nep-cna New Economics Papers
on China
Issue of 2022‒01‒31
seven papers chosen by
Zheng Fang
Ohio State University

  1. Inequality and Growth in China By Markus Brueckner; Haiyan Lin
  2. Green Infrastructure and Air Pollution: Evidence from Highways Connecting Two Megacities in China By Yu, Bo; Tran, Trang; Lee, Wang-Sheng
  3. Different antidumping legislations within the WTO: What can we learn from China's varying market economy status? By Sandkamp, Alexander; Yalcin, Erdal
  4. The role of China’s feed deficit in international grain markets By Marcel Adenauer
  5. Firm Finances and Responses to Trade Liberalization: Evidence from U.S. Tariffs on China By Avishai Schiff
  6. The Cultural Origins of Family Firms By Yuan, Song; Xie, Jian
  7. Why did the Peer-to-peer Lending Market Fail in China? By Sunny Yangguang Huang

  1. By: Markus Brueckner; Haiyan Lin
    Abstract: We provide estimates of the effects that income inequality has on economic growth in China. Our empirical analysis is at the county level. Using data provided by the China Health and Nutrition Survey, we construct measures of inequality and the growth rates of household incomes per capita for 72 Chinese counties during the period 1989-2015. System-GMM estimates of panel models show that the within-county effect of inequality on economic growth is significantly decreasing in initial average income. For the relatively low levels of initial average incomes that were prevalent in China during the 1980s and 1990s, our model estimates imply that the increase in inequality that occurred in China during the 1980s and 1990s had a significant positive effect on economic growth. However, for current levels of average income, our panel model predicts that inequality has a negative effect on economic growth: a 1 percentage point increase in the Gini would reduce the per annum growth rate by around 1 percentage point.
    Keywords: Inequality, Growth
    JEL: E0 O4
    Date: 2021–11
  2. By: Yu, Bo (Deakin University); Tran, Trang (University of Maryland at College Park); Lee, Wang-Sheng (Monash University)
    Abstract: Following market liberalisation, the vehicle population in China has increased dramatically over the past few decades. This paper examines the causal impact of the opening of a heavily used high speed rail line connecting two megacities in China in 2015, Chengdu and Chongqing, on air pollution. We use high-frequency and high spatial resolution data to track pollution along major highways linking the two cities. Our approach involves the use of an augmented regression discontinuity in time approach applied on data that have been through a meteorological normalisation process. This deweathering process involves applying machine learning techniques to account for change in meteorology in air quality time series data. Our estimates show that air pollution is reduced by 7.6% along the main affected highway. We simultaneously find increased levels of ozone pollution which is likely due to the reduction in nitrogen dioxide levels that occurred. These findings are supported using a difference-in-difference approach.
    Keywords: air pollution, China, green infrastructure, high-speed railway, regression discontinuity, machine learning
    JEL: L92 O18 Q53 Q54 R41
    Date: 2021–11
  3. By: Sandkamp, Alexander; Yalcin, Erdal
    Abstract: This paper examines how varying antidumping methodologies applied within the World Trade Organization differ in the extent to which they reduce targeted exports. We show that antidumping duties, on average, hit Chinese exporters harder than those of other targeted countries. This difference can be traced back in part to China's non‐market economy status, which affects the way antidumping duties are calculated. Furthermore, we show that the type of imposed duty matters, as ad‐valorem duties affect exports differently compared to specific duties or duties conditional on the export price. Overall, however, antidumping duties remain effective in reducing imports independent of market economy status.
    Date: 2021
  4. By: Marcel Adenauer
    Abstract: International grain prices experienced a sharp increase during the 2020/2021 marketing season, most likely due to the unprecedented increase of imported grains by China. What would be the possible impact on international grain markets if China remains a strong grain importer? The scenario developed to explore the impact of such a development shows that further increases in Chinese grain imports over the medium term could result in a 4% to 25% increase in agriculture commodity prices compared to what was projected in the OECD-FAO Agricultural Outlook 2021-2030.
    Keywords: African Swine Fever, Cereal trade, Commodity markets, Food price inflation, Food security
    JEL: C61 F17 Q11 Q17
    Date: 2022–01–13
  5. By: Avishai Schiff
    Abstract: This paper examines the relationship between a firm’s finances and its response to trade liberalization. Using a landmark change in U.S. tariff policy vis-à-vis Chinese imports and micro level data from the U.S. Census Bureau, I find larger manufacturing job losses in better capitalized firms - those with less leverage and more cash on hand. The effects concentrate in industries where weaker balance sheets are likely to lead to collateral and other borrowing constraints, helping rule out alternative explanations. Finally, domestic manufacturing job losses are not accompanied by greater reductions in sales or aggregate employment, but better capitalized firms do exhibit reduced input costs and increased productivity. These findings point to offshoring as the predominant firm response to trade liberalization and suggest a role for financial capacity in facilitating offshoring investments.
    Date: 2021–11
  6. By: Yuan, Song; Xie, Jian
    Abstract: What determines the prevalence of family firms? In this project, we investigate the role of historical family culture in the spatial distribution of family firms. Using detailed firm-level data from China, we find that there is a larger share of family firms in regions with a stronger historical family culture, as measured by genealogy density. The results are further confirmed by an instrumental variable approach and the nearest neighbor matching method. Examining the mechanisms, we find that entrepreneurs in regions with a stronger historical family culture: i) tend to have family members engage more in firms; ii) are more likely to raise initial capital from family members; iii) are more willing to pass on the firms to their children. Historical family culture predicts better firm performance due to a lower leverage ratio.
    Keywords: Family Culture; Family Firms; Genealogy; Cultural Origins; Firm Performance
    JEL: D02 D2 G3 L2 M1 Z1
    Date: 2021–12
  7. By: Sunny Yangguang Huang (Assistant Professor, Department of Economics and IEMS Faculty Associate; The Hong Kong University of Science and Technology)
    Abstract: From 2007 to 2020, China's Peer-to-peer lending market experienced a drastic boom and bust, and ended up with zero surviving platforms. The key reason for the collapse of China's P2P sector was that almost all P2P platforms deviate from the role of information intermediary and became shadow banks offering principal guarantee. As the number of P2P platforms increases, each platform has a greater incentive to offer principal guarantee in responses to fierce competition and the lure of financial fraud under limited regulatory capacity. This hurts the investors' and social welfare. The existence of naive investors makes offering principal guarantee more attractive to platforms. Promoting information disclosure may not solve the problem.
    Date: 2022–01

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