nep-cna New Economics Papers
on China
Issue of 2021‒09‒27
ten papers chosen by
Zheng Fang
Ohio State University

  1. Red Scare? A Study of Ethnic Prejudice in the Prosecutions under the Economic Espionage Act By Hanming Fang; Ming Li
  2. Postbellum Electoral Politics in California and the Genesis of the Chinese Exclusion Act of 1882 By Vincent Geloso; Linan Peng
  3. Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China By Tasso Adamopoulos; Loren Brandt; Jessica Leight; Diego Restuccia
  4. The Rise of China’s Global Middle Class in International Perspective By Terry Sicular; Xiuna Yang; Bjorn Gustafsson
  5. Effects of government contracting of services on NGOs in China: convergence and divergence with international experience By Enjuto Martinez, Regina; Qu, Yuanyuan; Howell, Jude
  6. Eclipses and the Memory of Revolutions: Evidence from China By Meng Miao; Jacopo Ponticelli; Yi Shao
  7. Can Today's and Tomorrow's World Uniformly Gain from Carbon Taxation? By Laurence J. Kotlikoff; Felix Kubler; Andrey Polbin; Simon Scheidegger
  8. Perspectives from mainland China, Hong Kong and the UK on the development of China’s auditing firms: implications and a research agenda By Macve, Richard
  9. Assessing China's Provincial Electricity Spot Market Pilot Operations: Lessons from the Guangdong Province By Liu, Y.; Jiang, Z.; Guo, B.
  10. Impact of US-China Trade War on Indian External Trade By Sanyal, Anirban

  1. By: Hanming Fang; Ming Li
    Abstract: We empirically test whether the Department of Justice (DOJ) engages in ethnic prejudice against Chinese in its prosecutorial decisions under the Economic Espionage Act (EEA) of 1996. Using data of EEA cases from November 1996 to June 2021, we conduct Becker's outcome test for evidence of ethnic prejudice. We find that Chinese-named defendants were more likely to be dismissed by trial or acquitted by jury, and were found guilty on fewer counts, and on average received harsher indictments. These results are robust regardless of whether we consider all cases or only arguably ``marginal'' cases. We also find that, for those publicly listed victim firms whose trade secrets were allegedly stolen by the charged defendants, the stock market reaction was much more muted to the news on the case filing date if the charged defendants are of Chinese descent. Our study provides the first systematic evidence that the DOJ's prosecutorial decisions in the application of the EEA may have been tainted by ethnic prejudice against Chinese, including American citizens of Chinese descent.
    JEL: J71 K4
    Date: 2021–09
  2. By: Vincent Geloso (Department of Economics, George Mason University); Linan Peng (Department of Economics and Management, DePauw University)
    Abstract: After the Civil War, the Democratic party carried an important electoral penalty from being associated with the war. To deal with this penalty, the party took increasingly anti-immigration positions to compete with Republicans. This led some Republican strongholds such as California to become competitive and also forced Republicans to embrace stricter immigration proposals. In this paper, we argue that adopting anti-immigration and raising awareness against immigration made California increasingly competitive in electoral terms. This electoral competitiveness can serve to explain the genesis of the 1882 Chinese Exclusion Act.
    Keywords: Immigration, Chinese Exclusion Act, Anti-Chinese Movement, Political Economy
    JEL: J15 N31 H59
    Date: 2021–09–21
  3. By: Tasso Adamopoulos; Loren Brandt; Jessica Leight; Diego Restuccia
    Abstract: We use household-level panel data from China and a quantitative framework to document the extent and consequences of factor misallocation in agriculture. We find that there are substantial within-village frictions in both the land and capital markets linked to land institutions in rural China that disproportionately constrain the more productive farmers. These frictions reduce aggregate agricultural productivity by affecting two key margins: (1) the allocation of resources across farmers (misallocation) and (2) the allocation of workers across sectors, in particular the type of farmers who operate in agriculture (selection). Selection substantially amplifies the productivity effect of distortionary policies by affecting occupational choices that worsen average ability in agriculture.
    Keywords: agriculture, misallocation, selection, productivity, China
    JEL: O11 O14 O4 E02 Q1
    Date: 2021–09–16
  4. By: Terry Sicular; Xiuna Yang; Bjorn Gustafsson
    Abstract: Defining the ‘global middle class’ as being neither poor nor rich in the developed world, we estimate the size of the global middle class in China and 33 other countries and analyze China’s expanding middle class in international perspective. China’s global middle class has grown rapidly and has been catching up with that in developed countries. By 2018 China’s global middle class constituted 25 percent of China’s population; in absolute size it was nearly double the size of the global middle class in the US and similar in size to that in Europe. Cross-country analysis of the relationship between the middle-class population share versus GDP per capita reveals an inverted-U pattern. China is not an outlier from the cross-country pattern, but the speed with which its middle-class has expanded is unusual. The only other countries with similarly large, rapid expansions of the middle class are transition economies.
    JEL: D31 O15 O53 P3
    Date: 2021–07
  5. By: Enjuto Martinez, Regina; Qu, Yuanyuan; Howell, Jude
    Abstract: The government of the Communist Party of China (CPC) rolled out a national policy to contract out social and welfare services to non-governmental organizations (NGOs) in 2013. This study explores how government contracting of services affects NGOs. We examine three areas: marketization, financial dependency, and autonomy. We find significant convergence of the effects of contracting on NGOs in China with NGOs’ experiences in liberal democratic countries, despite divergent political regimes. Found effects are explained by the combination of the authoritarian government of the CPC with the neoliberal governance structures introduced by contracting. Convergence with international experience despite divergent political regimes is attributed to the neoliberal essence of the policy of contracting of services.
    Keywords: service contracting; welfare; NGOs; authoritarianism; China; ES/P001726/1; Springer deal
    JEL: R14 J01
    Date: 2021–09–10
  6. By: Meng Miao; Jacopo Ponticelli; Yi Shao
    Abstract: Why are certain communities more prone to anti-government protests than others? Do past rebellions lead to more protests today? We study the historical roots of social unrest using the experience of China. We document that counties with higher incidence of peasant uprisings against local government officials during the Qing dynasty period (1644-1912) also have higher incidence of anti-government protests in present-day China. To generate plausibly exogenous variation in the incidence of past protests, we exploit differences in the visibility and magnitude of solar eclipses during the Qing dynasty period. In the Confucian tradition, solar eclipses are considered a negative divine signal on the legitimacy of the ruler, facilitating the coordination of protest actions. We test this mechanism using detailed data on the timing and location of anti-government rebellions extracted from local chronicles. Counties within the totality zone of a solar eclipse were significantly more likely to experience a rebellion in the eclipse year. Leaders of early anti-Qing rebellions were recorded in popular culture and celebrated in temples, favoring the transmission of the memory of their actions across generations. The persistent effect of past protests is stronger in counties with such temples and memorials, consistent with a long-term memory of revolutions.
    JEL: D74 N3
    Date: 2021–08
  7. By: Laurence J. Kotlikoff; Felix Kubler; Andrey Polbin; Simon Scheidegger
    Abstract: Carbon taxation is a widely proposed and in some countries already adopted means to limit anthropogenic climate change. This paper studies carbon taxation using an 18-region, 80- period overlapping generations model. We focus on carbon policy that delivers present and future mankind the highest uniform percentage welfare gain. The policy combines global carbon taxation and region- and generation-specific net transfers. In our main calibration, uniform welfare-improving carbon tax policy can make those agents already here and those yet to come, no matter their location, 4.35 percent better off. Achieving (such) equal proportionate gains, which may be needed for universal support, requires major interregional as well as intergenerational transfers. Universal support, though, is not essential. For example, even absent participation by China, whose projected carbon emissions are massive, the rest of the world can still materially limit the carbon externality. However, absent China, their optimal carbon tax is roughly half as large, and the uniform welfare-improving gain is less than three-fifths as large.
    JEL: H23 O44
    Date: 2021–09
  8. By: Macve, Richard
    Abstract: Based on gaining privileged access to interview senior representatives of audit firms, regulatory bodies, financial institutions, universities and other organisations in mainland China, Hong Kong and the UK, this exploratory study presents a range of informed views about the rapid development of China’s auditing profession over the last 25 years. It explores the emerging roles of the firms in the 2nd-tier international networks and among the larger stand-alone firms as challengers to the Big 4, nationally and internationally. It identifies national and international institutional interactions that have shaped and are being shaped by this rapid growth, with particular reference to the overarching role of the State’s shifting strategies to create a domestic profession in China that can compete internationally. The potential consequences, given China’s unequalled size and its expanding global influence, could change the nature and structure of the global profession. A significant contribution of this exploratory empirical study has been to deconstruct the continuing conventional political and academic rhetoric that dichotomises firms into ‘foreign vs local’ and ‘Big 4 vs other’. It contributes new voices and alternative perspectives to the emerging literature on the glocalization of large professional services firms and suggests new opportunities for future auditing research.
    Keywords: Chinese auditing profession; International Auditing Standards (ISA); Big 4; 2nd-tier audit networks; international professional service firms (IPSFs); auditing research
    JEL: F3 G3
    Date: 2020–11–09
  9. By: Liu, Y.; Jiang, Z.; Guo, B.
    Abstract: Targeting on improving the efficiency of power generation, China announced its plan to reform the electricity wholesale market. A focal point of the wholesale market reform is to introduce a stable and reliable electricity spot market. Using Guangdong's spot market pilot operations as a case study, this article becomes the first which uses ex-post market data to assess the efficacy of China's electricity spot market. To investigate the stability of the spot market, we estimate the relationship between prices and demand. We find the electricity supply curve to be non-linear and convex, suggesting the needs to invest more thermal capacity to stabilise the spot market prices (SMPs). To investigate the reliability of the spot market, we first estimate the market distortion caused by a price floor on the SMPs, and then examine whether local market power exists. The price floor on the SMPs resulted in a welfare transfer from consumers to producers, the monetary value of which equals to 1.3% of the tradable value of the day-ahead market. We also find evidence of local market power in the east of Guangdong, suggesting the necessity of investing more power lines connecting the west to the east. Finally, policy implications are provided.
    Keywords: China power market reform, market failures, local market power, electricity spot market
    JEL: Q41 Q48 D61
    Date: 2021–09–17
  10. By: Sanyal, Anirban
    Abstract: The recent US-China trade war refreshed the memory of trade protectionism in the era of global integration. In this context, this paper analyzes the impact of higher trade tariffs imposed by the US and China on each other, on India, a large country having significant trade ties with both the US and China, yet not directly involved in the tariff war. Using product level data on exports and imports, the paper analyzes the implication of the tariff war on India in short run through the lens of trade diversion and identifies the differential effect of trade diversion across different product types. The analysis reveals a significant trade diversion to India from China at an aggregate level with trade elasticity of 0.5-0.7 due to US tariffs on China which points towards a substitution effect in products targeted by the US-China tariffs. Further, the paper observes a heterogeneous impact of the trade diversion across different product classifications. Particularly, India's export of easily substituted products like final goods, homogeneous goods and high elastic goods, intensified plausibly driven by higher tariffs imposed by the US on China. However the effect on these tariffs on India's import intensity remains mixed.
    Keywords: US-China Trade War,Trade Cost,Product Heterogeneity,Comparative Advantages
    JEL: F1 F12 F13 F14
    Date: 2021

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