nep-cna New Economics Papers
on China
Issue of 2021‒07‒19
ten papers chosen by
Zheng Fang
Ohio State University

  1. Did the U.S. Bilateral Goods Deficit With China Increase or Decrease During the US-China Trade Conflict? By Hunter L. Clark; Anna Wong
  2. Decrypting China's self-image as "great power" By Noesselt, Nele; Eckstein, Tanja; Priupolina, Elizaveta
  3. Early-Life Famine Exposure, Hunger Recall and Later-Life Health By Deng, Zichen; Lindeboom, Maarten
  4. Effects of Social Networks on Job Attainment and Match Quality: Evidence from the China Labor-Force Dynamics Survey By Nie, Peng; Yan, Weibo
  5. Can China blunt the impact of new US economic sanctions? By Mary E. Lovely; Jeffrey J. Schott
  6. Nine blind men and the PBoC By Makram El-Shagi; Yishuo Ma
  7. The Reallocation Effect of Emissions Cap-and-Trade: Evidence from China By Kwon, Ohyun; Zhao, Hao; Zhao, Min Qiang
  8. Trade Promotion from Thailand to China As A Result Of a New Train Route By Siyuan wei
  9. Improving China's participation in resolving developing-country debt problems By Martin Chorzempa; Adnan Mazarei
  10. Physician-Induced Demand: Evidence from China’s Drug Price Zero-Markup Policy By Hanming Fang; Xiaoyan Lei; Julie Shi; Xuejie Yi

  1. By: Hunter L. Clark; Anna Wong
    Abstract: The United States' bilateral goods trade deficit with China appeared to have narrowed substantially since the escalation of the U.S.-China trade conflict in 2018, or so U.S. trade data suggest. By contrast, the Chinese data tell a much different story: the deficit, as implied by China's bilateral surplus, nearly reached historical highs by the end of 2020.
    Date: 2021–06–21
  2. By: Noesselt, Nele; Eckstein, Tanja; Priupolina, Elizaveta
    Abstract: This paper explores the visual representation of the Chinese concept of daguo (literally: great power / major power) based on the 2017 CCTV documentary Daguo Waijiao 大国外交 (Major Power Diplomacy). Drawing on a combination of select streams of National Role Theory (NRT) and Social Identity Theory (SIT), the paper assesses the Chinese role claims and visualized role performance vis-à-vis two significant others, the Soviet Union / Russia and the US. The coding of select cases of the PRC's daguo role enactment sheds light on the conceptual, socio-psychological underpinnings of China's self-identity and global status reflections in the 21st century and hence offers some rare insight into the black box of the hermetically closed Chinese party-state.
    Keywords: China,daguo,national role theory,Russia,social identity theory,visualized narratives,US
    Date: 2021
  3. By: Deng, Zichen (Norwegian School of Economics); Lindeboom, Maarten (Vrije Universiteit Amsterdam)
    Abstract: We use newly collected individual-level hunger recall information from the China Family Panel Survey to estimate the causal effect of undernourishment on later-life health. We develop a Two-Sample Instrumental Variable (TSIV) estimator that can deal with heterogeneous samples. We find a non-linear relationship between mortality rates, a commonly used famine indicator, and the individual hunger experience. The nonlinearity in famine exposure may explain the variation in the famine's effect on later life health found in previous studies. We also find that exposure to famine-induced hunger early in life leads to worse health among females fifty years later. This effect is much larger than the reduced-form effect found in previous studies. For males, we find no impact.
    Keywords: famine, hunger, developmental origins, two-sample instrumental variable
    JEL: I12 J11 C21 C26
    Date: 2021–06
  4. By: Nie, Peng (Xi’an Jiaotong University); Yan, Weibo (Zhongnan University of Economics and Law)
    Abstract: Using nationally representative data from the 2012 and 2014 China Labor-force Dynamics Survey, this paper investigates the effects of network types (kinship/non-kinship) and network resources (information/influence) on job attainment and match quality in China. We find a wage premium obtained through both kinship and non- kinship networks but shorter job duration only in jobs obtained through non-kinship networks. In regards to the different types of networks, resources embedded in the networks are not important. This conundrum can be reconciled if we take the structure of the network and the type of work unit into account. Kinship networks are more pervasive in the public sector, with better earnings and stable job positions. Non-kinship networks bring about a wage premium but lead to job dissatisfaction, especially in regards to promotion opportunities. This paper highlights the structure of the job market when studying networks and sheds new light on the types of networks that really matter in job attainment and those that result in the possible loss of match quality.
    Keywords: network types, network resources, job attainment, match quality
    JEL: J30 J31 J64
    Date: 2021–06
  5. By: Mary E. Lovely (Peterson Institute for International Economics); Jeffrey J. Schott (Peterson Institute for International Economics)
    Abstract: Successive US administrations have embraced economic sanctions, especially financial sanctions, to punish bad actors in Iran, North Korea, Russia, and other hostile countries. Often, US officials leverage the economic pressure on their targets by forcing individuals and companies outside the United States to stop transacting with those on the US sanctions list or face severe penalties. European governments have instituted blocking regulations to prohibit compliance with such extraterritorial US sanctions against their nationals, but with limited success. Most companies forsake business in countries targeted by US sanctions rather than risk losing access to the US market. China is now adopting new blocking rules to nullify the effect of foreign sanctions or other measures “unjustifiably applied” against Chinese nationals. The new rules allow Chinese government officials to issue orders prohibiting Chinese companies from complying with foreign sanctions, essentially forcing them to choose between access to the Chinese market and access to the US market, with penalties possible in either direction. For decades weak foreign pushback allowed unilateral sanctions to remain a relatively powerful tool of US economic statecraft, but the Chinese blocking rules signal a major change to the status quo. The authors argue that multinational firms operating abroad are increasingly at risk of being caught firmly between US sanctions, including export controls, and Chinese countermeasures. These pressures add to growing US-China trade frictions already pushing the restructuring of global supply chains.
    Date: 2021–06
  6. By: Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Yishuo Ma (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)
    Abstract: Over the past decade, several dozen papers have been written that identify the People’s Bank of China’s monetary policy shocks. Yet, what often seems like minor differences in measurements of monetary policy and identifying assumptions yield vastly different implied shocks. In this paper, we pitch 20 shock time series from the literature against each other in a horse race. We use a local projections framework to produce impulse responses based on all shocks for production, prices, money and interest rates and use them to assess the economic plausibility of the competing results. Our results confirm the frequently mentioned relevance of monetary aggregates for Chinese monetary policy but also point the importance of using forward looking policy reaction functions (or account for forward looking variables in a VAR framework) when identifying monetary policy shocks.
    Keywords: China, monetary policy shocks, local projections, meta study
    JEL: C83 E52
    Date: 2021–07
  7. By: Kwon, Ohyun (Drexel University); Zhao, Hao (Chapman University); Zhao, Min Qiang (Xiamen University)
    Abstract: Under a heterogeneous firm framework, this paper demonstrates a novel channel through which emissions cap-and-trade mitigates production-side distortion vis-à-vis an emissions cap. Specifically, a pro rata emissions cap across firms is excessively stringent for more productive firms, leading to negative reallocation in favor of less productive firms. Allowing firms to trade emission permits restores the efficiency loss via positive reallocation without increasing total emissions. Our empirical investigation that exploits the regional and temporal variation in the implementation of cap and cap-and-trade policies in China shows that the emission intensities of more productive firms declined and then increased relative to those of their less productive counterparts following the sequential implementation of emissions cap and cap-and-trade, confirming our key theoretical prediction. Provinces that implemented emissions cap-and-trade achieved greater output growth while being equally effective in curbing total emissions.
    Keywords: emissions cap-and-trade; heterogeneous firms; reallocative efficiency
    JEL: L51 Q53 Q58
    Date: 2021–06–21
  8. By: Siyuan wei (Naresuan University, Thailand Author-2-Name: Vatcharapol Sukhotu Author-2-Workplace-Name: Naresuan University 99, Moo.9, Thapo sub-district, Mueang district, Phitsanulok province 65000, Thailand Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - This paper aims to analyse the impact of the China-Laos railway on export trade from China to Thailand. The paper analyses the advantages and disadvantages of the new route and other routes base on driven factors, identifies what trade industry is suitable for this new route and provides some reference for Thai trade exporters. This will enable Thai export traders to understand the new transportation route formed by the railway and improve the trade volume and competitiveness of Thai products through this route. Methodology/Technique - Literature review method, secondary data method, in-depth interview method. Findings - It is found that the new route formed after the completion of the China-Laos railway has many advantages base on driven factors and many industries are suitable for the use of this new route. Novelty - Few people know much about the China-Laos railway, and even less about the analysis of its impact on Thailand's trade. The author's in-depth interview method allows him to get in touch with experts who are very relevant to the China-Laos railway, providing valuable insights. Type of Paper - Empirical.
    Keywords: Thai Products; Driving Factors; Route Selection; China-Laos Railway; In-depth Interviews; Secondary Data Method
    JEL: F16 F18 F19
    Date: 2021–06–30
  9. By: Martin Chorzempa (Peterson Institute for International Economics); Adnan Mazarei (Peterson Institute for International Economics)
    Abstract: The COVID-19 shock has exacerbated the struggles of many emerging-market and developing economies (EMDEs) to repay their external debt. One of the most urgent challenges relates to debt owed to China, whose lending spree under its Belt and Road Initiative and other programs has played an outsized role in what amounts to a crisis for many countries. The scope of the problem is striking. China is owed more than $100 billion, or 57 percent of all debt owed to official creditors by the countries that need help the most. China is not a member of the Paris Club of official creditors, which coordinates, within a multilateral framework, the resolution of general sovereign illiquidity or unsustainable external debt of EMDEs. There is an urgent need to put in place more effective, long-term solutions to help durably lower the risks of prolonged debt difficulties in EMDEs. These problems could be partly addressed by creating creditor committees to coordinate debt relief with China. The Group of Twenty (G20) has taken some steps to include creditor committees in the context of the Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI), but only for low-income countries that qualify for the DSSI and only for official creditors. To better address debt distress, it needs to extend the approach, especially to middle-income debtor countries.
    Date: 2021–05
  10. By: Hanming Fang; Xiaoyan Lei; Julie Shi; Xuejie Yi
    Abstract: We use a natural experiment in China's health care reform, in which the government mandated zero markups for drugs sold in public hospitals, to study physician-induced demand for medical care. We develop a theoretical model that robustly predicts that the drug price zero markup policy (ZMP) will lead to a reduction in the demand for drugs but an increase in the demand for non-drug services, only when the demands for drugs and non-drug services are at least partially physician induced. Our model also yields testable predictions of the impact of the ZMP regarding the equilibrium number of treated patients. Exploiting the staggered rollout of the ZMP and a unique claims data set, we find that, at the admission level, the reform decreases drug expenses by 63.4 log points (47.0 percent), but the reduction in drug expenses is almost fully substituted by the increases in expenses for non-drug services. Quantitatively similar results are also obtained at the physician and at the hospital levels. We also show that the ZMP reduces the number of patients in the treated hospitals, as predicted by the model, and that the reform has little impact on the quality of health care proxied by the readmission rate.
    JEL: I10 I11 I18
    Date: 2021–07

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