nep-cna New Economics Papers
on China
Issue of 2022‒04‒18
seven papers chosen by
Zheng Fang
Ohio State University

  1. The private sector advances in China- The evolving ownership structures of the largest companies in the Xi Jinping era By Tianlei Huang; Nicolas Véron
  2. The Effects of Trump's Trade War with China on Japan's Trade By ITO Tadashi
  3. China's Declining Business Dynamism By Diego A. Cerdeiro; Cian Ruane
  4. Data-intensive innovation and the State: evidence from AI firms in China By Beraja, Martin; Yang, David Y.; Yuchtman, Noam
  5. Has Chinese Aid Benefited Recipient Countries? Evidence from a Meta-Regression Analysis By Pierre Mandon; Martha Tesfaye Woldemichael
  6. Internationalizing Like China By Clayton, Christopher; Santos, Amanda Dos; Maggiori, Matteo; Schreger, Jesse
  7. Can aid buy foreign public support? Evidence from Chinese development finance By Wellner, Lukas; Dreher, Axel; Fuchs, Andreas; Parks, Bradley; Strange, Austin M.

  1. By: Tianlei Huang; Nicolas Véron
    Abstract: This paper documents recent structural changes in China’s corporate landscape, based on company level data, providing a complementary perspective to that of official Chinese statistics. We classify China’s largest companies by revenue since 2004 (based on Fortune Global 500 rankings), and largest listed companies by market capitalisation since 2010, into state and private-sector categories, using a conservative definition of the private sector. Among the largest companies by revenue, the private...
    Date: 2022–04
  2. By: ITO Tadashi
    Abstract: Using monthly trade data for the United States (U.S.), Japan, and China, this study investigates the effects of 45th U.S. President Trump's trade war with China on Japan's trade. Although Japan's import values and quantities of Trump-targeted goods from China did not increase, the import price did decrease slightly. Japan seems to have enjoyed a terms of trade effect because of Trump's trade war with China. Contrary to a priori expectation, Japanese industries which are linked as the upstream industry of China's (downstream) industries subjected to Trump tariffs are shown to have increased their exports to China. To investigate this unexpected result, this study analyzes China's exports of Trump tariff-targeted goods to the world and finds that China's exports of these goods to the world increased. An increase in China's exports to countries other than the U.S. more than offset the decrease in its exports to the U.S.
    Date: 2022–03
  3. By: Diego A. Cerdeiro; Cian Ruane
    Abstract: After impressive growth in the 2000s, China's productivity has more recently stagnated. We use firm-level data to analyze productivity and firm dynamism trends from 2003 to 2018. We document six facts that together show a decline in China’s business dynamism. We show that (i) the revenue share of young firms has declined, (ii) the life-cycle growth of young firms relative to older incumbents has slowed, (iii) weaker life-cycle growth can be explained by slower productivity growth and weaker investment in intangibles, (iv) younger and smaller firms are more capital constrained than their older and larger counterparts, (v) the responsiveness of capital growth to the marginal product of capital has declined, and (vi) large productivity gaps between SOEs and private firms persist. We find that business dynamism is weaker in provinces where SOEs account for a larger share of the capital stock. Our results suggest that declining private business dynamism is an important factor in explaining China's sluggish TFP growth and that SOE reform could boost productivity growth indirectly by stimulating business dynamism.
    Keywords: China, total factor productivity, growth, business dynamism.; business dynamism; life-cycle growth; SOE reform; China's productivity; dynamism trend; Productivity; Public enterprises; Total factor productivity; Capital productivity; Aging
    Date: 2022–02–18
  4. By: Beraja, Martin; Yang, David Y.; Yuchtman, Noam
    Abstract: Artificial intelligence (AI) innovation is data-intensive. States have historically collected large amounts of data, which is now being used by AI firms. Gathering comprehensive information on firms and government procurement contracts in China’s facial recognition AI industry, we first study how government data shapes AI innovation. We find evidence of a precise mechanism: because data is sharable across uses, economies of scope arise. Firms awarded public security AI contracts providing access to more government data produce more software for both government and commercial purposes. In a directed technical change model incorporating this mechanism, we then study the trade-offs presented by states’ AI procurement and data pro-vision policies. Surveillance states’ demand for AI may incidentally promote growth, but distort innovation, crowd-out resources, and infringe on civil liberties. Government data provision may be justified when economies of scope are strong and citizens’ privacy concerns are limited.
    Keywords: data; innovation; artificial intelligence; China; economies of scope; directed technical change; industrial policy; privacy; surveillance
    JEL: O30 P00 E00 L50 L63 O23 O40
    Date: 2021–03–31
  5. By: Pierre Mandon; Martha Tesfaye Woldemichael
    Abstract: This paper employs a meta-regression analysis of 473 estimates from 15 studies to take stock of the empirical literature on Chinese aid effectiveness. After accommodating publication selection bias, we find that, on average, Beijing’s foreign assistance has had a positive impact on economic and social outcomes in recipient countries but an opposite effect on governance, albeit negligible in size. We also show that (i) studies that fail to uncover statistically significant effects are less likely to be submitted to journals, or accepted for publication; and (ii) results are not driven by authors’ institutional affiliation. Differences in study characteristics such as the type of development outcome considered, how the Chinese aid variable is measured, the geographic region under study, and publication outlet explain the heterogeneity among Chinese aid effectiveness estimates reported in the literature.
    Keywords: China, foreign aid, meta-regression analysis
    Date: 2022–02–25
  6. By: Clayton, Christopher; Santos, Amanda Dos; Maggiori, Matteo; Schreger, Jesse
    Abstract: We empirically characterize how China is internationalizing the Renminbi by selectively opening up its domestic bond market and propose a dynamic reputation model to understand China's internationalization strategy. While previously closed to foreign investors, China has recently allowed major increases in foreign investment in its domestic bond market. China carefully controlled the entrance of foreign investors into its market, first allowing in relatively stable long-term investors like central banks before allowing in flightier investors like mutual funds. Foreign investors increasingly treat Renminbi denominated assets as a substitute for safe developed-market government bonds. Our framework explains these patterns as the result of a government strategy to build its reputation as an international currency issuer while minimizing the cost of potential capital flight as it gains credibility. We analyze optimal two-way liberalization: gradually letting more domestic capital flow abroad as foreigners increase their participation in domestic markets.
    Date: 2022–03–11
  7. By: Wellner, Lukas; Dreher, Axel; Fuchs, Andreas; Parks, Bradley; Strange, Austin M.
    Abstract: Bilateral donors use foreign aid to pursue soft power. We test the effectiveness of aid in reaching this goal by leveraging a new dataset on the precise commitment, implementation, and completion dates of Chinese development projects. We use data from the Gallup World Poll for 126 countries over the 2006-2017 period and identify causal effects with (i) an event-study model that includes high-dimensional fixed effects, and (ii) instrumental-variables regressions that rely on exogenous variation in the supply of Chinese government financing over time. Our results are nuanced and depend on whether we focus on subnational jurisdictions, countries, or groupings of countries.
    Keywords: development finance,foreign aid,aid events,public opinion,government approval,soft power,China,Gallup World Poll
    JEL: F35 F59 H73 H77 O19 P33
    Date: 2022

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