nep-cna New Economics Papers
on China
Issue of 2021‒10‒18
six papers chosen by
Zheng Fang
Ohio State University

  1. Trade war from the Chinese trenches By Liu, Nan
  2. Ultra-low tax regime in Imperial China, 1368-1911 By Deng, Kent
  3. The merit of misfortune: Taiping Rebellion and the rise of indirect taxation in modern China, 1850s-1900s By Deng, Hanzhi
  4. China’s Transition to a Digital Currency: Does It Threaten Dollarization? By Aysan, Ahmet Faruk; Kayani, Farrukh Nawaz
  5. Towards the decarbonization of the power sector – a comparison of China, the EU and the US based on historical data By Michel Noussan; Manfred Hafner; Loyle Campbell; Xinqing Lu; Pier Paolo Raimondi; Erpu Zhu
  6. The Rise of a New Anchor Currency in RCEP? A Tale of Three Currencies By Guo, Dong; Zhou, Peng

  1. By: Liu, Nan
    Abstract: From 2018 through 2019, the United States and China imposed a series of wide-ranging increases in import tariffs which have dramatically raised trade barriers between the two largest economies in the world. With a focus on the import side, this paper provides evidence on the impact of the trade war on China's trade quantities and prices, and estimates related trade elasticities. Both Chinese import quantities and values dropped sharply following the tariffs and there is evidence for incomplete pass-through of Chinese import tariffs in the very short run. More importantly, this paper shows that while China's non-processing imports declined dramatically during the trade war, the processing imports almost remain unaffected. The results suggest that the Chinese special duty-free policy on processing trade may have served as a built-in mechanism to better protect domestic firms from the damage of the trade war through the global value chain channel.
    Keywords: Trade war; Tariff; China; Processing trade; Global value chain
    JEL: F10 F13 F14
    Date: 2020–11–03
  2. By: Deng, Kent
    Keywords: state-peasant alliance; benevolent rule; rent-seeking; tax-burden; mass rebellions; village autonomy
    JEL: B10 H11 N35 N45
    Date: 2021–02
  3. By: Deng, Hanzhi
    Abstract: This article revisits the role of war in state development but goes beyond the scope of Western European nation states. It focuses on the relationship between political disorder and indirect taxation with micro-level evidence in late imperial China. With cross-sectional data for 266 prefectures this article employs quantitative methods to test the positive link between the warfare during the Taiping Rebellion (the greatest threat for the Qing reign) and the rapid rise and pervasive persistence of autonomous self-serving indirect taxation (lijin) institutions. The withering central fiscal role with the growing local fiscal-military needs accounted for this change. This article draws more economic and political implications by linking local fiscal autonomy to the Late Qing industrialization and the development of representative politics. The results demonstrate that the warfare by the Taiping Rebellion provided an unexpected opportunity for China’s fiscal modernization in a bottom-up way and that the impact was long-lasting
    Keywords: political disorder; fiscal capacity; modern China; Taiping Rebellion; indirect taxation
    JEL: H25 N45 O14
    Date: 2021–01
  4. By: Aysan, Ahmet Faruk; Kayani, Farrukh Nawaz
    Abstract: This article provides a detailed introduction to China’s launching of a digital currency. We conduct a comparative analysis concerning whether digital currency is a more stable and reliable currency than cryptocurrency and investigate whether a digital renminbi (or yuan) could replace the US dollar as a medium of exchange in international transactions. China has gained a first-mover advantage by rolling out a central bank digital currency (CBDC). But the outcome will depend on the US response as well as the future evolution of the US and Chinese economies. Most other articles on this topic focus on domestic use of the Chinese CBDC. But this study is unique in analyzing the prospects of a digital renminbi as a replacement for the US dollar in international commerce.
    Keywords: China, cryptocurrency, digital yuan, People’s Bank of China, US.
    JEL: F50
    Date: 2021–05–06
  5. By: Michel Noussan (Fondazione Eni Enrico Mattei, SciencesPo - Paris School of International Affairs); Manfred Hafner (Fondazione Eni Enrico Mattei, SciencesPo - Paris School of International Affairs, Johns Hopkins University - School of Advanced International Studies); Loyle Campbell (SciencesPo - Paris School of International Affairs); Xinqing Lu (SciencesPo - Paris School of International Affairs); Pier Paolo Raimondi (Fondazione Eni Enrico Mattei, Istituto Affari Internazionali); Erpu Zhu (FSciencesPo - Paris School of International Affairs)
    Abstract: This work compares the different decarbonization strategies of the power sector in China, the European Union and the United States, by considering the historical evolution of electricity generation and the current situation. Such a comparison is gaining a broader significance when evaluated with an additional level of geographic detail, by comparing European countries, Chinese provinces, and US states. The differences among these geographies highlight the challenges and opportunities of pushing towards low-carbon technologies, by making clear that regional decarbonization will need to address very different local contexts. Moreover, multiple policy and planning levels are involved, and those mechanisms are different in the three blocs being compared. Our analysis shows that these three blocs, although moving towards similar decarbonization targets, are currently at different levels of carbon intensity. The zero-carbon pathway will need to be declined in different local goals, based on the availability of low-carbon resources and the electricity demand. Given the geographical differences between demand and supply, and the likely increase of electricity demand, an improvement of power transmission networks will be essential. This work is part of a series of papers on the geopolitics of the energy transition in China, the European Union and the United States of America.
    Keywords: Electricity, Power, Decarbonization, Energy Transition, China, EU, US
    JEL: N70 O13 P48 Q42
    Date: 2021–10
  6. By: Guo, Dong; Zhou, Peng (Cardiff Business School)
    Abstract: We propose a flow-based criterion (intensity of use) and a stock-based criterion (stability of value) for choosing an anchor currency. This conceptual framework is applied to analyzing the RCEP region. According to the estimated TVP-VAR model, the influence of the US dollar in the region was weakened during the global financial crisis and the COVID pandemic, creating an opportunity for both Chinese Yuan and Japanese Yen to compete for the anchor currency. In terms of the intensity criterion, China accounts for the largest share in the regional share, but Yen seems to have an upper hand in the stability criterion. The sophisticated cooperative-competitive relationship between China and Japan may prolong the birth of a new anchor currency. Before then, US dollar still holds the role and the RCEP regional trade is subject to excessive volatility.
    Keywords: RCEP; TVP-VAR; Anchor Currency; Internationalization
    JEL: F13 F33 F45
    Date: 2021–09

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