nep-cna New Economics Papers
on China
Issue of 2022‒08‒08
sixteen papers chosen by
Zheng Fang
Ohio State University

  1. ICT, Human Capital, and Productivity in Chinese Cities By Qing Li; Yanrui Wu
  2. Guanxi and networking: The hidden business matrix of the Chinese economy By Haube, Markus; Horak, Sven
  3. The effect of gasoline prices on suburban housing values in China By Tong Zhang; Paul J. Burke
  4. The Effect of Housing Prices on the Quality of Export Products: Evidence from China By Yousen Jin; Helian Xu; Haitao Mao
  5. Entrepreneurs or Employees: What Chinese Citizens Encouraged to Become by Social Attitudes? By Xu, Tao; Zhu, Weiwei
  6. The Political Relation and Trade - The Case of US, China and Australia By Yifei Cai; Jamel Saadaoui; Yanrui Wu
  7. Spatial Disparity of Skill Premium in China: The Role of Financial Intermediation Development By Lai, Tat-kei; Wang, Luhang
  8. Urban Autonomy: Is China’s Belt and Road Initiative a Zero-Sum Game? By Veljko Fotak; William Megginson; Yi-Da Tsai
  9. ICT, Technological Diffusion and Economic Growth in Chinese Cities By Qing Li; Yanrui Wu
  10. Unique futures in China: studys on volatility spillover effects of ferrous metal futures By Tingting Cao; Weiqing Sun; Cuiping Sun; Lin Hao
  11. Towards An Inclusive Energy Transition Beyond Coal – A comparison of just transition policies away from coal between China, the EU and the US By Xinqing Lu; Erpu Zhu; Loyle Campbell; Manfred Hafner; Michel Noussan; Pier Paolo Raimondi
  12. Green credit policy and total factor productivity: Evidence from Chinese listed companies By Shu Guo; ZhongXiang Zhang
  13. Minimum Wages in Developing Countries By Fang, Tony; Ha, Viet Hoang
  14. Predicting Stock Price Movement after Disclosure of Corporate Annual Reports: A Case Study of 2021 China CSI 300 Stocks By Fengyu Han; Yue Wang
  15. Hard facts and envIRONmental impacts: An overview of the global iron and steel sector By Küblböck, Karin; Tröster, Bernhard; Eigner, Michael
  16. Deep historical roots, culture choice and the New World Order By Miller, Marcus

  1. By: Qing Li (Department of Economics and Finance, SILC Business School, Shanghai University); Yanrui Wu (Business School, The University of Western Australia)
    Abstract: This study uses a rich city-level dataset to analyse the relationship between information and communication technology (ICT) and productivity performance in China during 2003-2016. It is shown that ICT positively contributes to Chinese cities’ productivity in conjunction with other growth determinants, such as human capital, foreign direct investment, infrastructure development, financial market development, and research and development investment. An identifiable amplified effect is detected when ICT exceeds certain threshold in Chinese cities. This threshold level is reached in over a half of Chinese cities particularly cities in coastal regions. Finally, ICT is found to substitute human capital in China’s context. Since the average education level in Chinese cities is low, the finding is in line with the argument that ICT only improves productivity of high-skilled workers but worsens that of the low-skilled ones.
    Keywords: ICT, human capital, productivity, China
    JEL: O47 O33 R10
    Date: 2022
  2. By: Haube, Markus; Horak, Sven
    Abstract: China's economic structures, business dynamics and individual management decisions are not determined by the country's formal institutional arrangements alone. China's society, its politics and business are rather governed by powerful informal mechanisms that complement and sometimes overrule the ordering principles outlined in the formal sector. Network structures and guanxi, in particular, create hidden microcosms that exist beyond, or rather parallel to, markets and hierarchies and have a profound impact on the structures and dynamics of China's economy and its business sector. This phenomenon exists since the early days of China's civilisation and continues to shape the China of today (Bian, 2018; Fei, 1992; Yang, 1994). This contribution endeavours the following: (i) to outline the mechanics of guanxi relations and networks in Chinese society; (ii) to highlight the impact of guanxi relations and networks on Chinese business and management; and (iii) to discuss China's guanxi relations and networks in international comparison. In order to do so, this contribution integrates different streams of literature (economic and sociological network literature, management and organization studies, Chinese and East Asian area studies) into a comprehensive analysis shedding light on the various forms and dimensions in which guanxi relations and networks shape the way business is conducted in China.
    Date: 2022
  3. By: Tong Zhang; Paul J. Burke
    Abstract: By raising road transportation costs, an increase in gasoline prices should be expected to reduce housing demand in locations further from the central business district (CBD) relative to inner-city locations. This study uses a monthly real estate area-level dataset for 19 large cities in China over 2010–2018 to investigate the impact of gasoline prices on intra-city spatial differentials in housing prices. The findings suggest that higher gasoline prices on average lead to a relative decline in housing prices in outer suburbs, with a 1% increase in gasoline prices on average leading to a 0.004% relative reduction in home values for every additional kilometer from the CBD. The effect is larger in cities that have higher automobile ownership rates and that are less densely populated. The results are consistent with a conclusion that the rise of electric vehicles, autonomous vehicles, and working from home is likely to contribute to a lowering of geographical price differentials within Chinese cities over time.
    Keywords: gasoline price; housing price; transportation cost.
    JEL: R31 Q41 Q43
    Date: 2022
  4. By: Yousen Jin (School of Economics and Management, Nanjing University of Science and Technology); Helian Xu (School of Business Administration, Zhongnan University of Economics and Law); Haitao Mao (School of Business Administration, Zhongnan University of Economics and Law)
    Abstract: This paper studies the effect of rising housing prices on the quality of export products. It employs a model of endogenous quality choice to show that rising housing prices can exert both positive and negative effects on export quality. We test the model’s predictions by using Chinese firm-level data matched with customs and city-level data from 2000 to 2013. Results show that rising housing prices significantly reduce the quality of export products: the negative effect of speculative investment is found to outweigh the positive effect of easing of financing constraints. High-productivity firms and industries with a greater scope for quality differentiation are more affected by the rising housing prices. Furthermore, government controls on home purchasing help reduce the negative effect of rising housing prices on the quality of export products.
    Keywords: Housing prices, quality of export products, home purchase restriction policy
    JEL: F10 R31
    Date: 2022
  5. By: Xu, Tao; Zhu, Weiwei
    Abstract: The traditional way of the "troika" cannot support sustainable development for China, and future economic growth should be pushed by entrepreneurship, which can be the key to innovation. The paper analyses the importance and necessity of entrepreneurship in the context of China and its current situation systematically, and methodically studies whether it is entrepreneurs or employees that social attitudes encourage citizens to become. Using Chinese General Social Survey data, the paper explores the essentiality of social attitudes from three perspectives: social equity, social happiness and social trust that can reflect the social atmosphere, and examines the influential factors in terms of personal characteristics through an empirical approach. The paper finds that citizens' feelings and perceptions of social equity and social happiness have a significant positive impact on encouraging them to be entrepreneurs, with positive factors such as income, social security and children, and negative factors such as education, political identity and hukou. The effect can be more significant for urban citizens than rural ones; men and women are affected differently by the same factors in their choice to become employees or entrepreneurs.
    Keywords: Entrepreneurship; Social Attitude; Equity; Happiness; Social Atmosphere; Chinese General Social Survey
    JEL: J1 J12 J13 J16 M1 M13 M14 M2 O1 O3 O4
    Date: 2022–06–20
  6. By: Yifei Cai (Macau University of Science and Technology); Jamel Saadaoui (University of Strasbourg); Yanrui Wu (Business School, The University of Western Australia)
    Keywords: Structural vector autoregression, Local projection, Impulse response; US-China political relation; Australia-China trade
    JEL: C32 F14 F51
    Date: 2022
  7. By: Lai, Tat-kei; Wang, Luhang
    Abstract: In China, the relative wages of high-skilled and low-skilled workers display huge variation across different regions. We examine whether financial intermediation development can explain such variation. Conceptually, better-developed financial intermediation helps financially-constrained firms raise new capital, which is usually skilled-biased, resulting in an increased demand for skilled labor and skill premium. Using a cross-section of workers from the 1% Population Survey of 2005, we find consistent evidence; besides, the relationship is stronger among workers in industries with higher capital-skill complementarity and in non-state-owned enterprises. Overall, our results suggest that the financial market plays a role in explaining skill premium in China.
    JEL: J24 J31 O11
    Date: 2022–07–13
  8. By: Veljko Fotak; William Megginson; Yi-Da Tsai
    Abstract: UForeign infrastructure investments tend to increase cross-border economic activity between investor and recipient countries. We question whether such an increase comes at the expense of trade with third-party countries (a “zero-sum hypothesis”), or whether the infrastructure investment leads to an increase in overall trade (a “lifting all boats hypothesis”). Our investigation is within the context of the Chinese Belt and Road Initiative (BRI). In a sample spanning 2013 to 2018 and covering 1,135 BRI projects in 110 countries, we find strong evidence in support of the zero-sum hypothesis. The increase in cross-border economic activity (imports, exports, and M&A flows) with China is accompanied by a decrease in activity with third party countries. Further, we show that, following BRI investments, BRI countries trade more with other countries that are politically aligned with China, but less with countries that have recently been visited by the Dalai Lama. Overall, our evidence points to both a “zero-sum” nature of the impact of infrastructure on cross-border trade, and to the existence of a BRI “network” that favors countries that are politically aligned with China.
    Keywords: Trade, cross-border M&As, infrastructure, Belt and Road
    JEL: F14 F36
    Date: 2022
  9. By: Qing Li (Department of Economics and Finance, SILC Business School, Shanghai University); Yanrui Wu (Business School, The University of Western Australia)
    Abstract: This study uses a rich city-level dataset to analyse the relationship between information and communication technology (ICT) and economic growth in Chinese cities during 2001-2016. It is shown that ICT not only improves the aggregate efficiency of a city but also helps the city absorb technological diffusion from the frontier city. In addition, distance plays little role in technological diffusion process associated with ICT. Cities geographically farther away from or closer to the frontier city can equally benefit from technological diffusion as long as they have the same level of ICT development.
    Keywords: ICT, technological diffusion, economic growth, Chinese cities
    JEL: O47 O33 R11
    Date: 2022
  10. By: Tingting Cao; Weiqing Sun; Cuiping Sun; Lin Hao
    Abstract: Ferrous metal futures have become unique commodity futures with Chinese characteristics. Due to the late listing time, it has received less attention from scholars. Our research focuses on the volatility spillover effects, defined as the intensity of price volatility in financial instruments. We use DCC-GARCH, BEKK-GARCH, and DY(2012) index methods to conduct empirical tests on the volatility spillover effects of the Chinese ferrous metal futures market and other parts of the Chinese commodity futures market, as well as industries related to the steel industry chain in stock markets. It can be seen that there is a close volatility spillover relationship between ferrous metal futures and nonferrous metal futures. Energy futures and chemical futures have a significant transmission effect on the fluctuations of ferrous metals. In addition, ferrous metal futures have a significant spillover effect on the stock index of the steel industry, real estate industry, building materials industry, machinery equipment industry, and household appliance industry. Studying the volatility spillover effect of the ferrous metal futures market can reveal the operating laws of this field and provide ideas and theoretical references for investors to hedge their risks. It shows that the ferrous metal futures market has an essential role as a "barometer" for the Chinese commodity futures market and the stock market.
    Date: 2022–06
  11. By: Xinqing Lu (Sciences Po, Paris School of International Affairs); Erpu Zhu (Sciences Po, Paris School of International Affairs); Loyle Campbell (Sciences Po, Paris School of International Affairs); Manfred Hafner (Fondazione Eni Enrico Mattei, Sciences Po, Paris School of International Affairs, The John Hopkins University, School of Advanced International Studies); Michel Noussan (Fondazione Eni Enrico Mattei, Sciences Po, Paris School of International Affairs); Pier Paolo Raimondi (Fondazione Eni Enrico Mattei, Istituto Affari Internazionali)
    Abstract: This paper compares different just transition pathways in China, the European Union and the United States of America by comparing the current state of the coal sector and just transition policies away from coal. How can social justice in the energy transition be achieved under different models of energy governance? Since these three blocs have only made some progress on just transition policies and legislations for workers and communities impacted by the coal phase down or phase out in recent years, there have not been many studies comparing them to each other. The analysis in this paper shows that while all three blocs work towards ensuring the integration of coal workers and coal communities into the clean economy in the process of coal reduction, their approaches to achieving a just transition differ in terms of policy frameworks, financing resources, specific measures and public participation. This paper is part of a series of FEEM working papers of comparison studies of China, the EU and the US in the field of climate and energy.
    Keywords: Energy Transition, Just Transition, Coal Phase Out, Inclusiveness, China, the European Union, the United States
    JEL: Q38 Q56 Q58
    Date: 2021–12
  12. By: Shu Guo (Ma Yinchu School of Economics, Tianjin University and China Academy of Energy, Environmental and Industrial Economics); ZhongXiang Zhang (Ma Yinchu School of Economics, Tianjin University and China Academy of Energy, Environmental and Industrial Economics)
    Abstract: The green credit policy plays a vital role in promoting enterprise upgrading. Using a thirteen year panel data of listed companies in China (2007 2019), this study uses the difference in differences (DID) method to examine the effects of the Green Credit Guidelines in 2012 (GCG2012) on the firm level total factor productivity (TFP). Our results show that the GCG2012 significantly increases the TFP of companies in green credit restricted industries. This finding remains robust through employing the PSM-DID model, alternating the treatment group, changing the sample period, and controlling the effects of other environmental policies and financial crises. This effect is more pronounced for private enterprises, companies with worse debt paying ability, companies in highly competitive industries and companies in regions with higher financial liberalization. The impact mechanism test indicates that increasing the green innovation and reducing the agency costs (including green agency costs and traditional agency costs) are two possible channels to boost firm level TFP. Further analysis shows that the GCG2012 is effective not only for heavily polluting industries but also for light polluting industries, and that the GCG2012 can improve the economic performance of firms in green credit restricted industries. Overall, this study reveals the micro mechanisms behind the long term impact of the GCG2012 policy on firm level TFP, providing empirical evidence and policy suggestions for improving green credit policies and promoting green development.
    Keywords: Green credit policy, green finance, total factor productivity, PSM-DID model, China
    JEL: Q48 Q53 Q55 Q58 O13 P28 R11 H23
    Date: 2022–05
  13. By: Fang, Tony (Memorial University of Newfoundland); Ha, Viet Hoang (Memorial University of Newfoundland)
    Abstract: There is considerable debate on the level and effects of minimum wages for many decades. However, most of the studies are conducted in developed countries. This chapter first reviews the theoretical frameworks of anticipated effects of a minimum wage increase on wages and employment in developing countries. The empirical challenges are then discussed, including potential heterogeneity, simultaneity (or endogeneity) between employment and minimum wages, and possible omitted variable bias, taking into consideration of the different labour market structures and labour market institutions in developing countries, particularly the level of informal sector, extent of binding minimum wages, level of enforcement, and the vulnerability of the workers impacted. Evidence from BRICS members (Brazil, Russia, India, China, and South Africa) are reviewed and discussed. Surprisingly, there is substantial evidence of positive wage effects in both formal and informal sectors, although the adverse effects on employment are generally modest in the formal sector, and almost non-existent in the informal sector. However, when minimum wages are binding and enforced, studies focusing on vulnerable workers do find significant and positive wage effects and strong disemployment effects, implying that the classic trade-off of minimum wages between higher wages and lower employment does occur in developing countries.
    Keywords: minimum wages, labour market outcomes, developing countries
    JEL: J31 J33 J38
    Date: 2022–05
  14. By: Fengyu Han; Yue Wang
    Abstract: In the current stock market, computer science and technology are more and more widely used to analyse stocks. Not same as most related machine learning stock price prediction work, this work study the predicting the tendency of the stock price on the second day right after the disclosure of the companies' annual reports. We use a variety of different models, including decision tree, logistic regression, random forest, neural network, prototypical networks. We use two sets of financial indicators (key and expanded) to conduct experiments, these financial indicators are obtained from the EastMoney website disclosed by companies, and finally we find that these models are not well behaved to predict the tendency. In addition, we also filter stocks with ROE greater than 0.15 and net cash ratio greater than 0.9. We conclude that according to the financial indicators based on the just-released annual report of the company, the predictability of the stock price movement on the second day after disclosure is weak, with maximum accuracy about 59.6% and maximum precision about 0.56 on our test set by the random forest classifier, and the stock filtering does not improve the performance. And random forests perform best in general among all these models which conforms to some work's findings.
    Date: 2022–06
  15. By: Küblböck, Karin; Tröster, Bernhard; Eigner, Michael
    Abstract: This briefing paper provides an overview of t he global iron and steel sector. It describes the properties of iron ore and delineates the geographical distribution of deposits and trade flows. Further, it explains pricing mechanisms and addresses environmental impacts. Iron and steel are key materials for industrial production, with iron being used 20 times more than all other metals combined. While extraction of iron ore has almost tripled over the past twenty years, the iron and steel sector remains highly concentrated, with most iron ore extraction taking place in just a few countries, in particular in Australia and Brazil, which account for over half of all iron ore extraction. Indeed, more than two-thirds of the iron ore export market is controlled by only four companies. In terms of global steel production, China accounts for more than half of the market share. Iron ore is also mined in Austria, and significant quantities are imported for steel production, although there is a lack of transparency; Austria is the only country in the EU not to publish statistical data on its iron ore imports since 2018. Globally, iron and steel represent the larges t sector in terms of energy demands, CO 2 emissions and air pollution and are among the world's major water consumers. Prices of iron ore are highly volatile, which has major consequences for exporting and importing countries and makes planning for CO2 phase-out difficult.
    Keywords: iron ore,steel,trade flows,price volatility,China,Austria
    Date: 2022
  16. By: Miller, Marcus (University of Warwick, CAGE and CEPR)
    Abstract: Gerard Roland examines data going back to 3,000 BC for historical roots that might explain the current division of nations as between cultures of collectivism and individualism. In response to the appeal for theories bearing on the empirical evidence presented - and of recent moves by Russia and China to create a New World Order based on similar cultural division - three contributions are discussed. First is the competing powers perspective of Acemoglu and Robinson, who propose that individualism flourishes where power is evenly balanced between the state and the people : otherwise, either Despotism or Disorder will ultimately prevail. Then there is Ken Binmores study of cooperative social contracts : this offers support for stable societies of each cultural type, based on the folk theorem of repeated games. Finally the notion that dictatorship may be sustained by deception rather than repression - by leaders whom Guriev and Treisman call spin dictators. In the light of these perspectives, what to make of the current drive for a new global order that recognizes different spheres of influence for each of Roland’s cultural types? We look specifically at the case of Russia.
    Keywords: Individualism ; Collectivism, Culture ; Social Contracts ; social preferences ; Neofeudalism ; Despotism ; New World Order JEL Classification: C70 ; C73 ; N00 ; P00 ; P50 ; Z10 ; Z13
    Date: 2022

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