nep-cna New Economics Papers
on China
Issue of 2021‒09‒06
five papers chosen by
Zheng Fang
Ohio State University

  1. Opposing firm-level Responses to the China Shock: Horizontal Competition Versus Vertical Relationships? By Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc Melitz; Thomas Zuber
  2. Cross-functional Incentives for Purchasing-Logistics and Supplier Integration: With Evidence from China By Pfohl, Hans-Christian; Moraitakis, Nikos
  3. Is that Really a Kuznets Curve? Turning Points for Income Inequality in China By Martin Ravallion; Shaohua Chen
  4. BITs with a Bite? EU Home Investment Effects of EU-China Bilateral Investment Treaties By Kuusi, Tero; Ali-Yrkkö, Jyrki
  5. Modeling the Social Economy of Pandemics in China: An Input-Output Approach By Khan, Haider; Szymanski-Burgos, Adam

  1. By: Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc Melitz; Thomas Zuber
    Abstract: We decompose the “China shock” into two components that induce different adjustments for firms exposed to Chinese exports: a horizontal shock affecting firms selling goods that compete with similar imported Chinese goods, and a vertical shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm-level, we show that the horizontal shock is detrimental to firms’ sales, employment, and innovation. Moreover, this negative impact is concentrated on low-productivity firms. By contrast, we find a positive effect - although often not significant - of the vertical shock on firms’ sales, employment, and innovation.
    JEL: F14 F16 F6 O31
    Date: 2021–08
  2. By: Pfohl, Hans-Christian; Moraitakis, Nikos
    Date: 2021–08–03
  3. By: Martin Ravallion; Shaohua Chen
    Abstract: The path of income inequality in post-reform China has been widely interpreted as “China’s Kuznets curve.” We show that the Kuznets growth model of structural transformation in a dual economy, alongside population urbanization, has little explanatory power for our new series of inequality measures back to 1981. Our simulations tracking the partial “Kuznets derivative” of inequality with respect to urban population share yield virtually no Kuznets curve. More plausible explanations for the inequality turning points relate to determinants of the gap between urban and rural mean incomes, including multiple agrarian policy reforms. Our findings warn against any presumption that the Kuznets process will assure that China has passed its time of rising inequality. More generally, our findings cast doubt on past arguments that economic growth through structural transformation in poor countries is necessarily inequality increasing, or that a turning point will eventually be reached after which that growth will be inequality decreasing.
    JEL: D31 I32 O15
    Date: 2021–08
  4. By: Kuusi, Tero; Ali-Yrkkö, Jyrki
    Abstract: Abstract In this paper, we study the impacts of bilateral investment treaties (BITs) between the EU countries and China on EU home investments. We consider BITs as “treatments” that provide further access to global value chains (GVCs). We identify the causal impacts of the BITs on the relationship between home investments and the deepening of GVCs, with identification arising from exogenous, pre-treaty variation in the exposure to the Chinese value chains. We show that strong pre-treaty exposure to the Chinese value chains has led to a further strengthening of the Chinese upstream linkages and a decreasing impact on domestic capital growth in the EU. it seems that the effects of the BITs are strongly felt in growing industries where there have been high capital growth rates, most pronouncedly in the manufacture of computer, electronic, and optical products, and pharmaceuticals. On the other hand, it is also felt in some industries that have had laggard capital growth rates, such as the textile industry. However, it appears that the effect has been heterogeneous, concentrating on countries with low productivity, as relative to the global industry averages. Among the exposed industries with a high pre-treaty fraction of Chinese production, the high-productivity ones tend to increase their relative labor-productivity growth and value-added growth more after the signing of a treaty. The negative link between non-Chinese investments and the pre-treaty exposure also characterizes BITs with China and non-EU countries, but not BITs without China as a partner country.
    Keywords: Domestic investments, Foreign investments, Investment treaty, Overseas investments, Global value chain, Bilateral treaties
    JEL: F21 F23 F13 F62 L24
    Date: 2021–08–30
  5. By: Khan, Haider; Szymanski-Burgos, Adam
    Abstract: COVID-19 impacts have exacerbated socioeconomic inequalities and the threat of hunger and absolute poverty for vulnerable populations globally. China, as the most important Southern engine of growth, is a complex case. In taking countervailing measures for economic recovery and public health protection, the Chinese case is interesting for several reasons. First, from a public health perspective, what was distinctive about the Chinese policy and what have been the consequences so far? Second, what economic policy measures have led to a V-shaped recovery? Finally, what is the further prognosis for the Chinese Economy for the next few years? Our analysis highlights the salience of considering development and the economic and social shocks of pandemics from a Socially Embedded Intersectional Approach (SEICA) perspective. Using an economy-wide modelling methodology, we are able to draw conclusions that may be relevant for the case of other economies in various stages of development, particularly those with sharply uneven development patterns and large rural populations.
    Keywords: Input-output; China; Development; Covid-19; Socially Embedded Intersectional Approach
    JEL: A10 O2 P0 R15
    Date: 2021–08

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