nep-cna New Economics Papers
on China
Issue of 2022‒11‒21
six papers chosen by
Zheng Fang
Ohio State University

  1. Informal institution meets child development By Tang, Can; Zhao, Zhong
  2. Influence of E-commerce on Birth Rate: Evidence from rural China based on county-level longitudinal data By KOMATSU Sho; MA Xinxin; SUZUKI Aya
  3. What was the Impact of Creating Better Jobs for more People in China’s Economic Transformation? What we know and Questions for Further Investigation By Merotto, Dino Leonardo; Jiang, Hanchen
  4. Trade with Nominal Rigidities: Understanding the Unemployment and Welfare Effects of the China Shock By Andrés Rodríguez-Clare; Mauricio Ulate; Jose P. Vasquez
  5. China’s Carbon Market: Development, Evaluation, Coordination of Local and National Carbon Markets and Common Prosperity By ZhongXiang Zhang
  6. Engaging with partners in the Global South in uncertain times By Klingebiel, Stephan

  1. By: Tang, Can; Zhao, Zhong
    Abstract: Using a national representative sample, the China Family Panel Studies, this paper explores the influences of clan culture, a hallmark of Chinese cultural history, on the prevalence of child labor in China. We find that clan culture significantly reduces the incidence of child labor and working hours of child laborer. The results exhibit strong boy bias, and are driven by boys rather than girls, which reflects the patrilineal nature of Chinese clan culture. Moreover, the impact is greater on boys from households with lower socioeconomic status, and in rural areas. Clan culture acts as a supplement to formal institutions: reduces the incidence of child labor through risk sharing and easing credit constraints, and helps form social norms to promote human capital investment. We also employ an instrument variable approach and carry out a series of robustness checks to further confirm the findings.
    JEL: J21 J22 J81 O15
    Date: 2022–10–10
  2. By: KOMATSU Sho; MA Xinxin; SUZUKI Aya
    Abstract: Using official data from the Jiangsu region to construct county-level longitudinal samples and econometric models for the period from 2011 to 2019, we investigated the causal relationship between e-commerce development and regional birth rate in rural China. We used two indicators, the presence and number of Taobao villages in a county, to measure the development level of rural e-commerce. We find that e-commerce significantly reduces the crude birth rate (CBR) in most models, although this influence varies between groups. Furthermore, the negative effect of e-commerce is larger in regions with higher ratios of primary industry employment and smaller in well-developed regions. A U-shaped relationship exists between economic development level and CBR. Additionally, CBR is lower in counties with higher population densities and higher in counties with higher ratios of primary sector employment.
    Date: 2022–10
  3. By: Merotto, Dino Leonardo; Jiang, Hanchen
    Abstract: The authors show that for China the movement of more people into better jobs with higher incomes formed a very important explanation for the country’s long-term success in growth and poverty reduction. China’s exporting cities created a virtuous cycle of new wage-employment-creating investments by new businesses making new products. The rapid increase in urban labor demand drew hundreds of millions of workers from the rural “traditional” sector to the “modern” sector, providing them with more reliable waged incomes. This dramatically raised the share of waged employment in China’s economy and unleashed new middle-class demand for more income-elastic goods and services. Growth in urban wages was moderated by regulated rural to urban labor migration under the Hukou system. This raised returns to capital, which maintained business incentives to re-invest their profits in new goods and services for which new markets were opening. Production of cheaper manufactured goods for the world market was an important catalyst, but domestic demand for services in China has maintained the momentum.
    Keywords: labor productivity; labor productivity growth; per capita income; marginal propensity to save; gross fixed capital formation; wage employment; rural to urban migration; negative real interest rate; female labor force participation; lower level of education; per capita income growth; share of employment; capital per worker; Labor Compensation; returns to capital; increase in labor; household consumption; rural area; capital deepening; share of wage; urban labor migration; working age population; million people; fishing industry; share of labor; household survey data; agriculture industry; gross national income; demand for service; Labor Market; Homebased Work; fixed capital investment; cost of capital; share of work; accumulation of capital; years of schooling; Home Based Work; share of woman; factor of production; increase in capital; division of labor; output per worker; investment in buildings; old age dependency; employment in industry; gross capital formation; quality of job; change in demand; economies of scale; supply of labor; purchasing power parity; lack of skill; employment in agriculture; human capital accumulation; high productivity jobs; world market share; privileges and immunity; urban youth employment; private sector wage; return to education; real gdp; labor income; labor demand; Young Workers; labor transition; consumer demand; increased demand; job opportunities; urban population; virtuous cycle; rural worker; private household; value added; household saving; productivity gain; domestic economy; merchandise export; job opportunity; labor earning; rural employment; corporate profit; new product; wage work; wage growth; new investment; older worker; age category; world economy; trend growth; factor accumulation; employed persons; industry productivity; workers benefit; dynamic component; comparative advantage; urban worker; labor supply; demographic dividend; employment share; macro data; manufactured goods; modern sector; urban wage; domestic demand; Financial Sector; education level; private investment; urban employment; new market; total consumption; Employment Change; new job; fertility estimates; domestic service; global market; private consumption; global trade; worker type; Urban Transformation; rural-urban migration; employment increase; real share; trade war; Real estate; total wage; total employment; employment type; global economy; financial repression; ppp value; direct credit; women employment; domestic consumption; agriculture sector; young woman; increased export; external agencies; skilled labor; capital stock; real capital; consumption demand; migrant population; product category; vehicle demand; internal migration; construction industry; demographic change; employment rate; average wage; productivity increase; employment elasticity; pension system; monthly wage; migrant jobs; household income; consumption increase; rural location; urban growth; urban job; consumption survey; labor condition; replacement income; creating job; elderly dependents; trade datum; data service; dependency ratio; sampling frame; rural economy; average household; registration system; urban economy; investment climate; copyright owner; employment opportunities; employment opportunity; sole responsibility; original work; public policy; wage earnings; information gap; labor regulation; agglomeration effect; predatory practice; cross-section data; labor abundance; new demand; increased supply; commercial purpose; increased returns; regression results; business incentives; wage gap; in economics; jobs diagnostic; internationally comparable; survey modules; production method; wage income; individual characteristic; new business; migrant worker; production activity; traditional sector; take time; domestic saving; annual labor; commodity price; income category; richer countries; low inflation; consumption growth; aggregate data; empirical literature; lagged change; world trade; export boom; foreign saving
    Date: 2021–10–26
  4. By: Andrés Rodríguez-Clare; Mauricio Ulate; Jose P. Vasquez
    Abstract: We present a dynamic quantitative trade and migration model that incorporates downward nominal wage rigidities and show how this framework can generate changes in unemployment and labor participation that match those uncovered by the empirical literature studying the “China shock.” We find that the China shock leads to average welfare increases in most U.S. states, including many that experience unemployment during the transition. However, nominal rigidities reduce the overall U.S. gains by around one fourth. In addition, there are seven states that experience welfare losses in the presence of downward nominal wage rigidity that would have experienced gains without it.
    Keywords: trade, unemployment, China shock, downward nominal wage rigidity
    JEL: F10 J20
    Date: 2022
  5. By: ZhongXiang Zhang (Ma Yinchu School of Economics, Tianjin University and China Academy of Energy, Environmental and Industrial Economics)
    Abstract: To achieve the commitments to both carbon peaking and carbon neutrality, China should focus on those policies of significant impact on emissions reduction at the lowest cost. Launching the national carbon market with the power generation sector is a good start point in this direction. Since its operation, the carbon price has not experienced sharp fluctuations, and falls within a range of CNY40~60 per ton. The block agreement transaction dominates trading, but with an average discount rate of 9.6% in block agreement, the aforementioned carbon prices overestimate the overall carbon prices. While the overall compliance rate measured against entities reached about 94.4%, there are significant differences across provinces, with compliance rate ranging from 82.9% to a full 100% compliance. Entities engaging in trading are mainly for compliance, and therefore transaction is driven by compliance. This article argues that the development of the carbon market requires further reform of the electricity pricing mechanism and the coordinated development of various related markets. With respect to national carbon trading scheme itself, the article discusses the areas where more work needs to be done to ensure that the national carbon emissions trading scheme functions properly. This involves carbon emissions trading legislation, further improvement in the rules conducive to the use of carbon emissions trading as a market tool, and the expansion of the participating industries and the scope of the carbon market in terms of diversifying market players and increasing trading varieties. Given the co-existence of the national carbon market and regional carbon market pilots, the article suggests the specific areas for the regional carbon markets to take the initiative to strengthen the synergistic effects of national carbon market. Furthermore, the article strongly recommends to continuously increase the proportion of carbon allowances auctions, and to set up a transformation fund from the proceeds of paid allocation of allowances to support the transformation and upgrading of regions with low levels of development and technology in China.
    Keywords: Carbon market, Carbon price, Electricity market, Allowance allocation, Common prosperity
    JEL: Q48 Q53 Q55 Q58 O13 P28 R11 H23
    Date: 2022–10
  6. By: Klingebiel, Stephan
    Abstract: Having already been growing in importance for a number of years, geopolitics as it relates to the Global South has become tremendously more relevant following Russia's aggression in Ukraine in 2022. Rivalries with China are set to become even more influential in future, determining intergovernmental relations as a whole. Following the Russian invasion in February 2022, attention was initially concentrated on the stances adopted by states regarding the corresponding UN resolutions and UN debates. This focus alone illustrates the great significance attached to the positions taken by states and thus to strategic partisan thinking. At the same time, it would seem that none of the country alliances being formed to date differ fundamentally from those of recent years. Many developing countries are capitalising on their emancipated status gained in recent decades to formulate positions of their own, as well as to identify any double standards on the part of Western governments. It is important that German, European and other political players gain a better idea of the interests and perceptions of partners in the Global South. In development terms, Russia's war of aggression represents a watershed moment. It is important to note the following in this context: * At overall level, it will most likely be more difficult to achieve the 2030 Agenda, with its 17 SDGs (Sustainable Development Goals). The COVID-19 pandemic had already produced a huge socio-economic shock in the Global South, but this has now been dwarfed in many developing countries by the impact of the war. On top of this, the increasingly critical effects of climate change are proliferating all the time. * While the most severe consequences of the Ukraine war are being felt by the country itself (need for comprehensive humanitarian assistance; future need for large-scale reconstruction work) and the surrounding region (refugee care, etc.), the surge in food and energy prices resulting from the conflict is having a major impact on developing countries. * There are also other long-term challenges in regard to global sustainable development. Take innovative cooperation instruments for tackling climate change, for instance, the most prominent of which are just energy transition partnerships (JETP). The legitimacy of efforts to promote these ambitious cooperation initiatives could be undermined by European countries introducing short-term measures that involve a return to fossil fuel investment. * The growing need to overcome cross-border challenges could intersect with cutbacks being made by donor countries to their long-term development programmes. For example, some nations (particularly the UK and, in some cases, Germany) may scale back funding or increasingly charge for providing in-donor refugee costs and thus move to report a number of their activities as Official Development Assistance (ODA) (as planned by the Netherlands and Norway, for instance). * We can expect the Ukraine war to reinforce the general trend towards interest-based development policy and increase demand for approaches that deliver quick results. Nevertheless, it is not possible to derive a clear regional, thematic or country allocation pattern from this trend. * The issue of governance in developing countries is receiving greater attention in light of the risks posed by autocratic systems. The increase in cooperation with China and Russia, two nations employing their own global discourse in an attempt to promote what they refer to as 'real democracy', is especially indicative of the way China in particular is striving to influence global debate.
    Keywords: Development policy,Global South,West,Russia,Pandemic,Africa,China
    Date: 2022

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