xiaobo Zhang (Peking University and IFPRI)
    Abstract: We examine how exposure of Chinese firms to the Covid-19 shock varied with a cluster index (measuring spatial agglomeration of firms in related industries) at the county level. Two data sources are used: entry flows of newly registered firms in the entire country, and an entrepreneur survey regarding operation of existing firms. Both show greater resilience in counties with a higher cluster index, after controlling for industry dummies and local infection rates, besides county and time dummies in the entry data. Reliance of clusters on informal entrepreneur hometown networks and closer proximity to suppliers and customers help explain these findings.
    Keywords: Clusters, Covid-19, China, Firms, Social Networks
    JEL: J12 J16 D31 I3
    Date: 2020–10
  5. By: Martine Audibert (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Yong He (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Jacky Mathonnat (FERDI - Fondation pour les Etudes et Recherches sur le Développement International)
    Abstract: We built a database of two samples of patients surveyed within the same regions in rural China over a time interval of 18 years, and presumed varying demand heterogeneity due to income increase and people aging. We find that while the mean price and distance negative effects on patients choice were present in both time periods, their differences in heterogeneity, which were confirmed with the mixed multinomial logit (MMNL), could have crucial importance in avoiding erroneous policy making based merely on mean price and distance effects. We also find that while both the multinomial logit (MNL) and the MMNL are able to predict price and distance effects with low heterogeneity, only the MMNL appears able to detect the price effect when heterogeneity is high. These findings suggest using caution when interpreting estimation results with the MNL in cases of high heterogeneity.
    Keywords: Chinese rural households,Healthcare choice,Distance effect,Price effect,Mixed multinomial logit models,Multinomial logit,Preference heterogeneity
    Date: 2020–10–07
  6. By: Fei, Xuan
    Abstract: This paper proposes a spatial equilibrium model to quantify welfare losses from land market distortions in China. In the model, heterogeneous firms in a variety of sectors choose their locations across regions with costly trade, frictional labor migration, and land market distortions. We match land transaction and firm-level survey data to estimate land market distortions for firms. Misallocation arises when similar firms are faced with land prices that effectively prevent productive firms from establishing in large cities where they can benefit from agglomeration forces and access to higher productivity. Our framework incorporating land market distortions also helps clarify the mystery of China’s undersized cities, a phenomenon noted by Au and Henderson (2006) and Chauvin et al. (2017). Our estimates suggest large negative effects of land policies on the economic welfare in China. We end with a counterfactual exercise that suggests that a coordinated land and labor migration reform would generate welfare gains and reduce regional inequality.
    JEL: F16 L22 L51 O47 R14 R30
    Date: 2020–10–21
  7. By: Dic Lo (Department of Economics, SOAS University of London); Yuning Shi (Department of Economics, SOAS University of London)
    Abstract: The control of the COVID-19 crisis requires strong and rapid actions of each nation-state, but multiple facets of the ineffectiveness have been exposed so far. This paper seeks to characterise and assess the handling of the public health emergency in China and the United States. The exposition focuses on the governance structures and state-people dynamics of the two countries, drawing on the framework of “exit, voice, and loyalty†developed by Albert Hirschman. The paper concludes that the Chinese “tough model†appears to have facilitated a virtuous circle of the state-people interaction, whereas the US “loose model†has led to a vicious circle.
    Keywords: coronavirus; systemic challenges; governance; state-people relationship; comparative political economy
    JEL: H12 I18 P16
    Date: 2020–07

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