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on China |
| By: | Brautigam, Deborah; Huang, Yufan; Acker, Kevin |
| Abstract: | From modest beginnings in 1960, China has recently become a highly visible actor in Africa's lending landscape. African borrowers have built roads, installed electrical grids, and modernized their airports with Chinese finance. Yet when commodity prices and growth rates began to tumble in 2015, the specter of a new debt crisis arose. These fears expanded sharply with the impact of the COVID-19 pandemic. Are the African countries most vulnerable to debt distress those with high Chinese debt? Who are the Chinese lenders in Africa and how do they manage lending in risky environments? Is China a bigger lender than the World Bank? What kind of terms do we see on Chinese loans in Africa? Why have Chinese banks lent so much in risky environments? How often are loans collateralized with natural resource exports? Do Chinese banks require property as collateral for loans to African governments or their state-owned enterprises (SOEs)? 1. New data show that China makes up 22% of public debt stock (2018) and 29% of debt service (2020) in low income Africa. Yet China's role should not be overestimated. In over half of the 22 countries facing debt distress, China is a small lender. Their debt problems are not made in China. 2. In seven of these 22 countries, China accounts for a quarter or more of all public and publicly guaranteed debt: Angola, Djibouti, Cameroon, Republic of Congo, Ethiopia, Kenya, and Zambia. Four of these countries negotiated debt restructuring with Chinese lenders in 2018 and 2019. 3. Chinese banks' "project-by-project" analysis may have disregarded the overall debt risk in borrower countries. Only a quarter of Chinese lending is secured by natural resource exports. 4. Borrower government should plan their projects better before they borrow. A large portion of Chinese loan commitments are slow to disburse, partly due to borrowers' inability to meet their share of project responsibilities. Delays hurt the bank, the contractor, and the borrower government. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caribp:032020&r= |
| By: | Jorrit Gosens; Alex Turnbull; Frank Jotzo |
| Abstract: | China aims for net-zero carbon emissions by 2060, and an emissions peak before 2030. This will reduce its consumption of coal for power generation and steel making. Simultaneously, China aims for improved energy security, primarily with expanded domestic coal production and transport infrastructure. Here, we analyze effects of both these pressures on seaborne coal imports, with a purpose-built model of China's coal production, transport, and consumption system with installation-level geospatial and technical detail. This represents a 1000-fold increase in granularity versus earlier models, allowing representation of aspects that have previously been obscured. We find that reduced Chinese coal consumption affects seaborne imports much more strongly than domestic supply. Recent expansions of rail and port capacity, which reduce costs of getting domestic coal to Southern coastal provinces, will further reduce demand for seaborne thermal coal and amplify the effect of decarbonisation on coal imports. Seaborne coking coal imports are also likely to fall, because of expanded supply of cheap and high quality coking coal from neighbouring Mongolia. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2112.06357&r= |
| By: | Zuzana Fungáčová; Paul-Olivier Klein (LARGE - Laboratoire de recherche en gestion et économie - UNISTRA - Université de Strasbourg - L'europe en mutation : histoire, droit, économie et identités culturelles - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique); Laurent Weill (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg) |
| Abstract: | A vast literature shows that China's five largest state-owned banks (the Big Five) suffer from low cost efficiency. We offer a new explanation of this situation, by decomposing overall efficiency of Chinese banks into two parts: persistent and transient efficiency. Using the model of Kumbhakar, Lien and Hardaker (2014) based on the stochastic frontier approach, we measure persistent and transient efficiency for a large sample of 166 Chinese banks over the period 2008–2015. We show that the lower efficiency of China's Big Five banks is almost entirely due to low persistent cost efficiency, indicating structural problems. On the contrary, the Big Five banks transient efficiency is similar to other Chinese banks, reflecting a good aptitude to minimize their costs in the short-term. Our findings support the view that major structural reforms are needed to enhance the efficiency of China's Big Five banks. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03058848&r= |
| By: | Acker, Kevin; Brautigam, Deborah |
| Abstract: | China's lending to Africa remained significant in 2019, but its nature is changing. Chinese financiers have committed US$ 153 billion to African public sector borrowers between 2000 and 2019. At least 80 percent of these loans financed economic and social infrastructure projects: mainly transport, power, telecoms, and water. In 2019, Chinese financiers committed US$ 7 billion to African borrowers, down 30 percent from US$ 9.9 billion in 2018. We expect this dip to continue through 2020, reflecting the impact of the pandemic and associated economic dislocation. Yet we do not predict a sustained drop in Chinese lending to Africa. Like other lenders, Chinese banks are interested in the profits available in emerging and frontier markets. - Down but not out. China's loan commitments (2000- 2019) in Africa now total US$ 153 billion. New Chinese loan commitments of US$ 7 billion dipped 30% in 2019 compared with 2018. - Avoiding risk. Countries where China reprofiled, restructured, or refinanced existing debt between 2015 and 2019, including Angola, Cameroon, Djibouti, Ethiopia, Mozambique, and Republic of Congo, received far less Chinese finance in subsequent years. In 2019, China's top borrowers were Ghana, South Africa, Egypt, Côte d'Ivoire and Nigeria. - Changing creditors. In 2019, CARI data included over 30 Chinese banks and other lenders. Lending from China Eximbank, China's only source of concessional loans and preferential export credits, peaked in 2013. Commercial loans from China Development Bank and other banks have filled the gap. - Resource-backed finance is evolving. Although accounting for only 8% of total Chinese lending to Africa (aside from Angola), the controversial resource-backed infrastructure financing model is not dead; it lives on in Ghana and Guinea. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caribp:042021&r= |
| By: | Huiyao Chen (The Wharton School - University of Pennsylvania [Philadelphia]); Changyuan Luo; Mary-Françoise Renard (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Shiyi Sun |
| Abstract: | This paper examines how EU-China trade affected intra-EU trade. The estimation shows that when a country's share of trade with China increased, its share of trade with EU partners declined. This suggests that stronger trade links with China resulted in weaker trade links among EU countries. Furthermore, the "disintegration" effect of the export to China was stronger than that of import from China, meaning that the influence of China as an export destination was greater than that of China as a source of import. An extended analysis shows that the disintegration effect was most strongly felt in trade links among EU core countries, less strongly felt in trade links between EU core and periphery countries, and least strongly felt in trade links among EU periphery countries. In comparison, we find that EU import from the US and India significantly weakened and strengthened intra-EU trade respectively. Estimation results using product level data demonstrate that the effects depend on the types of products we are concerned with. Whether using gross value or value added, the conclusions remain valid. |
| Keywords: | complementary,substitute,intra-EU trade,EU-China trade |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03467473&r= |
| By: | Brautigam, Deborah; Acker, Kevin; Huang, Yufan |
| Abstract: | As China is poised to become the world's largest creditor, concerns about debt sustainability have grown. Yet considerable confusion exists over what is likely to happen when a government runs into trouble repaying its Chinese loans. In this paper, the authors draw on CARI data to review the evidence on China's debt cancellation and restructuring in Africa, in comparative and historical perspective. Cases from Sri Lanka, Iraq, Zimbabwe, Ethiopia, Angola, and the Republic of Congo, among others, point to patterns of debt relief with distinctly Chinese characteristics. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cariwp:202039&r= |
| By: | Pablo Fajgelbaum; Pinelopi K. Goldberg; Patrick J. Kennedy; Amit Khandelwal; Daria Taglioni |
| Abstract: | We study global trade responses to the US-China trade war. We estimate the tariff impacts on product-level exports to the US, China, and rest of world. On average, countries decreased exports to China and increased exports to the US and rest of world. Most countries export products that complement the US and substitute China, and a subset operate along downward-sloping supplies. Heterogeneity in responses, rather than specialization, drives export variation across countries. Surprisingly, global trade increased in the products targeted by tariffs. Thus, despite ending the trend towards tariff reductions, the trade war did not halt global trade growth. |
| JEL: | F10 F12 F14 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29562&r= |
| By: | Jingwen Tan; Shixi Kang |
| Abstract: | While the size of China's mobile population continues to expand, the fertility rate is significantly lower than the stable generation replacement level of the population, and the structural imbalance of human resource supply has attracted widespread attention. This paper uses LPM and Probit models to estimate the impact of house prices on the fertility intentions of the mobile population based on data from the 2018 National Mobile Population Dynamics Monitoring Survey. The lagged land sales price is used as an instrumental variable of house price to mitigate the potential endogeneity problem. The results show that for every 100\% increase in the ratio of house price to household income of mobile population, the fertility intention of the female mobile population of working age at the inflow location will decrease by 4.42\%, and the marginal effect of relative house price on labor force fertility intention is EXP(-0.222); the sensitivity of mobile population fertility intention to house price is affected by the moderating effect of infrastructure construction at the inflow location. The willingness to have children in the inflow area is higher for female migrants of working age with lower age, smaller family size and higher education. Based on the above findings, the study attempts to provide a new practical perspective for the mainline institutional change and balanced economic development in China's economic transition phase. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2112.07273&r= |
| By: | Deron, Laure; Pairault, Thierry; Pasquali, Paola |
| Abstract: | On June 21, 2021, the French public television channel France 2 aired a report in which it was stated that Montenegro, a heavily indebted nation, was at risk of "having to cede some of its land to China" as a result of its inability to pay back a loan for the construction of a highway. According to reporters, Montenegro's Port of Bar could be annexed by China "completely legally," thanks to an "extraordinary contract" that had been "never seen before in Europe (...)." In reality, reporters erroneously presented a standard sovereign immunity waiver as evidence that China is entitled to seize land in Montenegro in the case of a payment default, reflecting their lack of understanding of normal international legal practice. Deron, Pairault, and Pasquali argue that criticism of problematic Chinese lending practices must be based on facts, not unfair and misguided denunciation. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caribp:072021&r= |
| By: | Wang, Ruting; Althof, Michael; Härdle, Wolfgang |
| Abstract: | This paper develops a new risk meter specifically for China - FRM@China - to detect systemic financial risk as well as tail-event (TE) dependencies among major financial institutions (FIs). Compared with the CBOE FIX VIX, which is currently the most popular financial risk measure, FRM@China has less noise. It also emitted a risk signature much earlier than the CBOE FIX VIX index in the 2020 COVID pandemic. In addition, FRM@China uses a single quantile-lasso regression model to allow both the assessment of risk transfer between different sectors in which FIs operate and the prediction of systemic risk. Because the risk indicator in FRM@China is based on penalization terms, its relationship with macro variables are unknown and non-linear. This paper further expands the existing FRM approach by using Shapley values to identify the dynamic contribution of different macro features in this type of "black box" situation. The results show that short-term interest rates and forward guidance are significant risk drivers. This paper considers the interaction among FIs from mainland China, Hong Kong and Taiwan to provide an enhanced regional tool set for regulators to evaluate financial policy responses. All quantlets are available on quantlet.com. |
| Keywords: | FRM (Financial Risk Meter),Lasso Quantile Regression,Financial Network,China,Shapley value |
| JEL: | C30 C58 G11 G15 G21 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:irtgdp:2021022&r= |
| By: | Ofori, Isaac K.; Dossou, Toyo A. M.; Asongu, Simplice A.; Armah, Mark. K. |
| Abstract: | In line with the SDG 10 and Aspiration 1 of Africa’s Agenda 2063, this study examines whether: (i) the remarkable inflow of Chinese FDI to Africa matters for bridging the continent’s marked income inequality gap, (ii) Africa’s institutional fabric is effective in propelling Chinese FDI towards the equalisation of incomes in Africa, and (iii) there exist relevant threshold levels required for the various governance dynamics to cause Chinese FDI to equalise incomes in Africa. Our results, which are based on the dynamic GMM estimator for the period 1996 – 2020, reveal that though: (1) Chinese FDI contributes to equitable income distribution in Africa, the effect is weak, and (2) Africa’s institutional fabric matters for propelling Chinese FDI towards the equalisation of incomes across the continent, governance mechanisms for ensuring political stability, low corruption, and voice and accountability are keys. Finally, critical masses required for these three key governance dynamics to propel Chinese FDI to reduce income inequality are 0.8, 0.5 and 0.1, respectively. Policy recommendations are provided in the end. |
| Keywords: | Africa,Agenda 2063,China,Corruption,China,FDI,Income Inequality |
| JEL: | F6 F15 O43 O55 R58 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:248468&r= |
| By: | Graham Beattie; Iza Ding; Andrea La Nauze |
| Abstract: | We provide evidence of an energy efficiency gap in China. Using an incentivized field experiment, we document that providing information to consumers on the energy costs of lightbulbs significantly affects their willingness to pay for energy efficient bulbs. Unlike previous literature, we do not find evidence that this gap is driven by biased beliefs. Further our experimental design allows us to rule out that changes in willingness to pay are driven purely by the salience of the monetary or environmental costs of lightbulbs. We argue that the results are consistent with consumers being risk averse and uncertain about the benefits of more energy efficient appliances. |
| Keywords: | energy-efficiency, lightbulbs, information experiment |
| JEL: | Q40 H23 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9435&r= |
| By: | Lijing Zhu (China University of Petroleum); Jingzhou Wang (China University of Petroleum); Arash Farnoosh (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles, IFP School); Xunzhang Pan (China University of Petroleum) |
| Abstract: | To reduce traffic congestion and protect the environment, license plate control (LPC) policy has been implemented in Beijing since 2011. In 2019, 100,000 vehicle license plates were distributed, including 60,000 for electric vehicle (EV) and 40,000 for gasoline vehicle (GV). However, whether the current license plate allocation is optimal from a social welfare maximization perspective remains unclear. This paper proposes a two-level Stackelberg game which portrays the interaction between vehicle applicants and the government to quantify the optimal EV license plates under the LPC policy in Beijing. The equilibrium number of EV license plates derived from the Stackelberg model is 58,800, which could increase the social welfare by 0.38%. Sensitivity analysis is conducted to illustrate the impact of important influential factors — total license plate quota, vehicle rental fee, and energy price — on EV adoption. The LPC policy under COVID-19 is also studied through a scenario analysis. If the government additionally increases the total quota by 20,000, 24% could be allocated to GV and 76% to EV. One third reduction of the current vehicle rental fee could increase EV license plates by 10.5%. Interms of energy prices, when gasoline price is low, reducing electricity price could contribute to EV adoption significantly, while that effect tapers off as the gasoline price rises. |
| Keywords: | License plate quota,Stackelberg game theory,License plate control (LPC) policy,Electric vehicle |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03500766&r= |