nep-cna New Economics Papers
on China
Issue of 2023‒05‒29
eight papers chosen by
Zheng Fang
Ohio State University

  1. The Impact of Industrial Zone:Evidence from China's National High-tech Zone Policy By Li Han
  2. Demographic Transition, Industrial Policies, and Chinese Economic Growth By Michael Dotsey; Wenli Li; Fang Yang
  3. Social Organizations and Political Institutions: Why China and Europe Diverged By Joel Mokyr; Guido Tabellini
  4. A Scoping Review of Internal Migration and Left-behind Children's Wellbeing in China By Jinkai Li
  5. Interest Rate Liberalization, Permanent Technology Shocks, and Macroeconomic Volatility in China By Qiaoyu Liang; Yihao Xue; Bing Tong
  6. Mild Government Failure By Shang-Jin Wei; Jianhuan Xu; Ge Yin; Xiaobo Zhang
  7. The Effect of Income on Vehicle Demand: Evidence from China’s New Vehicle Market By Shen, Chang; Linn, Joshua
  8. What Makes Old-Age Poverty in East Asian Societies so High? By Inhoe Ku; Wonjin Lee; Aya Abe; Zhu Mengbing; Li Shi; Chungyang Yeh; Dongjin Kim

  1. By: Li Han
    Abstract: Based on the statistical yearbook data and related patent data of 287 cities in China from 2000 to 2020, this study regards the policy of establishing the national high-tech zones as a quasi-natural experiment. Using this experiment, this study firstly estimated the treatment effect of the policy and checked the robustness of the estimation. Then the study examined the heterogeneity in different geographic demarcation of China and in different city level of China. After that, this study explored the possible influence mechanism of the policy. It shows that the possible mechanism of the policy is financial support, industrial agglomeration of secondary industry and the spillovers. In the end, this study examined the spillovers deeply and showed the distribution of spillover effect.
    Date: 2023–04
  2. By: Michael Dotsey; Wenli Li; Fang Yang
    Abstract: We build a unified framework to quantitatively examine the demographic transition and industrial policies in contributing to China’s economic growth between 1976 and 2015. We find that the demographic transition and industrial policy changes by themselves account for a large fraction of the rise in household and corporate savings relative to total output and the rise in the country’s per capita output growth. Importantly, their interactions also lead to a sizable fraction of the increases in savings since the late 1980s and reduce growth after 2010. A novel and important factor that drives these dynamics is endogenous human capital accumulation, which depresses household savings between 1985 and 2010 but leads to substantial gains in per capita output growth after 2005.
    Keywords: Aging; Credit policy; Household saving; Output growth; China
    JEL: E21 J11 J13 L52
    Date: 2022–06–27
  3. By: Joel Mokyr; Guido Tabellini
    Abstract: This paper discusses the historical and social origins of the bifurcation in the political institutions of China and Western Europe. An important factor, recognized in the literature, is that China centralized state institutions very early on, while Europe remained politically fragmented for much longer. These initial differences, however, were amplified by the different social organizations (clans in China, corporate structures in Europe) that spread in these two societies at the turn of the first millennium AD. State institutions interacted with these organizations, and were shaped and influenced by this interaction. The paper discusses the many ways in which corporations contributed to the emergence of representative institutions and gave prominence to the rule of law in the early stages of state formation in Europe, and how specific features of lineage organizations contributed to the consolidation of the Imperial regime in China. JEL Codes: E42, L14, O10
    Date: 2023
  4. By: Jinkai Li
    Abstract: Children's well-being of immigrants is facing several challenges related to physical, mental, and educational risks, which may obstacle human capital accumulation and further development. In rural China, due to the restriction of Hukou registration system, nearly 9 million left-behind children (LBC) are in lack of parental care and supervision in 2020 when their parents internally migrate out for work. Through the systematic scoping review, this study provides a comprehensive literature summary and concludes the overall negative effects of parental migration on LBC's physical, mental (especially for left-behind girls), and educational outcomes (especially for left-behind boys). Noticeably, both parents' and mother's migration may exacerbate LBC's disadvantages. Furthermore, remittance from migrants and more family-level and social support may help mitigate the negative influence. Finally, we put forward theoretical and realistic implications which may shed light on potential research directions. Further studies, especially quantitative studies, are needed to conduct a longitudinal survey, combine the ongoing Hukou reform in China, and simultaneously focus on left-behind children and migrant children.
    Date: 2023–05
  5. By: Qiaoyu Liang (School of Economics at Henan University, Kaifeng, Henan); Yihao Xue (School of Economics at Henan University, Kaifeng, Henan); Bing Tong (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)
    Abstract: Are technology shocks contractionary or expansionary when interest rates are inflexible? This paper studies this issue based on Chinese data during the interest rate reform. We decompose the technology shock into permanent and transitory components and investigate their macroeconomic effects based on the New Keynesian model and the local projection method. Our empirical results show that interest rate fixation amplifies the effects of permanent technology shocks: a positive shock generates higher output and inflation during the period of fixed interest rates. This result is consistent with the New Keynesian model's prediction for permanent technology shocks. However, the empirical results for transitory technology shocks are insignificant.
    Keywords: Technology Shock, Interest rate liberalization, Total factor productivity (TFP), Macroeconomic Volatility
    JEL: E31 E42 E43 E52 E58
    Date: 2023–04
  6. By: Shang-Jin Wei; Jianhuan Xu; Ge Yin; Xiaobo Zhang
    Abstract: A relatively mild form of government failure - for example, bureaucrats can count but do not differentiate quality - can significantly affect the efficacy of industrial policy. We investigate this idea in the context of China's largest pro-innovation industrial policy using a structural model. We find that the return to the subsidy program is -19.7\% (but would be 7.8\% if the mild government failure can be removed). Furthermore, the welfare loss is exacerbated by patent trade.
    JEL: H21 O14 O25
    Date: 2023–04
  7. By: Shen, Chang; Linn, Joshua (Resources for the Future)
    Abstract: Growth of private vehicle ownership in low-income and emerging countries is a dominant factor in forecasts of global oil demand and greenhouse gas emissions. Countries such as China are expected to experience rapid income growth over the next few decades, but little causal evidence exists on its effect on car ownership in these countries. Using city-level data on new car sales and income from 2005 to 2017, and using export-led growth to isolate plausibly exogenous income variation, we estimate an elasticity of new car sales to income of about 2.5. This estimate indicates that recent projections of vehicle sales in China have understated actual sales by 36 percent and carbon dioxide emissions by 18 million metric tons in 2017. The results suggest that, to meet its climate objectives, China’s climate policies will need to be substantially more aggressive than previous forecasts indicate.
    Date: 2021–06–24
  8. By: Inhoe Ku; Wonjin Lee; Aya Abe; Zhu Mengbing; Li Shi; Chungyang Yeh; Dongjin Kim
    Abstract: This study compares poverty among older adults in China, Japan, Korea, and Taiwan with that in selected Western societies and explores factors contributing to these high levels of poverty among older adults from a comparative perspective. Lower education levels of older people contribute to high poverty among East Asian older people while multigenerational living arrangements work toward lowering the poverty rate. Among income sources, low levels of income from public transfer programs account for high old-age poverty although high levels of market income and private transfer income partly offset this among older people. Meanwhile, taking account of financial assets and home ownership does not change the comparative features of high old-age poverty among East Asian older people. Our analyses suggest that the future prospect of economic well-being among older people in the region largely hinges on the further development of welfare state programs for older people.
    Date: 2022–06

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