nep-cna New Economics Papers
on China
Issue of 2021‒12‒20
five papers chosen by
Zheng Fang
Ohio State University

  1. Uncovering Heterogeneous Regional Impacts of Chinese Monetary Policy By Tsang, Andrew
  2. Migration and Spatial Misallocation in China By Li, Xiaolu; Ma, Lin; Tang, Yang
  3. Why Germany should continue its development cooperation with China By Zajac, Kimsey; Kaplan, Lennart
  4. “Golden Ages”: A Tale of the Labor Markets in China and the United States By Hanming Fang; Xincheng Qiu
  5. Tyrannical participation approaches in China’s regeneration of Urban heritage areas: a case study of baitasi historic district, Beijing By Wei, Ran

  1. By: Tsang, Andrew
    Abstract: This paper applies causal machine learning methods to analyze the heterogeneous regional impacts of monetary policy in China. The method uncovers the heterogeneous regional im-pacts of different monetary policy stances on the provincial figures for real GDP growth, CPI inflation and loan growth compared to the national averages. The varying effects of expansionary and contractionary monetary policy phases on Chinese provinces are highlighted and explained. Subsequently, applying interpretable machine learning, the empirical results show that the credit channel is the main channel affecting the regional impacts of monetary policy. An imminent conclusion of the uneven provincial responses to the “one size fits all” monetary policy is that different policymakers should coordinate their efforts to search for the optimal fiscal and monetary policy mix.
    Keywords: China, monetary policy, regional heterogeneity, machine learning, shadow banking
    JEL: C54 C61 E52 R11
    Date: 2021–07–28
  2. By: Li, Xiaolu (Nanjing University of Posts and Telecommunications); Ma, Lin (Singapore Management University); Tang, Yang (Nanyang Technological University)
    Abstract: We structurally estimate the firm-level frictions across prefectures in China and quantify their aggregate and distributional implications. Based on a general equi-librium model with input and output distortions and migration, we show that the firm-level frictions are less dispersed and less correlated with productivity in richer prefectures. Counterfactual exercises show that reducing the within-prefecture mis-allocation increases the aggregate welfare, discourages migration towards large cities, and narrows the spatial inequality. Moreover, internal migration alleviates the impacts of micro-frictions on aggregate welfare and worsens their impacts on spatial inequality.
    Keywords: misallocation; regional trade; economic geography; welfare gain
    JEL: F12 O11 R12
    Date: 2021–09–01
  3. By: Zajac, Kimsey; Kaplan, Lennart
    Abstract: Although bilateral development cooperation officially ended in 2009, China is still the third largest recipient of Germany's official development assistance, a fact that often causes frequent public confusion. The authors argue that German payments to China are not "traditional aid" in the sense of poverty reduction through public funds. Rather, payments to China include profitable promotional loans and serve technical cooperation. In recent years, German-Chinese relations have shifted from development cooperation to mutually profitable international cooperation on equal footing. A premature exit from German-Chinese "development" cooperation would therefore be detrimental to both sides. The authors recommend that the German government should create more transparency about the nature of development assistance to China and thus highlight the "win-win" situation in German-Chinese cooperation.
    Keywords: Development cooperation,China,ODA,Entwicklungszusammenarbeit
    Date: 2021
  4. By: Hanming Fang; Xincheng Qiu
    Abstract: We study the labor markets in China and the United States, the two largest economies in the world, by examining the evolution of their cross-sectional age-earnings profiles during the past thirty years. We find that, first, the peak age in the cross-sectional age-earnings profiles, which we refer to as the “golden age,” stayed almost constant at around 45-50 in the U.S., but decreased sharply from 55 to around 35 in China; second, the age-specific earnings grew drastically in China, but stayed almost stagnant in the U.S.; third, the cross-sectional and life-cycle age-earnings profiles were remarkably similar in the U.S., but differed substantially in China. We propose and empirically implement a decomposition framework to infer from the repeated cross-sectional earnings data the experience effect (i.e., human capital accumulation over the life cycle), the cohort effect (i.e., inter-cohort human capital growth), and the time effect (i.e., changes in the human capital rental prices over time), under an identifying assumption that the growth of the experience effect stops at the end of one's working career. The decomposition suggests that China has experienced a much larger inter-cohort productivity growth and higher increase in the rental price to human capital, but lower returns to experience, compared to the U.S. We also use the inferred components to revisit several important and classical applications in macroeconomics and labor economics, including growth accounting and the estimation of TFP growth, and the college wage premium and skill-biased technical change.
    JEL: E24 E25 J24 J31 O47
    Date: 2021–11
  5. By: Wei, Ran
    Abstract: In China’s new model of heritage area regeneration, a series of approaches have been undertaken to promote community participation which is branded as inclusive and innovative by the local authority. Using Baitasi Historic District in Beijing as a case study, this research examines such new participation approaches. By analysing how the government has failed to meet the communities’ demands as well as to engage the communities in the decision-making process but only the implementation stage, I argue that the government has misused the concept of participation by equating attendance and notification to higher levels of participation. The participation approaches are ‘the tyranny of participation’ which de facto helps to justify the official agenda, exploit the communities for their financial contribution, and target the already privileged group while continuing to marginalise the underprivileged. These approaches make the new regeneration model no different from previous ones in terms of facilitating displacement and widening the socioeconomic gaps between the lower-class and the middle- and upper-classes. This research finally reflects on the flawed motivation, strategy, and subsequent negative consequences of such community participation and calls for more attempts in heritage practices to solve the issues.
    Keywords: community participation; tyranny of participation; heritage areas; relocation; regeneration
    JEL: N0
    Date: 2021–10–21

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