nep-cna New Economics Papers
on China
Issue of 2023‒05‒08
six papers chosen by
Zheng Fang
Ohio State University

  1. The Health and Climate Benefits of Economic Dispatch in China's Power System. By Luo, Qian; Garcia-Menendez, Fernando; Yang, Haozhe; Deshmukh, Ranjit; He, Gang; Lin, Jiang; Johnson, Jeremiah X
  2. China’s Augmented National Innovation System (ANIS) and the Future: A Nonlinear Complex Systems Model with Application to Semiconductors and AI By Khan, Haider
  3. Finding Anomalies in China By Hou, Kewei; Qiao, Fang; Zhang, Xiaoyan
  4. Parental Investment, School Choice, and the Persistent Benefits of Intervention in Early Childhood By Lei Wang; Yiwei Qian; Nele Warrinnier; Orazio Attanasio; Scott Rozelle; Sean Sylvia
  5. Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swaps Lines and Offshore Clearing Banks By Ms. Longmei Zhang; Hector Perez-Saiz
  6. Has China’s Growth Gone From Miracle to Malady? By Eswar S. Prasad

  1. By: Luo, Qian; Garcia-Menendez, Fernando; Yang, Haozhe; Deshmukh, Ranjit; He, Gang; Lin, Jiang; Johnson, Jeremiah X
    Abstract: China's power system is highly regulated and uses an "equal-share" dispatch approach. However, market mechanisms are being introduced to reduce generation costs and improve system reliability. Here, we quantify the climate and human health impacts brought about by this transition, modeling China's power system operations under economic dispatch. We find that significant reductions in mortality related to air pollution (11%) and CO 2 emissions (3%) from the power sector can be attained by economic dispatch, relative to the equal-share approach, through more efficient coal-powered generation. Additional health and climate benefits can be achieved by incorporating emission externalities in electricity generation costs. However, the benefits of the transition to economic dispatch will be unevenly distributed across China and may lead to increased health damage in some regions. Our results show the potential of dispatch decision-making in electricity generation to mitigate the negative impacts of power plant emissions with existing facilities in China.
    Keywords: Humans, Carbon Dioxide, Reproducibility of Results, Coal, Climate, Air Pollution, Power Plants, China, air pollution, power system in China, public health, Climate-Related Exposures and Conditions, Climate Action, Environmental Sciences
    Date: 2023–02–01
  2. By: Khan, Haider
    Abstract: I present a nonlinear complex dynamic systems model of innovation for China within which both efficiency and equity can be addressed. For the fourth industrial revolution(IR4), digital technologies based on semiconductor material foundation and AI are analyzed for China within such a system which can be called an Augmented National innovation system or ANIS. There are at least two dimensions along which China’s NIS can be augmented. One is to include the AI and semiconductor base for high technology for IR4, and the other is to move towards a more egalitarian innovation system in accordance with the goal of creating a harmonious moderately prosperous economy and society. The Chinese ANIS that is being built for the 21st century has important regional and geoeconomic implications for the future.
    Keywords: Keywords: China, 4th industrial revolution, Innovation, AI, semiconductors, Geoeconomics, , ANIS, complex dynamic nonlinear model
    JEL: F50 O3 O53
    Date: 2023–01–15
  3. By: Hou, Kewei (Ohio State U); Qiao, Fang (U of International Business and Economics, Beijing); Zhang, Xiaoyan (Tsinghua U)
    Abstract: To study the cross-section of returns in the Chinese stock market, we follow the anomaly literature and construct 454 strategies between 2000 and 2020, based on 208 firm-level trading and accounting signals. With the conventional single-testing t-statistic cutoff of 1.96, 101 strategies have significant value-weighted raw returns, and 20 remain significant after risk adjustments. To avoid false discoveries, we recalibrate the t-statistic cutoff to 2.85 to accommodate multiple testing. 36 strategies survive the higher hurdle rate in value-weighted raw returns, while none remains significant after risk adjustments. When we use machine learning techniques to combine information from multiple signals, the resulting composite strategies mostly have significant returns after risk adjustments, even with the higher t-statistic cutoff. We relate Chinese anomaly returns to aggregate economic conditions and find that they comove with financial market development, accounting quality, market liquidity, and government regulations.
    JEL: G1 G12
    Date: 2023–01
  4. By: Lei Wang (Shaanxi Normal University); Yiwei Qian (Stanford University); Nele Warrinnier (Queen Mary University of London and LICOS, KU Leuven); Orazio Attanasio (Yale University, the Institute of Fiscal Studies (IFS)); Scott Rozelle (Stanford University); Sean Sylvia (University of North Carolina at Chapel Hill)
    Abstract: We present evidence from a randomized experiment testing the impacts of a six-month early childhood home-visiting program on child outcomes at school entry. Two and a half years after completion of the program, we find persistent effects on child working memory - a key skill of executive functioning that plays a central role in children’s development of cognitive and socio-emotional skills. We also find that the program had persistent effects on parental time investments and preschool enrolment decisions. Children were enrolled earlier and in higher quality preschools, the latter reflecting a shift in preferences over preschool attributes toward quality. Our findings imply an important role for the availability of high-quality subsequent schooling in sustaining the impacts of early intervention programs.
    Keywords: Early Childhood Development, Parenting, China, Poverty
    JEL: J13 I21 I28 H11
  5. By: Ms. Longmei Zhang; Hector Perez-Saiz
    Abstract: The paper examines the usage of the Renminbi (RMB) as an international payment currency. Globally, the use of RMB remains small, accounting for 2 percent of total cross-border transactions. Using country-level transaction data from Swift** for 2010–21, we find significant regional variations in the use of RMB for cross-border payments. While RMB is little used in some regions, it has gained traction in others, and these cross-country differences have widened over the years. Such differences can be partly explained by an economy’s geographic distance, political distance, and trade linkages with China. However, it also reflects the impact of policy measures by the People’s Bank of China, including establishing bilateral swap lines and offshore clearing banks. Both policy measures helped to address offshore RMB liquidity shortages given China’s overall capital account restrictions, with the offshore clearing banks having a quantitatively larger impact. Our analysis contributes to a better understanding of the growing importance of RMB within the international monetary system.
    Keywords: RMB internationalization; Swift; Swap lines; Offshore Clearing Banks
    Date: 2023–03–31
  6. By: Eswar S. Prasad
    Abstract: China’s remarkable run of persistently high growth in recent decades is all the more stunning in light of the country’s low levels of financial and institutional development, state-dominated economy, and nondemocratic government. Notwithstanding the inefficient and risky growth model, the government has maneuvered the economy around various stresses without any major financial or economic crash. With a shrinking labor force and declining efficiency of investment, raising productivity growth is key to maintaining reasonable GDP growth. Unbalanced reforms, a schizophrenic approach to the role of the market versus the state, and strains in financial and property markets could result in significant volatility but a financial or economic collapse is not in the cards.
    JEL: E2 F3 F4 O4 O53
    Date: 2023–04

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