nep-cna New Economics Papers
on China
Issue of 2021‒02‒15
eight papers chosen by
Zheng Fang
Ohio State University

  1. Pandemics, global supply chains and local labor demand: evidence from 100 million posted jobs in China By Fang, Hamming; Ge, Chunmian; Hwang, Hanwei; Li, Hongbin
  2. The impact of Chinese FDI in Africa: evidence from Ethiopia By Crescenzi, Riccardo; Limodio, Nicola
  3. Consumption Vouchers during COVID-19: Evidence from E-commerce By Wu, Di; Nair, Harikesh S.; Geng, Tong
  4. Poverty in China since 1950: A Counterfactual Perspective By Martin Ravallion
  5. Trade Liberalization, Input Intermediaries and Firm Productivity: Evidence from China By Fabrice Defever; Michele Imbruno; Richard Kneller
  6. Sweet Unbinding: Sugarcane Cultivation and the Demise of Foot-Binding By Cheng, Nora; Fan, Elliott; Wu, Tsong-Min
  7. Does the Rise of China Lead to the Fall of European Welfare States? By Barth, Erling; Finseraas, Henning; Kjelsrud, Anders; Moene, Karl Ove
  8. Pandemic Economics and the Transformation of Health Policy By Chen, Xi; Fan, Annie

  1. By: Fang, Hamming; Ge, Chunmian; Hwang, Hanwei; Li, Hongbin
    Abstract: This paper studies how the COVID-19 pandemic has affected labor demand, using over 100 million posted jobs on one of the largest online platforms in China. Our data reveal that the number of newly posted jobs within the first 14 weeks after the Wuhan lockdown on January 23, 2020, was about 31% lower than that of comparable periods in 2018 and 2019. We show that, via the global supply chain, COVID-19 cases abroad and pandemic-control policies by foreign governments reduced new-job creation in China by 11.7%. We also find that firms most exposed to international trade outperformed other firms at the beginning of the pandemic but underperformed during the recovery as the virus spread throughout the world.
    Keywords: Covid-19; coronavirus; labor demand; global supply chains; trade; China; employment
    JEL: R14 J01
    Date: 2020–11
  2. By: Crescenzi, Riccardo; Limodio, Nicola
    Abstract: We exploit exogenous variation in China’s export taxes to investigate the impact of Chinese foreign direct investment (FDI) in Ethiopia. Higher sector-specific export taxes in China lead to more Chinese FDI in Ethiopian districts specialized in those sectors and generate highly heterogeneous effects. Domestic firms competing with Chinese FDI reduce their sales, investment, inputs and prices, while firms in upstream and downstream sectors expand. We build a 20-year district panel of night lights and observe that Chinese FDI leads to no instantaneous impact on local growth, but significant and persistently positive effects after 6-12 years.
    Keywords: foreign direct investment; domestic investment; growth; 639633-MASSIVE-ERC2014-STG
    JEL: F23 O16 O47
    Date: 2021–01–01
  3. By: Wu, Di ( American Technologies Corporation); Nair, Harikesh S. (Stanford U); Geng, Tong ( American Technologies Corporation)
    Abstract: As households reduce discretionary spending in response to the COVID-19 pandemic, concerns are high that a resulting fall in aggregate demand can lead to a lasting recession post-COVID-19. Consequently, policies aimed at stimulating consumer spending are of key interest to governments working to mitigate the economic costs of the pandemic. While some governments have relied on direct household cash transfers, others have used consumption vouchers, which are cash discounts for purchases of goods. Compared to cash, which can be saved, consumption vouchers expire if not utilized within a deadline; are available only if utilized for targeted goods; and as such, have the potential to be more efficacious at stimulating spending. We evaluate consumption vouchers leveraging randomized controlled experiments implemented at, a large e-commerce platform based in China. The scale of the experimentation--comprising about 110 million users--allow us to causally evaluate a range of vouchers on their digital distribution, targetability, money value and contractual restrictions. We find that the design of the vouchers is key to their efficacy, and that best designed vouchers stimulate incremental spending of about 2X the expenditure incurred on the voucher. These results can help drive public policy and also underscore the value of distribution, transaction and testing of vouchers via digital platforms such as e-commerce, making them private sector facilitators of public policy goals.
    JEL: D12 L81 M31
    Date: 2020–08
  4. By: Martin Ravallion
    Abstract: The other side of the coin to post-reform success is often pre-reform failure, and the policy lessons are found on both sides. The paper estimates how much of China’s poverty rate around 1980—near the outset of Deng Xiaoping’s pro-market reforms—is attributable to the prior Maoist regime. Based on the history, it is argued that South Korea and Taiwan provide a relevant counterfactual. Then a difference-in-difference estimate using historical data indicates that about two thirds of China’s poverty in 1980 is attributed to the impact of the Maoist path since 1950. Further checks and tests suggest that (if anything) this is likely to be an underestimate. It took 10-20 years for China’s post-reform economy to make up the lost ground. The impact of the Maoist path had begun to fade in the 1970s, and half or more of the catch-up was in period up to 1990, under Deng’s rule.
    JEL: I32 N35 O53
    Date: 2021–01
  5. By: Fabrice Defever; Michele Imbruno; Richard Kneller
    Abstract: We investigate theoretically and empirically the role of wholesalers in mediating the productivity effects of trade liberalization. Intermediaries provide indirect access to foreign produced inputs. The productivity effects of input tariff cuts on firms that do not directly import therefore depends on the extent that wholesalers are a feature of input supply within an industry. Using firm level data from China, we document that wholesalers play no such role for direct importers. However, other firms experience productivity gains from reducing input tariffs if trade intermediation of foreign inputs within their sector is high. They suffer efficiency losses otherwise.
    Keywords: firm heterogeneity, trade liberalization, intermediate inputs, productivity, intermediaries, China
    JEL: F12 F13
    Date: 2019–12
  6. By: Cheng, Nora (National Taiwan University); Fan, Elliott (National Taiwan University); Wu, Tsong-Min (National Taiwan University)
    Abstract: This study investigates the sudden disappearance of foot-binding, a costly custom practiced for centuries in China and Taiwan prior to its demise. We estimate the numbers of women who unbound their feet in response to the rapid growth of the sugarcane cultivation in Taiwan in the early 20th century, growth which boosted the demand for female labor relative to male labor. Cross-township variations based upon multiple history datasets indicate that cane cultivation had a strong and robust effect on unbinding. The IV estimations utilizing cane railroads – lines built exclusively for cane transportation – support a causal interpretation of the estimated effect. This finding implies that a change in gender-specific labor productivity can help eliminate costly norms against women, and it also provides additional support for the argument that foot-binding was incentivized by economic motives. We also present evidence lending credit for the conventional hypothesis of foot-binding as a form of marriage competition.
    Keywords: foot-binding, social norms, gender roles, sugarcane
    JEL: J16 N35 Z13
    Date: 2021–01
  7. 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: Have recent trends in globalization changed the positive link between trade openness and social insurance? The consensus view - that voters want better social insurance against income loss the more open the economy - is seemingly contested by the rise of populism and the China shock. We present a theoretical framework of risk and income effects of globalization that captures the conventional view, but also shows when it will be modified: When the income effect is negative, the political support for social insurance can decline in spite of the risk effect. We construct an empirical measure of welfare state support across European regions and leverage the rapid integration of China into the world economy to show that higher import competition reduces the support for social insurance. Consistent with our framework, we decompose the overall effect of the shock into a (weak) positive risk effect and a (strong) negative income effect.
    Keywords: regional labor demand, welfare state support, social insurance, China shock, trade exposure
    JEL: J21 J23 H55 F16 F6
    Date: 2021–01
  8. By: Chen, Xi (Yale University); Fan, Annie (China Health Policy and Management Society)
    Abstract: The Coronavirus Disease 2019 (COVID-19) pandemic is bringing about once-in-a-century changes to human society. This article summarizes key characteristics of the COVID-19 pandemic that should be incorporated in economics and health policy analyses. We then review the literature on the importance of public health measures, including taking early, targeted, and coordinated actions, enhancing social safety nets for vulnerable populations, and strengthening public communications. In the long term, addressing misallocation of health resources and improving health governance are critical. Drawing on evidence from past and present epidemics as well as comparing cross-country variations in their responses to the current public health emergency, we navigate long-awaited health reforms in areas that help optimize epidemics response and realign incentives of the major players in the health sector in preparation for the next pandemic.
    Keywords: COVID-19, pandemic, healthcare reform, health governance, global health policy
    JEL: I18 J24 H12 P41 H51
    Date: 2021–01

This nep-cna issue is ©2021 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.