nep-cna New Economics Papers
on China
Issue of 2021‒09‒13
eighteen papers chosen by
Zheng Fang
Ohio State University

  1. Targeted Poverty Alleviation and Children's Academic Performance in China By Nong, Huifu; Zhang, Qing; Zhu, Hongjia; Zhu, Rong
  2. Educational Responses to Migration-Augmented Export Shocks: Evidence from China By Yao Pan; Jessica Leight
  3. Early-life Famine Exposure, Hunger Recall and Later-life Health By Zichen Deng; Maarten Lindeboom
  4. Energy and Economic Implications of Carbon Neutrality in China -- A Dynamic General Equilibrium Analysis By Shenghao Feng; Xiujian Peng; Philip Adams
  5. Increased trade with China and Eastern Europe hardly affects Dutch workers By Rob Euwals; Harro van Heuvelen; Gerdien Meijerink; Jan Möhlmann; Simon Rabaté
  6. College Expansion, Trade and Innovation: Evidence from China By Ma, Xiao
  7. Project Aid and Firm Performance By Silvia Marchesi; Tania Masi; Saumik Paul
  8. How China lends: A rare look into 100 debt contracts with foreign governments By Anna Gelpern; Sebastian Horn; Scott Morris; Brad Parks; Christoph Trebesch
  9. One Currency, Two Markets: China's Attempt to Internationalize the Renminbi By Edwin L.-C. Lai
  10. New Insight on Investment-Cash Flow Sensitivity By Sai Ding; Minjoo Kim; Xiao Zhang
  11. Role of Professionalism in Response to the COVID-19 Pandemic: Does a Public Health or Medical Background Help? By Li, Xun; Lai, Weizheng; Wan, Qianqian; Chen, Xi
  12. Heterogonous Buyers and Housing Transaction Prices By Qiulin Ke; Shijun Jia
  13. How COVID-19 medical supply shortages led to extraordinary trade and industrial policy By Chad P. Bown
  14. Collateral benefits? South Korean exports to the United States and the US-China trade war By Mary E. Lovely; David Xu; Yinhan Zhang
  15. The effect of live-streaming shopping on the consumer's perceived risk and purchase intention in China By Song, Chuling; Liu, Yu-li
  16. Chinese vs. US trade in an emerging country: the impact of trade openness in Chile By Sotiriou, Alexandra; Rodríguez-Pose, Andrés
  17. Corporate Actions and the Manipulation of Retail Investors in China: An Analysis of Stock Splits By Sheridan Titman; Chishen Wei. Wei; Bin Zhao
  18. Governance of Privacy Protection: How Laws Will Be Adopted to Address New Technologies? By Shi, Peilin; Winter, Jenifer Sunrise; Zhang, Bin

  1. By: Nong, Huifu (Guangdong University of Finance); Zhang, Qing (Hunan University); Zhu, Hongjia (Jinan University); Zhu, Rong (Flinders University)
    Abstract: This paper estimates the causal impact of China's targeted poverty alleviation program on the academic achievement of students from poor households. We use the longitudinal academic records of a cohort of students from all middle schools in a nationally designated poor county in China. Using the difference-in-differences approach, we show that targeted poverty alleviation improves the scholastic performance of girls and their achievement rank among peer students. However, we find no such empirical evidence for boys. Our findings suggest that the new anti-poverty program in China has the potential to ameliorate the intergenerational transmission of low socioeconomic status to girls by promoting their human capital accumulation.
    Keywords: targeted poverty alleviation, academic outcomes, middle school, China
    JEL: I21 I32 I38
    Date: 2021–08
  2. By: Yao Pan (George Washington University); Jessica Leight (International Food Policy Research Institute)
    Abstract: This paper analyzes the effects of positive shocks to export-oriented industries following China's accession to the World Trade Organization on human capital investment in urban and rural areas. Exploiting cross-county variations in the reduction in export tariff uncertainty both locally and at plausible migration destinations, we find that youth reaching matriculation age post-accession in counties experiencing a larger export shock show a lower probability of enrolling in high school. In urban areas, this effect is driven by local shocks, while in rural areas, it is primarily driven by shocks at migration destinations. Urban youth show evidence of a deterioration in labor market outcomes linked to declining matriculation rates, while there is no evidence of significant labor market effects for rural youth.
    Keywords: Export Shock, Human Capital Attainment, Urban-rural Inequality, China
    JEL: F14 F16 J24 O15 O18 O19
    Date: 2021
  3. By: Zichen Deng (Norwegian School of Economics); Maarten Lindeboom (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 varia
    JEL: I12 J11 C21 C26
    Date: 2021–09
  4. By: Shenghao Feng; Xiujian Peng; Philip Adams
    Abstract: This study investigates the energy and economic implications of China's carbon neutrality path over the period of 2020 to 2060. We use a recursive dynamic CGE model, CHIANGEM-E, to conduct the analysis. Notable advancements from the original CHINAGEM model include: 1) detailed energy sector disaggregation, 2) a new electricity generation nesting structure, and 3) carbon capture and storage (CCS) mechanisms. Our simulation shows that to achieve carbon neutrality in 2060, China needs change its energy consumption structure significantly. Coal and gas consumption will decline dramatically while the demand for renewable energy, especially demand for solar and wind energy will increase considerably. However, the negative effects of the dramatic carbon emission reduction on China's macro economy is limited. In particular, by 2060 real GDP will be 1.36 percent lower in carbon neutrality scenario (CNS) than in the base case scenario. The carbon price level will be 1614 CNY per tonne of carbon dioxide in 2060 in CNS. The substantial changes in China's energy structure imply significant changes to its fossil fuel imports. China's import demand for coal, crude oil and gas will all fall sharply. By 2060, China's imports of coal and gas will be more than 60% lower and its oil imports will be around 50% lower than their respective base-case levels.
    Keywords: Carbon neutrality, economic implication, energy consumption, China, CGE
    JEL: C68 Q4
    Date: 2021–08
  5. 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
  6. By: Ma, Xiao
    Abstract: This paper examines how China’s expansion of college education since 1999 affects innovation and exports’ skill content. I develop a two-country spatial equilibrium model, featuring skill intensity differences across industries and heterogeneous firms’ innovation and exporting choices. I empirically validate my model mechanisms about how the college expansion affects innovation and exports, exploiting differential supply shocks of college-educated workers across regions due to historical college endowments. I apply the resulting reduced-form estimates in the calibration to discipline key elasticities that determine the magnitude of export expansion. Under different assumptions about firm entry, I find that China’s college expansion explained 40–70% of increases in China’s manufacturing R&D intensity between 2003–2018 and triggered export skill upgrading. I also find that trade openness amplified the impact of this education policy change on China’s innovation and production.
    Keywords: College Expansion, Trade, Innovation
    JEL: F16 I25 O32
    Date: 2020–11
  7. By: Silvia Marchesi; Tania Masi; Saumik Paul
    Abstract: This paper evaluates the effect of development project aid from the World Bank and China on firms' Â’sales growth, using a large dataset of 110864 firms, spanning 121 countries between 2001 and 2016. We find that, contrary to the World Bank, Chinese ODA projects increase, on average, firm sales and, compared to sector-specific, Chinese region-speciÂ…c aid positively affect firm performance. Finally, we show that the positive effect of Chinese aid is stronger for firms lacking transport infrastructure (and with better electricity provision), suggesting that aid may improve firm performance by releasing their infrastructure constraints.
    Keywords: Aid effectiveness, World Bank projects, Chinese projects, Geo-coding, Firm growth.
    JEL: F35 O19 E24 E25
    Date: 2021–09
  8. By: Anna Gelpern (Peterson Institute for International Economics); Sebastian Horn (Kiel Institute for the World Economy); Scott Morris (Center for Global Development); Brad Parks (AidData; Center for Global Development); Christoph Trebesch (University of Kiel; Kiel Institute for the World Economy)
    Abstract: China is the world’s largest official creditor, but basic facts are lacking about the terms and conditions of its lending. Very few contracts between Chinese lenders and their government borrowers have ever been published or studied. This paper is the first systematic analysis of the legal terms of China’s foreign lending. The authors collect and analyze 100 contracts between Chinese state-owned entities and government borrowers in 24 developing countries in Africa, Asia, Eastern Europe, Latin America, and Oceania, and compare them with those of other bilateral, multilateral, and commercial creditors. Three main insights emerge. First, the Chinese contracts contain unusual confidentiality clauses that bar borrowers from revealing the terms or even the existence of the debt. Second, Chinese lenders seek advantage over other creditors, using collateral arrangements such as lender-controlled revenue accounts and promises to keep the debt out of collective restructuring (“no Paris Club†clauses). Third, cancellation, acceleration, and stabilization clauses in Chinese contracts potentially allow the lenders to influence debtors’ domestic and foreign policies. Even if these terms were unenforceable in court, the mix of confidentiality, seniority, and policy influence could limit the sovereign debtor’s crisis management options and complicate debt renegotiation. Overall, the contracts use creative design to manage credit risks and overcome enforcement hurdles, presenting China as a muscular and commercially savvy lender to the developing world.
    Keywords: China, International Lending, Foreign Aid, Debt Management, Sovereign Debt, Contract Law, Debt Restructuring, Debt Transparency
    JEL: F35 F34 H63 K12 K22 K33 P33
    Date: 2021–05
  9. By: Edwin L.-C. Lai (Professor of Economics, Hong Kong University of Science and Technology, Director of the Center for Economic Development Technology.Author-Email:
    Abstract: The global financial crisis in 2007-2009 caused a shortage of the US dollar all over the world. This sounded an alarm, reminding China that the dollar-based international monetary system (IMS) could be quite unreliable. In response, China began to accelerate the pace of RMB internationalization so as to eventually escape from the "dollar trap" i.e. become independent of the US, the USD, and an international monetary system (IMS) dominated by the USD. In order for the RMB to be a significant international currency, it has to be largely convertible in the capital account and China's financial market must be sufficiently deep, broad and liquid.
    Date: 2021–09
  10. By: Sai Ding; Minjoo Kim; Xiao Zhang
    Abstract: The investment-cash flow sensitivity (ICFS) of Chinese listed firms declined during the global financial crisis, which contradicts the conventional financial constraint interpretation of ICFS. We analyze this interesting phenomenon by examining how cash flow uncertainty affects the ways to finance investment in China. We find that ICFS reveals not only the information between investment and cash flow but also the relationship between internal funds and external financing. When internal funds and external financing are complements, cash flow uncertainty decreases ICFS much more than when internal funds and external financing are substitutes. Our results remain robust when we consider the problem of endogeneity and use alternative measures of key variables. Our story is also supported by the sample of US firms, indicating that our new interpretation of ICFS based on cash flow uncertainty and the relationship between internal funds and external financing can apply to the general literature of corporate finance.
    Keywords: cash flow uncertainty, financial constraint, debt, cash flow, investment, China
    JEL: E22 G31 O16
    Date: 2021–09
  11. By: Li, Xun (Wuhan University); Lai, Weizheng (University of Maryland); Wan, Qianqian (Wuhan University); Chen, Xi (Yale University)
    Abstract: In response to the outbreak of coronavirus disease 2019 (COVID-19), there have been substantial variations in policy response and performance for disease control and prevention within and across nations. It remains unclear to what extent these variations may be explained by bureaucrats' professionalism, as measured by their educational background or work experience in public health or medicine. To investigate the effects of officials' professionalism on their response to and performance in fighting the COVID-19 pandemic, we collect information from the résumés of government and Party officials in 294 Chinese cities, and integrate this information with other data sources, including weather conditions, city characteristics, COVID-19-related policy measures, and health outcomes. We show that, on average, cities whose top officials had public health or medical backgrounds (PHMBG) had significantly lower infection rates than cities whose top officials lacked such backgrounds. We test the mechanisms of these effects and find that cities whose officials had PHMBG implemented community closure more rapidly than those lacked such backgrounds. Our findings highlight the importance of professionalism in combating the pandemic.
    Keywords: COVID-19, professionalism, public health background, medical background, policy response
    JEL: I18 H12 H75 P41
    Date: 2021–09
  12. By: Qiulin Ke; Shijun Jia
    Abstract: We investigate whether and the extent to which buyer’s characteristics affect housing transaction prices. Using the transaction data of existing apartments from 2014 to 2017 in Guangzhou, China, our results show that buyer’s locality, motivation and financial ability affect the transaction prices. Non-local buyers pay a premium. First-time buyers gain a discount. Experienced repeat buyers for upgrading pay a premium. We also find that buyer’s financial ability affects purchasing power and transaction prices. The buyers paying the acquisition through mortgage gain a higher discount or pay a lower premium than their counterparts paying in cash. Internet using itself won’t affect transaction price. When it is combined with buyer’s other characteristics, the buyers using internet to obtain the property information have information advantage over the ones using tradition method and gain a higher discount or pay a lower premium than their counterparts using traditional method. This finding is important for market participates and regulators to improve information efficiency and transparency through technology.
    Keywords: Buyer's characteristics; China; Housing transaction price; Information Asymmetry
    JEL: R3
    Date: 2021–01–01
  13. By: Chad P. Bown (Peterson Institute for International Economics)
    Abstract: Early in the COVID-19 pandemic, a global shortage of hospital gowns, gloves, surgical masks, and respirators caused policymakers around the world to panic. This paper examines international trade in this personal protective equipment (PPE) during the crisis, with a focus on China, the European Union, and the United States. As the pandemic first hit, China increased imports and decreased exports of PPE, removing considerable quantities of supplies from global markets. For the European Union and United States, the decrease in their imports from China was not immediately replaced by increased trade from other foreign suppliers. Early shortages led to EU and US export controls on their own, domestically produced PPE and other extraordinary policy actions, including a US effort to reserve for itself supplies manufactured in China by a US-headquartered multinational. By April 2020 China’s exports had mostly resumed, and over the rest of the year its export volumes of some products surged, more than doubling compared to pre-pandemic levels. But China’s export prices also skyrocketed and remained elevated through 2020, reflecting severe and continued shortages. This paper documents these facts. It also explores these and other government actions, such as US trade war tariffs and the emergence of US industrial policy in the form of over $1 billion of subsidies to build out its domestic PPE supply chain, as well as potential lessons for future pandemic preparedness and international policy cooperation.
    Keywords: personal protective equipment, COVID-19, tariffs, export restrictions, supply chains, industrial policy
    JEL: F13
    Date: 2021–07
  14. By: Mary E. Lovely (Peterson Institute for International Economics); David Xu (Peterson Institute for International Economics); Yinhan Zhang (Syracuse University)
    Abstract: This Policy Brief assesses the extent to which the United States increased its imports from South Korea after the US imposition of tariffs on Chinese exports. Korea benefited from this shift in US imports, although the increase was relatively small in most sectors. The authors use highly disaggregated US import and tariff data to examine adjustments in US purchases of manufactured goods from its trade partners. Their analysis indicates that Korea made a small gain in the US market following the levying of US tariffs on Chinese exports, with Korea’s share of overall US manufacturing imports rising 0.9 percent and its share of US manufacturing imports subject to trade war tariffs rising 1.0 percent. Gains were spread across a variety of manufacturing sectors—such as wood products, textiles and apparel, and machinery—reflecting both the choices made by US officials regarding which Chinese exports to tax and the nature of preexisting trade relationships between South Korea and the United States.
    Date: 2021–07
  15. By: Song, Chuling; Liu, Yu-li
    Abstract: Recent empirical research has indicated that the perceived risk in e-commerce affects the consumer's purchase intention. Based on the Stimulus-Organism-Response (SOR) model, this study explores the effects of environmental stimuli on the consumer's perceived risk and purchase intention within a live-streaming shopping context. Through a sample of 341 valid users, we found that 1) perceived risk has a negative effect on the consumer's purchase intention; 2) the streamer's credibility partially mediates the relationship between perceived risk and purchase intention; and 3) the interactivity is positively associated with purchase intention. These results provide possible insights into how environmental stimuli in the context of live-streaming shopping affect the consumer's perceived risk and purchase intention.
    Keywords: live streaming,perceived risk,purchase intention,credibility,media richness
    Date: 2021
  16. By: Sotiriou, Alexandra; Rodríguez-Pose, Andrés
    Abstract: This paper explores the effects of import competition on the manufacturing sector in Chile following the implementation of the country’s two largest Free Trade Agreements (FTA) (with the USA and China). Exploiting cross-industry variation in import exposure, we analyse the effects on manufacturing sales, employment and labour productivity at the finest level of industrial classification (4 digit ISIC level). We detect an overall negative effect of increased Chinese import penetration, owing to substitution effects from low and medium tech imports and a less pronounced effect from USA imports. By introducing interaction effects, we find that the levels of foreign ownership and the export intensity of the domestic industries reverse the negative effect due to the opportunities offered via participation in global value chains. An IV strategy is applied to address standard endogeneity concerns and confirm the robustness of our estimates.
    Keywords: import penetration; free trade; manufacturing; Chile; China; USA; Taylor & Francis deal
    JEL: L81
    Date: 2021–08–13
  17. By: Sheridan Titman; Chishen Wei. Wei; Bin Zhao
    Abstract: We identify a group of “suspicious” firms that use stock splits—perhaps, along with other activities—to artificially inflate their share prices. Following the initiation of suspicious splits, share prices temporarily increase, and subsequently decline below their pre-split levels. Using account level data from the Shanghai Stock Exchange, we find that small retail investors acquire shares in firms initiating suspicious splits, while more sophisticated investors accumulate positions before suspicious split announcements and sell in the post-split period. We also find that insiders sell large blocks of shares and obtain loans using company stock as collateral around the initiation of suspicious splits.
    JEL: G12 G14
    Date: 2021–09
  18. By: Shi, Peilin; Winter, Jenifer Sunrise; Zhang, Bin
    Abstract: In accordance with UNCTAD data, out of 194 countries in the world, 132 countries have enacted laws to protect data and privacy. Among them, most of the laws were issued at the beginning of the 21st century. With the continuous development of digital technology, especially the widespread application of big data technology, existing legislation has been unable to deal with the privacy protection risks brought by new technologies. In recent years, Japan, South Korea, and other countries have begun to revise or expand the definition of personal information protection boundaries and content in laws and regulations to protect the personal information of their citizens in response to the development of new technologies. In early 2020, the COVID-19 epidemic suddenly broke out and quickly swept the world, posing unprecedented challenges to healthcare systems, lifestyles, economic development and social stability in countries around the world. Digital technologies and data applications have played an important role in COVID-19 detection and control, but their characteristics have also raised concerns about the security of personal data and privacy. How the law will be adjusted (or has been adjusted) to deal with new technology will be a challenge.This paper selects the countries (EU, the United States, Japan, South Korea, China) that have modified laws and regulations related to data security and privacy protection in recent years as research objects, analyzes their existing privacy protection laws and regulations governance framework, and then analyzes the privacy risks faced to the new technology. In particular, privacy regulations and compliance guidelines for the application of facial recognition, location tracking and distance learning technology during the COVID-19 epidemic. Then, the governance experience in dealing with the relationship between digital technology progress, personal information protection and public health in the special period was summarized. Finally, it summarizes the future development direction of privacy protection governance from the legal level.
    Keywords: Privacy Protection,New Technologies,Governance,COVID-19 epidemic
    Date: 2021

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