nep-cna New Economics Papers
on China
Issue of 2023‒03‒20
twelve papers chosen by
Zheng Fang
Ohio State University

  1. Spillovers in Childbearing Decisions and Fertility Transitions: Evidence from China By Pauline Rossi; Yun Xiao
  2. Cognitive Misperception and Chronic Disease Awareness: Evidence from Blood Biomarker Data By Lin, Zhuoer; Fu, Mingqi; Chen, Xi
  3. Migration Restrictions Can Create Gender Inequality: The Story of China's Left-Behind Children By Xuwen Gao; Wenquan Liang; Ahmed Mushfiq Mobarak; Ran Song
  4. Weather, Credit, and Economic Fluctuations: Evidence from China By Chen, Zhenzhu; Li, Li; Tang, Yao
  5. Unification and Division: A Theory of Institutional Choices in Imperial China By Zhou, Haiwen
  6. Environmental Kuznets curve on water pollution in Chinese provinces By Taguchi, Hiroyuki; Fujino, Takeshi; Asada, Hidekatsu; Ma, Jui-Jun
  7. Temperature and Low-Stakes Cognitive Performance By Zhang, Xin; Chen, Xi; Zhang, Xiaobo
  8. Macroeconomic risk factors and Chinese FDIs in real estate: Evidence from the Asia-Pacific public real estate markets By Alain Coen; Patrick Lecomte; Saadallah Zaiter
  9. From contractors to investors? Evolving engagement of Chinese state capital in global infrastructure development and the case of Lekki Port in Nigeria By Zhang, Hong
  10. The Global Economic Polycrisis and the Korean Economy By Kang, Duyong
  11. Automation, Global Value Chains and Functional Specialization By Lionel Fontagné; Ariell Reshef; Gianluca Santoni; Giulio Vannelli
  12. Localisation economies, intellectual property rights protection and entrepreneurship in China: a Bayesian analysis of multi-level spatial correlation By Gao, Xing; Meng, Jing; Ling, Yantao; Liao, Maolin; Cao, Mengqiu

  1. By: Pauline Rossi (CREST, Ecole Polytechnique, Palaiseau, France); Yun Xiao (University of Gothenburg, Göteborg, Sweden)
    Abstract: This article uses China’s family planning policies to quantify and explain spillovers in fertility decisions. We test whether ethnic minorities decreased their fertility in response to the policies, although only the majority ethnic group, the Han Chinese, were subject to birth quotas. We exploit the policy rollout and variation in pre-policy age-specific fertility levels to construct a measure of the negative shock to Han fertility. Combining this measure with variation in the local share of Han, we estimate that a woman gives birth to 0.63 fewer children if the average completed fertility among her peers is exogenously reduced by one child. The fertility response of minorities is driven by cultural proximity with the Han and by higher educational investments, suggesting that spillovers operate through both social and economic channels. These results provide evidence that social multipliers can accelerate fertility transitions.
    Keywords: Fertility, Family planning, China, Spillovers, Peer Effects, Partial population experiment.
    JEL: C36 D1 J11 J13 O15 O53
    Date: 2022–10–21
  2. By: Lin, Zhuoer; Fu, Mingqi; Chen, Xi
    Abstract: Cognitive misperception contributed to poor decision-making; yet their impact on health-related decisions is less known. We examined how self-perceived memory was associated with chronic disease awareness among older Chinese adults. Data were obtained from the China Health and Retirement Longitudinal Study. Nationally representative blood biomarkers identify participants' dyslipidemia and diabetes status. Among participants with biomarker identified dyslipidemia or diabetes, disease awareness was defined as self-reported diagnosis of the conditions. The proportions of disease awareness were lower for individuals with better self-perceived memory and those with more impaired cognitive ability, showing opposite patterns. Controlling for cognitive ability and covariates, self-perceived memory was negatively associated with the dyslipidemia and diabetes awareness. In particular, older adults with the highest level of self-perceived memory had significantly lower disease awareness as compared to those with the lowest level of self-perceived memory. Our findings were robust to alternative cognitive measures and were stronger for less educated rural residents or those living without children. Cognitive misperception poses great challenges to chronic disease management. Targeted interventions and supports are needed, particularly for the disadvantaged.
    Keywords: Cognitive impairment, Self-perceived memory, Chronic disease awareness, Dyslipidemia, Diabetes
    JEL: I12 J14 D91 I18
    Date: 2023
  3. By: Xuwen Gao; Wenquan Liang; Ahmed Mushfiq Mobarak; Ran Song
    Abstract: About 11% of the Chinese population are rural-urban migrants with a rural hukou that severely restricts their children's access to urban schools. As a result, 69 million children are left behind in rural areas. We use two regression-discontinuity designs - based on school enrollment age cutoffs and a 2014 policy change that more severely restricted migrants' access to schooling - to document that migrants become discontinuously more likely to leave middle-school-aged daughters (but not sons) behind in poor rural areas without either parent present exactly when schooling becomes expensive and restricted. The effect is larger when the daughter has a male sibling. Migrant parents send significantly less remittances back to daughters than sons. Although China's hukou mobility restrictions are not gender-specific in intent, they have larger adverse effects on girls. Rural residents adjacent to cities that experience shocks to labor demand after China's accession to the WTO are more likely to separate from children to take advantage of new opportunities in cities. Those workers earn much more and advance economically, but longitudinal data reveals that their children complete fewer years of schooling, remain poor, and have worse mental and physical health later in life.
    JEL: J13 J16 R23
    Date: 2023–02
  4. By: Chen, Zhenzhu; Li, Li; Tang, Yao
    Abstract: We constructed an Actuary Climate Index to measure extreme weather risks in China. Analyzing macroeconomic data through a structural vector auto-regression model suggests that a negative weather shock leads to persistently low GDP and credit obtained by non-financial firms. In our regression analysis of a panel of firms listed in China, the negative effects of weather shocks on firm level loans were statistically and practically significant. Further analysis suggests that credit risk and expectations are two important impact channels. A high existing credit risk or low confidence among firm managers, amplifies the negative effects of extreme weather on loans.
    Keywords: extreme weather shocks, credit risk, expectations, Chinese economy
    JEL: E32 E44 G32 Q54
    Date: 2023–02–16
  5. By: Zhou, Haiwen
    Abstract: Ancient China experienced various rounds of division and unification. Unification was maintained through economic and political institutions such as low tax rates to reduce peasant rebellions and the division of authority among government officials to reduce usurpation of power. A ruler’s choice of institutions to maintain unification is studied in a theoretical model. Interactions among external threats, internal rebellions by peasants, and usurpation of power by government officials are established. A higher level of external threats induces the ruler to choose a higher level of autonomy for government officials and a higher tax rate. That is, equilibrium probability of internal rebellions increases endogenously with the level of external threats. When government officials are more likely to usurp power, the ruler will choose a higher tax rate, thus equilibrium probability of peasant rebellions increases. Interestingly, a higher level of state power could induce the ruler to choose a lower tax rate!
    Keywords: Chinese history, institutional design, size of nations, political economy, division of power
    JEL: H56 N45 O53
    Date: 2023–02–15
  6. By: Taguchi, Hiroyuki; Fujino, Takeshi; Asada, Hidekatsu; Ma, Jui-Jun
    Abstract: This study, focusing on the water pollutions in terms of chemical oxygen demand (COD) and ammonia nitrogen by industrial and household discharges in Chinese provinces, investigates the contribution of capacity shortage for pollution control to the provincial pollution levels, by conducting a factor analysis to the heterogeneity of provincial pollutions under the environmental Kuznets curve (EKC) framework. The study’s contribution to the literature lies in its framework of analyzing the heterogeneity of Chinese provinces’ EKCs in terms of their positions (not their shapes) by using a fixed-effect model to extract the province-specific pollution effects. The main finding of this study is that the capacity shortage for pollution control accounts for around 30% as a pollution factor of industrial COD and ammonia nitrogen, and accounts for around 60% and 80% as a pollution factor of household COD and ammonia nitrogen, respectively. It suggests that China has still much policy space and room to mitigate the water pollutions, by building the capacity for pollution control through developing human resources and training them.
    Keywords: water pollutions, pollution-control capacity, Chinese provinces, chemical oxygen demand (COD), ammonia nitrogen, environmental Kuznets curve
    JEL: O53 Q53 Q58
    Date: 2022
  7. By: Zhang, Xin (Beijing Normal University); Chen, Xi (Yale University); Zhang, Xiaobo (Peking University)
    Abstract: This paper offers one of the first evidence in a developing country context that transitory exposure to high temperatures may disrupt low-stakes cognitive activities across a range of age cohorts. By matching eight years of repeated cognitive tests among all the participants in a nationally representative longitudinal survey in China with weather data according to the exact time and geographic location of their assessment, we show that exposure to a temperature above 32 °C on the test date, relative to a moderate day within 22–24 °C, leads to a sizable decline in their math scores by 0.066 standard deviations (equivalent to 0.23 years of education). Also, the effect on the math test scores becomes more pronounced as people age, especially for males and the less educated. However, the test takers living in hotter regions or those with air conditioning installed on site are less vulnerable to extreme high temperatures, indicating the role of adaptation.
    Keywords: cognition, high temperatures, climate change, adaptation, age gradients
    JEL: I24 Q54 Q51 D91 J14 J16
    Date: 2023–02
  8. By: Alain Coen; Patrick Lecomte; Saadallah Zaiter
    Abstract: The aim of this study is to analyze the role of Chinese foreign direct investments (FDIs) in the dynamics of real estate in the Asia-Pacific region after the global financial crisis. We use a linear asset pricing model including macroeconomic risk factors and develop a metric to measure FDIs in the real estate sector. Based on panel econometrics, our robust results report that Chinese FDIs significantly influence Asia-Pacific region’s public real estate markets, shedding new light on China’s economic internationalization in the Asia and the Pacific region. We also provide strong evidence that our findings are not driven by a reverse causality phenomenon, whereby a country with superior performance of public real estate sector is in better position to attract Chinese FDIs.
    Keywords: Asia-Pacific region; Chinese foreign direct investments; Macroeconomic risks; REITs
    JEL: R3
    Date: 2022–01–01
  9. By: Zhang, Hong
    Abstract: This paper introduces and critically analyzes an emerging form of global infrastructure development by China's infrastructure construction companies, known as "integrated investment, construction, and operation" (IICO). This model has been promoted by the Chinese infrastructure industry, financial institutions, and policymakers in recent years, as a response to the moral hazard problems exposed in the past sovereign loan-based infrastructure engagements, the industry's need to upgrade, and the global rise of PublicPrivate Partnerships. IICO can be understood as a form of market-seeking foreign direct investment. Compared to past forms of globalization of Chinese state capital, it has a much more complicated risk profile and less clear pay-off. While Chinese state capital actors are not yet well equipped to manage such new risks, they have been driven to make such attempts by the political pressure to become globally leading firms. A case study of Lekki Port in Nigeria serves to illustrate the challenges in the transition toward IICO. This paper calls for continued attention to this emerging form of Chinese state capital's engagement in global infrastructure development, especially on how risks are managed and the implications for the relationships between Chinese actors and host country stakeholders.
    Date: 2023
  10. By: Kang, Duyong (Korea Institute for Industrial Economics and Trade)
    Abstract: Today the global economy is facing down the threat of a multifaceted crisis. Sustained by ultra-low interest rates and unprecedented levels of quantitative easing since the last global financial crisis, the global economy is taking a sharp turn toward tighter monetary policy as it experiences rampant inflation (in some countries at a 40-year high). As the economy has yet to recover fully from the impact of the COVID-19 pandemic, this has produced a looming threat of a recession and led to uncertainties stemming from soaring interest rates amid record highs in debt. On the other hand, the intensifying US-China rivalry for global hegemony — recently put on full display in Washington’s new national security strategy, its sanctions on semiconductor exports to China, and the Chinese Communist Party (CCP)’s latest congress — poses additional, grave threats to the global economy. The continuing antagonism between the G2 countries will exert an impact beyond a simple decoupling of the two economies: it threatens to destabilize the global trade environment. Amid all this, climate change continues to add to the long-term risks faced by the global economy. Most importantly, all these disruptive factors can interact with one another to produce results that are far more difficult to predict and even more devastating. A global recession and ever-higher interest rates will adversely affect long-term investment in the energy transition, while the intensifying US-China rivalry also stands in the way of encouraging globally-concerted efforts to fight and mitigate climate change. The longer the delay in the global response, the greater the inevitable cost of climate change. These multifaceted global problems have converged to generate a state of polycrisis. This paper explores the nature of this polycrisis, its effects on the Korean economy, and identifies the implications carried for policy.
    Keywords: polycrisis; US-China conflict; recession; interest rates; inflation; macroeconomy; macroeconomics; global trade; Korea
    JEL: E30 E31 E32 E42 E43 E44 E60 E61 E62 E66 F01 F02 F15
    Date: 2022–11–30
  11. By: Lionel Fontagné; Ariell Reshef; Gianluca Santoni; Giulio Vannelli
    Abstract: We study how technology adoption and changes in global value chain (GVC) integration jointly affect labor shares and business function specialization in a sample of 14 manufacturing industries in 14 European countries in 1999– 2011. Our main contribution is to highlight the indirect effect of robotization on relative demand for labor via GVC integration. To do this, we develop a methodology to separately account for robots in the total capital stock. Increases in upstream, forward GVC participation directly reduce labor shares, mostly through reductions in fabrication, but also via management, marketing and R&D business functions. We do not find any direct effects of robot adoption; robotization affects labor only indirectly, by increasing upstream, forward GVC integration. In this sense robotization is “upstream-biased”. We also study novel channels through which rapid robotization in China shaped robotization in Europe and, therefore, GVC participation. This highlights an understudied way by which the global integration of China has affected relative demand for labor in its trading partners.
    Keywords: Labor Share;Functional Specialization;Global Value Chains;Upstreamness;Technological Change;Automation;Robots
    JEL: E25 F14 F16
    Date: 2023–03
  12. By: Gao, Xing; Meng, Jing; Ling, Yantao; Liao, Maolin; Cao, Mengqiu
    Abstract: Entrepreneurship is an important determinant of innovation and growth with an uneven spatial distribution. In addition, the mechanism of entrepreneurship is affected by administrative hierarchies. However, the driving forces behind the spatial differences are not clear. Therefore, this study aims to examine the key determinants of entrepreneurship by clarifying the roles of localisation economies and intellectual property rights (IPRs) protection from 2008 to 2017 using a Bayesian analysis of multi-level spatial correlation. The empirical results indicate that localisation economies and IPRs protection have a major influence on entrepreneurship. In particular, although it is insignificant, the role of localisation economies at prefecture level is important, because the impact of supplier linkages at provincial level is negative. The effects of IPRs protection at both prefecture and provincial levels are significant in all the models, and its effect increases with the improvement in model performance. Moreover, these determinants vary across different spatial scales.
    Keywords: entrepreneurship; IPRs protection; localisation economies; multi-level models; spatial random effects; 51808392; 72173133; EP/R035148/1; chool Funding from the University of Westminster; and National Conditions Research Project of Research Institute for Eco-civilization; Chinese Academy of Social Sciences (Taicang 2022) .
    JEL: J1 C1
    Date: 2022–06–01

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