nep-cna New Economics Papers
on China
Issue of 2022‒03‒28
three papers chosen by
Zheng Fang
Ohio State University

  1. China’s Model of Managing the Financial System By Markus K. Brunnermeier; Michael Sockin; Wei Xiong
  2. Decoding China’s Virus Exceptionalism: Community-based Digital Contact Tracing in Wuhan amid Covid-19 By Philipp Boeing; Yihan Wang
  3. Cutting through the Value Chain: The long-run effects of decoupling the East from the West. By Gabriel Felbermayr; Hendrik Mahlkow; Alexander Sandkamp

  1. By: Markus K. Brunnermeier (Princeton University); Michael Sockin (University of Texas at Austin); Wei Xiong (Princeton University)
    Abstract: China's economic model involves active government intervention in financial markets. We develop a theoretical framework in which interventions prevent a market breakdown and a volatility explosion caused by the reluctance of short-term investors to trade against noise traders. In the presence of information frictions, the government can alter market dynamics since the noise in its intervention program becomes an additional factor driving asset prices. More importantly, this may divert investor attention away from fundamentals and totally toward government interventions (as a result of complementarity in investors' information acquisition). A trade-off arises: government's objective to reduce asset price volatility may worsen, rather than improve, information efficiency of asset prices.
    Keywords: China, financial markets
    JEL: G01 G14 G28
    Date: 2020–05
  2. By: Philipp Boeing (Centre for European Economic Research (Mannheim, Germany) - Zentrum für Europäische Wirtschaftsforschung (ZEW) - Universität Mannheim [Mannheim]); Yihan Wang (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)
    Abstract: This article explores how key stakeholders of an open innovation ecosystem interact in the digital context to overcome a public health emergency. Amid the Covid-19 pandemic, comprehensive, accurate and timely community-based digital contact tracing serves as a decisive measure in curbing viral transmission. This strategy integrates agile government decision-making, corporate innovation, community coordination, and citizen participation. In the process of big data analytics, communities play the crucial role of the middleground that moderates the interactions between organizational upperground (government and enterprises) and individual underground (citizens) on the digital platform. To demonstrate the application, we study the three stages of "closed-end community management" in Wuhan, which represents China's "virus exceptionalism" amid the pandemic. Finally, we raise several ethical concerns related to this model for future R&D management research on digitization.
    Keywords: Community,Covid-19,Digital contact tracing,Innovation ecosystem,Big data analytics
    Date: 2021–03–23
  3. By: Gabriel Felbermayr; Hendrik Mahlkow; Alexander Sandkamp
    Abstract: With ever-increasing political tensions between China and Russia on one side and the EU and the US on the other, it only seems a matter of time until protectionist policies cause a decoupling of global value chains. This paper uses a computable general equilibrium trade model calibrated with the latest version of the GTAP database to simulate the effect of doubling non-tariff barriers - both unilateral and reciprocal - between the two blocks on trade and welfare. Imposing trade barriers almost completely eliminates bilateral imports. In addition, changes in price levels lead to higher imports and lower exports of the imposing country group from and to the rest of the world. The targeted country group increases exports to the rest of the world and reduces imports. Welfare falls in all countries involved, suggesting that governments should strive to cooperate rather than turning away from each other. By imposing a trade war on Russia, the political West could inflict severe damage on the Russian economy because of the latter’s smaller relative size.
    Keywords: Trade, non-tariff barriers, global value chains, quantitative trade model, China, Russia, European Union
    JEL: F11 F13 F14 F17
    Date: 2022–02

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