nep-cna New Economics Papers
on China
Issue of 2021‒08‒09
nine papers chosen by
Zheng Fang
Ohio State University

  1. The Impact of Foreign Direct Investment on Innovation: Evidence from Patent Filings and Citations in China By Chen, Yongmin; Jiang, Haiwei; Liang, Yousha; Pan, Shiyuan
  2. Economic and Emission Impact of Australia–China Trade Disruption: Implication for Regional Economic Integration By Xunpeng Shi; Tsun Se Cheong; Michael Zhou
  3. Increased trade with China and Eastern Europe hardly affects Dutch workers By Rob Euwals; Harro van Heuvelen; Gerdien Meijerink; Jan Möhlmann; Simon Rabaté
  4. Horizontal Foreclosure with Vertically Shared Large Value: Qualcomm's License Fee Contracts and Anti-Monopoly Decisions by Government in China's Smartphone Integrated Circuits Market, 2011-2014 By WATANABE Mariko
  5. Latin America and the Caribbean exports to the United States: Analysis of the competition with China and other regions at product level, 2002-2018 By Artecona, Raquel; Perrotti, Daniel E.
  6. Fundamentals vs. policies: can the US dollar’s dominance in global trade be dented? By Georgiadis, Georgios; Le Mezo, Helena; Mehl, Arnaud; Tille, Cédric
  7. Price Levels, Size, Distribution and Growth of the World Economy: Insights from recent International Comparisons of Prices and Real Product By Alan Heston; D.S Prasada Rao
  8. Valuing Elementary Schools: Evidence from Public School Acquisitions in Beijing By Su, Xuejuan; Yu, Huayi
  9. Does the Frequency of Reminders Matter for their Effectiveness? A Randomized Controlled Trial By Antinyan, Armenak; Asatryan, Zareh; Dai, Zhixin; Wang, Kezhi

  1. By: Chen, Yongmin; Jiang, Haiwei; Liang, Yousha; Pan, Shiyuan
    Abstract: This paper studies how foreign direct investment (FDI) affects innovation in the host country, using matched firm-level patent data of Chinese firms. The data contain multidimensional information about patent counts and citations which, together with an identification strategy based on Lu et al. (2017), allows us to measure innovation comprehensively and to uncover the causal relationship. Our empirical analysis shows that FDI has positive intra-industry effects on the quantity and quality of innovation by Chinese firms. We show that these positive effects are driven by increases in competition, rather than by knowledge spillover from FDI which is measured by patent citations between domestic firms and foreign invested enterprises (FIEs). We further investigate the inter-industry effects of FDI and find that FDI has positive vertical effects on innovation in upstream sectors.
    Keywords: FDI; Innovation; Patent; Competition; Spillover
    JEL: F2 L5 O3
    Date: 2021–07–26
  2. By: Xunpeng Shi (Australia–China Relations Institute, University of Technology Sydney, Australia); Tsun Se Cheong (Department of Economics and Finance, The Hang Seng University of Hong Kong, Hong Kong); Michael Zhou (Australia–China Relations Institute, University of Technology Sydney, Australia)
    Abstract: This study examines the debates on supply chain resilience and the economic and emissions impact of supply chain rerouting using Australia and China trade as an example. The estimations demonstrate that, in both export and import cases, a trade embargo between Australia and China, despite being compensated by alternative supply chains, will cause gross domestic product loss and emissions increases for both countries. Moreover, even if all other countries gain from the markets left by China, many of them suffer from overall gross domestic product loss and emissions increase. The findings that ASEAN and China may also suffer from an Australia–China trade embargo, despite a gain in trade volume, suggests that no country should add fuel to the fire. The results suggest that countries need to defend rules-based trading regimes and continuously promote regional economic integration.
    Keywords: COVID-19; supply chain; global value chain; economic integration; Australia; China
    JEL: F18 Q56
    Date: 2021–07–07
  3. By: Rob Euwals (CPB Netherlands Bureau for Economic Policy Analysis); Harro van Heuvelen (CPB Netherlands Bureau for Economic Policy Analysis); Gerdien Meijerink (CPB Netherlands Bureau for Economic Policy Analysis); Jan Möhlmann (CPB Netherlands Bureau for Economic Policy Analysis); Simon Rabaté (CPB Netherlands Bureau for Economic Policy Analysis)
    Abstract: Contrary to other studies, we find no robust effect of an increase in trade with China and Central European (CEE) countries on local employment, wages and inequality in the Netherlands. If there is an effect, it is small, with positive effects of increased exports counteracting the negative effects of increased imports. One of the reasons why we find different results for the Netherlands is the fact that the Dutch manufacturing industry was already undergoing changes well before the emergence of China and the CEE countries and became less sensitive to import competition from China or the CEE countries. In addition, the Netherlands has collective wage negotiations, which may help to explain that we do not find any effects on wages. While the effect of increased trade with China and the CEE countries on manufacturing jobs is limited, it can create uncertainty for workers. The negative effect of import competition and the positive impact of export opportunities on manufacturing jobs also point to adjustments across industries and regions. Transitioning workers to new types of work can be difficult for these workers, as they are (temporarily) unemployed and may need to move to other regions.
    JEL: F16 J31 R11
    Date: 2021–07
  4. By: WATANABE Mariko
    Abstract: In 2015, the Chinese competition authority announced a sanction against Qualcomm, a leading semiconductor manufacturer in the United States. This study investigates whether Qualcomm's pricing strategy limited competition with its rivals. The study estimated two demand functions for handsets and integrated circuit (IC) chips, as well as the marginal cost of smartphones. It then factored in the price of IC chips. Based on the estimated prices of chips and demand parameters, the study identified the competitive relationship regarding the IC chips at the product level. The following were the results of the analysis; the cost of smartphone handsets with Qualcomm's chipset installed is lower than those of rival products. Meanwhile, Qualcomm's chip generates a higher willingness to pay (WTP) by engaging in transactions with increasing numbers of handset assemblers. Qualcomm did not commit vertical foreclosures since its products are not exclusive but the company expanded their customer bases and contributed to the improvement of their customers' ability to set higher WTP and higher prices for their products. However, the company committed horizontal foreclosures, as evident from the pricing of its licensing, where Qualcomm limits competition by raising the cost for rivals; this observation is consistent with the authority's determination. This form of anti-competitive conduct is most severe in the CDMA2000 market in China.
    Date: 2021–07
  5. By: Artecona, Raquel; Perrotti, Daniel E.
    Abstract: This research looks at Latin America and the Caribbean exports trajectory in the United States market in the almost two decades that followed China's accession to the WTO and compares it with that followed by China and other regions. The analysis exploits product-level United States imports data collected from the United States Census Bureau. The dataset contains information on more than 30.000 products per year for almost 200 countries.
    Date: 2021–07–13
  6. By: Georgiadis, Georgios; Le Mezo, Helena; Mehl, Arnaud; Tille, Cédric
    Abstract: The US dollar plays a dominant role in the invoicing of international trade, albeit not an exclusive one as more than half of global trade is invoiced in other currencies. Of particular interest are the euro, with a large role, and the renminbi, with a rising role. These two currencies are well suited to contrast the roles of economic fundamentals and policies, as European policy makers have taken a neutral stance in contrast to the promotion of the international role of the renminbi by the Chinese authorities. We assess the drivers of invoicing using the most recent and comprehensive data set for 115 countries over 1999-2019. We find that standard mechanisms that foster use of a large economy's currency predicted by theory – i.e. strategic complementarities in price setting and integration in cross-border value chains – underpin use of the dollar and the euro for trade with the United States and the euro area. These mechanisms also support the role of the dollar, but not the euro, in trade between non-US and non-euro area countries, making the dollar the globally dominant invoicing currency. Fundamentals and policies have played a contrasted role for the use of the renminbi. We find that China's integration into global trade has further strengthened the dominant status of the dollar at the expense of the euro. At the same time, the establishment of currency swap lines by the People's Bank of China has been associated with increases in renminbi invoicing, with an adverse effect on dollar use that is larger than for the euro. JEL Classification: F14, F31, F44
    Keywords: dominant currency paradigm, international trade invoicing, markets vs. policies
    Date: 2021–07
  7. By: Alan Heston (University of Pennsylvania); D.S Prasada Rao (The University of Queensland, Australia)
    Abstract: We highlight and extend findings of the recent International Comparison Program (ICP) for the years 2011 and 2017 that provides PPP based national accounts for 173 countries. The growth and distribution of world GDP are examined and some convergence is found. The ICP price level story is consistent with that of previous ICP rounds of the 1970s. Using new methods, international prices were compared between the 1975 ICP and 2017. Updating the results to 2019, it is clear China is number one and that gains of the lower income countries are another casualty of covid-19.
    Keywords: Purchasing power parities; price levels; global growth; inequality; price structures
    JEL: E01 E31 I31 O57
    Date: 2021–07
  8. By: Su, Xuejuan (University of Alberta, Department of Economics); Yu, Huayi (Renmin University of China)
    Abstract: We utilize government-sanctioned public school acquisitions in Beijing to estimate individuals’ willingness to pay for enrollment eligibility in sought after elementary schools. The spatial and temporal variation in these acquisitions allows us to estimate a hedonic pricing model in the differencein-difference framework. Comparing regular elementary schools that are acquired by sought-after schools to those that are not, we find an average price increase of 7% for apartments in the catchment areas of acquired schools. This percentage increase is both statistically and economically significant, and it does not vary by the size of the apartment. We also find heterogeneous price effects for different types of acquisitions, defined by their post-acquisition organizational structures, but these differences are not statistically significant.
    Keywords: school acquisition; public schools; housing price; hedonic model; difference-in-difference
    JEL: H75 I28 R21
    Date: 2021–07–26
  9. By: Antinyan, Armenak (Cardiff Business School, Cardiff University.); Asatryan, Zareh (ZEW Mannheim); Dai, Zhixin (China Financial Policy Research Center, School of Finance, Renmin University of China); Wang, Kezhi (Shanghai Municipal Tax Service, State Taxation Administration)
    Abstract: We assess the impact of reminder frequency on the probability of paying overdue property taxes in a randomized controlled trial in China. One reminder a week (sent as a text message) considerably increases the probability of tax compliance and results in tangible fiscal gains compared to a one-off reminder. However, increasing the frequency of reminders to two text messages a week diminishes their effectiveness. The takeaway of our study is that frequent reminders are an important trigger for human behavior, nonetheless, beyond a certain frequency the effectiveness of additional reminders seems to decline.
    Keywords: Reminder Frequency; Randomized Controlled Trial; Tax Compliance
    JEL: C93 H24 H26
    Date: 2021–07

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