nep-cna New Economics Papers
on China
Issue of 2023‒04‒03
seven papers chosen by
Zheng Fang
Ohio State University

  1. The Emergence of China’s Mergers and Acquisitions Market By Chen, Chien-Hsun
  2. Wage Functions in China and Eastern Europe : A Large-Scale Comparative Meta Analysis By HORIE, Norio; IWASAKI, Ichiro; KUPETS, Olga; MA, Xinxin; MIZOBATA, Satoshi; SATOGAMI, Mihoko
  3. Import Competition and Informal Employment: Empirical Evidence from China By Feicheng Wang; Zhe Liang; Hartmut Lehmann
  4. Will China's impending overhaul of its financial regulatory system make a difference? By Martin Chorzempa; Nicolas Veron
  5. Decomposition of the Changes in Household Disposable Income Distribution in China By Gong, Chen; Sologon, Denisa Maria; Nimeh, Zina; O'Donoghue, Cathal
  6. Regulation of Petrol and Diesel Prices and their Effects on GDP Growth: Evidence from China By Markus Brueckner; Haidi Hong; Joaquin Vespignani
  7. Building Floorspace in China: A Dataset and Learning Pipeline By Peter Egger; Susie Xi Rao; Sebastiano Papini

  1. By: Chen, Chien-Hsun
    Abstract: In China, mergers and acquisitions (M&As) have had a long-run impact on companies’ operational and financial rearrangements in the process of the country’s economic restructuring and rebalancing. The vibrancy of China’s M&A market is reflected in the gradual maturity of Chinese companies and the massive commercial opportunities that arose following the phenomenal growth of China’s economy. The initial motives behind Chinese domestic M&As were to save poorly governed state-owned enterprises in what may be termed the “rescue mission”. Most M&As involve state-owned enterprises that play a dominant role in China’s capital markets. The success of Japanese keiretsu and South Korean chaebols has prompted China to develop business groups in its economy to enhance the competitive advantage of Chinese companies through economies of scale and improved company performance. Foreign inbound M&As can monopolize positions in certain industries and destroy a fair competitive environment. This in turn has seriously threatened the existence and growth of Chinese companies.
    Keywords: China; mergers and acquisitions; business strategies; state-owned enterprises
    JEL: M10 M31 M38
    Date: 2023–03–09
  2. By: HORIE, Norio; IWASAKI, Ichiro; KUPETS, Olga; MA, Xinxin; MIZOBATA, Satoshi; SATOGAMI, Mihoko
    Abstract: This paper conducts a meta-analysis using 6453 estimates reported in 216 research works to compare the wage function in China and Eastern Europe. The results indicate that the wage systems in both China and Eastern Europe were structured consistently with economic theories. Nevertheless, it is also revealed that the shape of their wage functions has changed dynamically in recent decades. In fact, both China and Eastern Europe have experienced a flattening of their wage-experience profiles over time. At the same time, China and Eastern Europe have showed quite contrasting changes in the wage effects of education and gender.
    Keywords: wage function, research synthesis, meta-regression analysis, publication selection bias, China, Eastern Europe
    JEL: D31 I26 J16 J31 P23 P36
    Date: 2023–03
  3. By: Feicheng Wang (University of Göttingen); Zhe Liang; Hartmut Lehmann
    Abstract: This paper investigates the effects of trade liberalisation induced labour demand shocks on informal employment in China. We employ a local labour market approach to construct a regional measure of exposure to import tariffs by exploiting initial differences in industrial composition across prefectural cities and then link it with the employment status of individuals. Using three waves of household survey data between 1995 and 2007, our results show that workers from regions that experienced a larger tariff cut were more likely to be employed informally. Further results based on firm-level data reveal a consistent pattern; tariff reductions increased the share of informal workers within firms. Such effects are more salient among smaller and less productive firms. Our findings suggest an important margin of labour market adjustment in response to trade shocks in developing countries, i.e. employment adjustment along the formal-informal dimension.
    Keywords: Trade liberalisation; Import competition; Informal employment; Firms; China
    JEL: F14 F16 F66 J46
    Date: 2021–09
  4. By: Martin Chorzempa (Peterson Institute for International Economics); Nicolas Veron (Peterson Institute for International Economics)
    Abstract: China's reshuffle of its financial supervisory architecture announced in March, like previous changes, appears incremental rather than radical. It will not, however, resolve the main challenge hobbling China's financial system, which is not linked to specific choices of supervisory architecture but rather to the unfinished transition from a state-directed to a market-based financial system and the way the Chinese Communist Party's pervasive role creates obstacles to good corporate governance of individual financial firms and to the independence of supervisory authorities. Too often, political authorities and sometimes the supervisors themselves intervene directly in financial firms' decisions to allocate capital and credit, occasionally resulting in failures of risk control and risk management. The authors argue that Chinese reformers should aim at a clearer and more rigorous division of responsibilities, in which financial firms manage financial opportunities and risks, and supervisors are exclusively focused on their respective public policy mandates.
    Date: 2023–03
  5. By: Gong, Chen (Maastricht University); Sologon, Denisa Maria (LISER (CEPS/INSTEAD)); Nimeh, Zina (Maastricht University); O'Donoghue, Cathal (National University of Ireland, Galway)
    Abstract: Studies have shown that the previously growing inequality in China has stabilized and even declined since 2008 (Kanbur et al., 2021), nevertheless, the drivers of the latest trans-formation in income inequality remain to be unraveled. We address this research gap by examining the changes in the distribution of household disposable income and its drivers in China from 2010 to 2016. We apply the distributional decomposition method proposed by Bourguignon et al. (2008) and Sologon et al. (2021), and quantify the contribution of all factors into four general dimensions, (1) demographic composition, (2) labor market structure, (3) price and return, and (4) governmental transfers. This study considers not only the individual labor income as with existing literature, but also models other family incomes and social transfers to reflect the real economic conditions more accurately. The decomposition results show that all four factors contribute positively to the decline in income inequality during the period studied. The changes in urban labor market structure, specifically the general forms of employment, occupational and industrial structure, have been contributing as inequality augmenting factors.
    Keywords: income distribution, decomposition, income inequality, microsimulation, overtime comparison, labor market structure, demographic structure
    JEL: D63 D31 F63
    Date: 2023–01
  6. By: Markus Brueckner; Haidi Hong; Joaquin Vespignani
    Abstract: This paper presents estimates of the effects that government regulation of diesel and petrol prices has on GDP growth. Theory suggests that when supply curves are convex, a decrease in the regulatory price has a larger effect on output than a tantamount increase. Motivated by this theoretical insight, we specify VAR models with asymmetric effects of positive and negative changes in the regulatory prices of diesel and petrol. We estimate the VAR models on quarterly data from China’s national accounts during the period Q1 1998 to Q4 2018. Our main findings are that: (i) negative growth rates of regulatory diesel and petrol prices significantly reduce GDP growth; (ii) positive growth rates of regulatory diesel and petrol prices have a positive, but quantitatively small and statistically insignificant effect on GDP growth.
    Keywords: GDP growth, energy price regulation
    JEL: Q43 K20 E02
    Date: 2023–03
  7. By: Peter Egger; Susie Xi Rao; Sebastiano Papini
    Abstract: This paper provides the first milestone in measuring the floor space of buildings (that is, building footprint and height) and its evolution over time for China. Doing so requires building on imagery that is of a medium-fine-grained granularity, as longer cross-sections and time series data across many cities are only available in such format. We use a multi-class object segmenter approach to gauge the floor space of buildings in the same framework: first, we determine whether a surface area is covered by buildings (the square footage of occupied land); second, we need to determine the height of buildings from their imagery. We then use Sentinel-1 and -2 satellite images as our main data source. The benefits of these data are their large cross-sectional and longitudinal scope plus their unrestricted accessibility. We provide a detailed description of the algorithms used to generate the data and the results. We analyze the preprocessing steps of reference data (if not ground truth data) and their consequences for measuring the building floor space. We also discuss the future steps in building a time series on urban development based on our preliminary experimental results.
    Date: 2023–03

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