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on China |
| By: | Martin Beraja; Andrew Kao; David Y. Yang; Noam Yuchtman |
| Abstract: | Can frontier innovation be sustained under autocracy? We argue that innovation and autocracy can be mutually reinforcing when: (i) the new technology bolsters the autocrat's power; and (ii) the autocrat's demand for the technology stimulates further innovation in applications beyond those benefiting it directly. We test for such a mutually reinforcing relationship in the context of facial recognition AI in China. To do so, we gather comprehensive data on AI firms and government procurement contracts, as well as on social unrest across China during the last decade. We first show that autocrats benefit from AI: local unrest leads to greater government procurement of facial recognition AI, and increased AI procurement suppresses subsequent unrest. We then show that AI innovation benefits from autocrats' suppression of unrest: the contracted AI firms innovate more both for the government and commercial markets. Taken together, these results suggest the possibility of sustained AI innovation under the Chinese regime: AI innovation entrenches the regime, and the regime's investment in AI for political control stimulates further frontier innovation. |
| Keywords: | artificial intelligence, autocracy, innovation, data, China, surveillance, political unrest |
| Date: | 2021–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1811&r= |
| By: | Stanzel, Angela |
| Abstract: | Chinese foreign policy is at the crossroads of regional interests and global power rivalry in the Middle East, especially in Iran. China's interests in the Middle East increasingly collide with those of the US, which has brought about a significant re-orientation of Chinese foreign policy on this region. Beijing is increasingly concerned with balancing US influence in the region. Relations with Iran offer China various possibilities for balancing US influence. A decisive factor for China's Iran policy are its regulatory ideas aiming to establish equality of influence between the major global powers in a given region, in this case the Middle East. Chinese discourse underpins the shifts in Chinese foreign policy in which hard or soft balancing is increasingly becoming a feature of a "geo-politicised" regional policy. This geostrategic regional policy with regard to Iran shows that China is gaining influence there at the expense of the United States. German and European actors need a deeper understanding of China's balancing policy. This would enable Germany and the EU to correctly assess and also question the rhetoric of the Chinese leadership. On this basis, Germany and the EU should adjust their engagement in Iran, especially with regard to the Iranian nuclear weapons issue. Moreover, the new German government should ensure that foreign policy actions in third countries are comprehensive and coordinated with the EU so as to meet the challenges posed by China. Such coordination must also be pursued within the transatlantic framework. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:swprps:52022&r= |
| By: | Preston, Alison (University of Western Australia); Qiu, Lili (University of Western Australia); Wright, Robert E. (University of Glasgow) |
| Abstract: | This paper uses data from the 2015 China Household Financial Survey to analyse the gender gap in financial literacy in China. The sample consists of 36,311 adult respondents. A variety of financial literacy measures are employed. We show that important predictors of financial literacy include age, education and geographic location and that there are strong cohort effects, with younger respondents significantly more financially literate than older respondents. Males, on average, are more financially literate than females. Blinder-Oaxaca decomposition analysis shows that the gender gap in financial literacy, in part, reflects gender differences in schooling that favours males. There are also large and significant urban-rural differences in financial literacy, with the gender gap markedly higher in rural areas. Overall the gender gap in financial literacy is largely unexplained by gender differences in characteristics. Indeed, were females in China to look like males in China (in terms of age and geographic location) the gender gap in financial literacy would be even wider. Policy responses are discussed in the paper. |
| Keywords: | financial literacy, decomposition, gender-gap, urban-rural gap, China |
| JEL: | G53 I22 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15253&r= |
| By: | Karel Janda; Anna Kortusova; Binyi Zhang |
| Abstract: | Green bonds have gained prominence in China’s capital market as tools that help to fuel the transition to a climate-resilient economy. Although the issuance volume in the Chinese green bond market has been growing rapidly in recent years, the impact of the green label on bond pricing has not been adequately studied. Therefore, this paper investigates whether the newly developed financial instrument offers investors in China an attractive yield compared to other equivalent conventional bonds. By matching green bonds with their conventional counterparts and subsequently applying a fixed-effects estimation, our empirical results reveal a significant negative green bond yield premium of -1.8 bps on average in the Chinese secondary market. In addition, the yield premium is found to vary across issuers’ business sectors mainly due to the public reputation of bond issuers. Moreover, our empirical results reveal an insignificant relationship between the green certification and the yield premium, possibly reflecting inconsistent green bond standards in the Chinese market. Our results point to some practical implications for policymakers and investors. |
| Keywords: | Green Finance, Green bonds, ESG, China |
| JEL: | G12 Q56 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2022-38&r= |
| By: | Luke Milsom; Isabelle Roland |
| Abstract: | Exposure to Chinese import competition led to significant manufacturing job losses in the United States. Local labor markets, however, differ significantly in how they fared with respect to manufacturing employment. An important question is whether labor market institutions have an impact on the dynamic response of manufacturing employment to rising import penetration. We contribute to this debate by showing that minimum wages amplified the negative effect of Chinese import penetration on manufacturing employment in US local labor markets between 2000 and 2007. We develop a rigorous double-edged identification strategy. First, we construct shift-share instrumental variables to address the endogeneity of import penetration. Second, we use a border identification strategy to distinguish the effects of minimum wage policies from the effects of other local labor market characteristics that are unrelated to policy. Specifically, we rely on comparing commuting zones that are contiguous to each other but located in different states with different minimum wage policies. The approach essentially considers what happens to the response of manufacturing employment to import penetration when one crosses a policy border. |
| Keywords: | import penetration, labor market institutions, minimum wages, manufacturing employment |
| Date: | 2021–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1807&r= |
| By: | Du, Jun (Aston University); Girma, Sourafel (University of Nottingham); Görg, Holger (Kiel Institute for the World Economy); Stepanok, Ignat (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | China is perceived to rely on subsidizing firms in targeted industries to improve their performance and stay competitive. We implement an approach that allows for the joint estimation of direct and indirect effects of subsidies on subsidized and non-subsidized firms. We find that firms that receive subsidies experience a boost for productivity. However, our approach highlights the importance of indirect effects, which are generally neglected in the literature. We find that, in general but not always, non-subsidized firms experience reductions in their productivity growth if they operate in a cluster where other firms are subsidized. These negative externalities depend on the share of firms that receive subsidies in the cluster. Aggregating direct and indirect effects into a (weighted) total effect shows that this negative indirect effect tends to dominate. We interpret our results in the light of a simple heterogenous firm type model, which highlights that subsidization, in a competitive environment of firms, may potentially harm non-subsidized firms. |
| Keywords: | subsidies, firm performance, treatment effects, externalities, China |
| JEL: | H25 H32 L25 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15249&r= |
| By: | Clayton, Christopher (Yale School of Management); Dos Santos, Amanda (Columbia Business School;); Maggiori, Matteo (Stanford University Graduate School of Business, NBER, and CEPR;); Schreger, Jesse (Columbia Business School, NBER, and CEPR;) |
| JEL: | E01 E44 F21 F23 F32 G11 G15 G32 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4019&r= |
| By: | Du, Jun; Girma, Sourafel; Görg, Holger; Stepanok, Ignat |
| Abstract: | China is perceived to rely on subsidizing firms in targeted industries to improve their performance and stay competitive. We implement an approach that allows for the joint estimation of direct and indirect effects of subsidies on subsidized and non-subsidized firms. We find that firms that receive subsidies experience a boost for productivity. However, our approach highlights the importance of indirect effects, which are generally neglected in the literature. We find that, in general but not always, non-subsidized firms experience reductions in their productivity growth if they operate in a cluster where other firms are subsidized. These negative externalities depend on the share of firms that receive subsidies in the cluster. Aggregating direct and indirect effects into a (weighted) total effect shows that this negative indirect effect tends to dominate. We interpret our results in the light of a simple heterogenous firm type model, which highlights that subsidization, in a competitive environment of firms, may potentially harm non-subsidized firms. |
| Keywords: | Subsidies,Firm performance,Treatment effects,Externalities,China |
| JEL: | H25 H32 L25 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2220&r= |
| By: | Margit Molnar |
| Abstract: | The impressive emergence of China’s economy is set to lose some momentum as the country catches up with more advanced economies and its rapid ageing also weighs on it. However, China can still reap the “reform dividend”, especially with measures to keep up the sustained growth of productivity. Reforms that enhance competition in product markets are among those that can potentially bring about significant productivity gains. China has been lowering the burden on start-ups and simplifying administrative procedures for a while already, achieving significant progress, though more procedures could go online and a one-stop shop is still to be implemented across the country. State ownership remains dominant in most network industries and there are many SOEs even in commercially-oriented industries such as retail or catering. SOEs enjoy implicit government guarantees and are the main beneficiaries of administrative monopolies, i.e. exclusive rights granted by regulations. In addition, they also benefit from various subsidies, sometimes leading to low-level, repetitious investment, excess capacity and waste of public money. A more level playing field would bring about efficiency-enhancing competition by private and foreign firms. Some network industries such as electricity and gas have recently accelerated their opening up and competition is developing in some segments. Digitalisation is a promising candidate to lift China’s long-term growth potential. Competition, in particular competitive pressure from foreign counterparts when there are few domestic players could be an important source of efficiency gains in digital services. China has been a frontrunner in business digitalisation for a while already, but the outbreak accelerated also the provision of e-government services. While strengthening of IPR protection and promoting innovative ways of financing are welcome steps to nurture innovative industries, generous tax exemptions – which by OECD standards do not constitute good tax policy - reduce the availability of public funds for other priority areas. |
| Keywords: | administrative monopolies, competition, digitalisation, e-commerce, industrial policy, innovation, private firms, product markets, regulation, state-owned enterprises, trade in services |
| JEL: | D40 H81 L11 L50 L63 L84 L90 O25 P20 |
| Date: | 2022–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1716-en&r= |
| By: | Sardar, Rashedur (University of North Carolina at Greensboro, Department of Economics); Schaffer, Matthew (University of North Carolina at Greensboro, Department of Economics) |
| Abstract: | This paper investigates international monetary spillovers to stock prices in Bangladesh, a frontier market that has been excluded from prior studies in the literature. Using daily stock price data for over 300 publicly traded firms in a high-frequency framework, we find that contractionary monetary shocks originating from the US, euro area, and China lower stock prices, with Chinese monetary shocks having the largest impact. Contractionary shocks originating from India, on the other hand, lead to a statistically significant increase in stock returns. The positive response is driven by a small number of policy decisions. When these outlier decisions are removed from the sample, contractionary Indian monetary shocks lead to a decline in stock prices in line with spillovers from the other countries. |
| Keywords: | Monetary Policy; International Spillovers; Frontier Markets; |
| JEL: | E58 G15 O53 |
| Date: | 2022–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:uncgec:2022_005&r= |
| By: | Ahsan, Md. Nazmul; Emran, M. Shahe; Jiang, Hanchen; Shilpi, Forhad |
| Abstract: | A large literature on intergenerational mobility focuses on the conditional mean of children's economic outcomes to understand the role of family background, but ignores the information contained in conditional variance. Using exceptionally rich data free of coresidency bias, we provide evidence on three large developing countries (China, India, and Indonesia) that suggests a strong influence of father's education on conditional variance of children's schooling. We find substantial heterogeneity across countries, gender, and geography (rural/ urban). Cohort based estimates suggest that the effects of father's education on the conditional variance has changed qualitatively, in some cases a positive effect in the 1950s cohort turning into a substantial negative effect in the 1980s cohort. We develop a methodology to incorporate the effects of family background on the conditional variance along with the standard conditional mean effects. We derive risk adjusted measures of relative and absolute mobility by accounting for an estimate of the risk premium for the conditional variance faced by a child. The estimates of risk adjusted relative and absolute mobility for China, India and Indonesia suggest that the standard measures substantially underestimate the effects of family background on children's educational opportunities, and may give a false impression of high educational mobility. The downward bias is specially large for the children born into the most disadvantaged households where fathers have no schooling, while the bias is negligible for the children of college educated fathers. The standard (but partial) measures may lead to incorrect ranking of regions and groups in terms of relative mobility. Compared to the risk adjusted measures, the standard measures are likely to underestimate gender gap and rural-urban gap in educational opportunities. |
| Keywords: | Conditional Variance,Family Background,Intergenerational Educational Mobility,Risk Adjusted Mobility Measures,China,India,Indonesia |
| JEL: | I24 J62 O12 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1097&r= |