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on China |
| By: | Horn, Sebastian; Parks, Bradley; Reinhart, Carmen M.; Trebesch, Christoph |
| Abstract: | This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. We build the first comprehensive dataset on China's overseas bailouts between 2000 and 2021 and provide new insights into China's growing role in the global financial system. A key finding is that the global swap line network put in place by the People's Bank of China is increasingly used as a financial rescue mechanism, with more than USD 170 billion in liquidity support extended to crisis countries, including repeated rollovers of swaps coming due. The swaps bolster gross reserves and are mostly drawn by distressed countries with low liquidity ratios. In addition, we show that Chinese state-owned banks and enterprises have given out an additional USD 70 billion in rescue loans for balance of payments support. Taken together, China's overseas bailouts correspond to more than 20 percent of total IMF lending over the past decade and bailout amounts are growing fast. However, China's rescue loans differ from those of established international lenders of last resort in that they (i) are opaque, (ii) carry relatively high interest rates, and (iii) are almost exclusively targeted to debtors of China's Belt and Road Initiative. These findings have implications for the international financial and monetary architecture, which is becoming more multipolar, less institutionalized, and less transparent. |
| Keywords: | China, financial crises, sovereign debt crises, bailouts, rescue loans, external debt, official lending, hidden debts, sovereign risk, Belt and Road initiative |
| JEL: | F21 F33 F42 F65 G15 H63 N25 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2244&r=cna |
| 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. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10405&r=cna |
| By: | Bräutigam, Deborah A.; Huang, Yufan |
| Abstract: | This paper provides an evaluation of China's participation in the G20's COVID-19 Debt Service Suspension Initiative (DSSI). Through analysis of available data, more than 100 interviews, and fieldwork in Angola, Kenya, and Zambia, we argue, with some caveats, that the DSSI was a success. First, the existing architecture for sovereign debt relief was badly in need of reform. The old system was based on the G7 negotiating rules for relief, which were carried out by the informal Paris Club and the IMF. With the G20 emerging as the premier forum for global economic coordination, and the rise of major new creditors like China and bondholders, new institutions, and new rules, were in order. The DSSI succeeded in providing a pathway for China, the world's largest bilateral creditor, to negotiate debt treatments together with the Paris Club in the context of IMF balance of payments assistance. Getting Chinese commitment to join was 'miraculous' as one G20 participant put it. Yet much remains to be done. Second, China fulfilled its role fairly well as a responsible G20 stakeholder implementing the DSSI in the challenging circumstances of the COVID-19 pandemic. In the 46 countries that participated in the DSSI, Chinese creditors accounted for 30 percent of all claims, and contributed 63 percent of debt service suspensions. The perception that other creditors - private and multilateral banks -- were free-riding on Chinese suspensions reinforced Chinese banks' later resistance to providing debt reductions in the Common Framework. On the other hand, Chinese disbursements dropped significantly in countries requesting DSSI relief, but remained steady for other creditors. The terms of the moratorium did not include instructions on how creditors should act in a situation that closely resembled a default. Third, the DSSI prompted China and other G20 creditors to take steps to classify their banks into 'official' and 'commercial' categories, a necessary distinction for member countries participating in the IMF's financing assurances requirement. It pushed the Chinese government to align interests among fragmented banks and bureaucracies with conflicting goals. It started an internal learning process about how debt restructuring has been done historically, and how China might safeguard its interests by participating with others in a multilateral forum. Finally, geopolitical tensions affected negotiations over debt relief and allowed Chinese stakeholders facing losses to argue that pressure from the United States was an effort to "take advantage of China". |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:caribp:092023&r=cna |
| By: | Georgios Tsiachtsiras (AQR-IREA University of Barcelona and University of Bath); Deyun Yin (School of Economics and Management, Harbin Institute of Technology); Ernest Miguelez (Univ. Bordeaux and AQR-IREA University of Barcelona); Rosina Moreno (AQR-IREA University of Barcelona) |
| Abstract: | This paper explores the effect of the High Speed Rail (HSR) network expansion on local innovation in China during the period 2008-2016. Using exogenous variation arising from a novel instrument - courier’s stations during the Ming dynasty, we find solid evidence that the opening of a HSR station increases cities’ innovation activity. We also explore the role of inter-city technology diffusion as being behind the surge of local innovation. To do it, we compute least-cost paths between city-pairs, over time, based on the opening and speed of each HSR line, and obtain that an increase in a city’s connectivity to other cities specialized in a specific technological field, through the HSR network, increases the probability for the city to specialize in that same technological field. We interpret it as evidence of knowledge diffusion. |
| Keywords: | High speed rail, Innovation, Technology Diffusion, Patents, Specialization. JEL classification: R40, O18, O30, O33. |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:202210&r=cna |
| By: | García-Herrero, Alicia; Schindowski, Robin |
| Abstract: | Since China's Belt and Road Initiative (BRI) was announced almost a decade ago, circumstances in global politics have changed radically. The trade war between the United States and China, and most recently the Covid-19 pandemic have caused a partial reshuffling of the international economic architecture. At the same time, China has become stronger and more self-confident, more innovative and more embedded in global value chains. Under the framework of the BRI it has become the world's largest official creditor in 2017. As of recently, an increasing number of countries have fallen into debt distress, some of which have received substantial investment from China. The question is then how the image of the BRI has evolved as these conditions have shifted. Drawing on global media reports, we conduct an analysis of the sentiment towards China's Belt and Road Initiative across geographies and of how this sentiment has evolved over time. |
| Keywords: | China, Belt and Road Initiative, sentiments |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofitb:102023&r=cna |
| By: | Valérie Mignon; Jamel Saadaoui |
| Abstract: | This paper assesses the effect of US-China political relationships and geopolitical risks on oil prices. To this end, we consider two quantitative measures — the Political Relationship Index and the Geopolitical Risk Index — and rely on structural VAR and local projections methodologies. Our findings show that improved US-China relationships, as well as higher geopolitical risks, drive up the price of oil. Positive shocks on the political relationship index are associated with optimistic expectations regarding economic activity, whereas positive shocks on the geopolitical risk index reflect fears of supply disruption. Political tensions and geopolitical risks are thus complementary factors, the former being linked to the demand side and the latter to the supply side. |
| Keywords: | Oil prices, political relationships, geopolitical risk, China. |
| JEL: | Q4 F51 C32 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2023-15&r=cna |
| By: | Liu-Schuppener, Xing |
| Abstract: | The People's Republic of China is generally considered a pioneer in the development and application of artificial intelligence methods and digitalization solutions. This article is dedicated to a systematic review of the current AI and digitalization strategy in the education sector in China and places it in the wider context. It examines China-specific education policy strategies, how they are shaped, and which actors are crucial in this regard. The study is based on a systematic evaluation of publicly available sources using software-supported document analysis. For this purpose, 48 thematically relevant policy documents from the period of 2001 to 2022 were included. The results are categorized using an analysis framework and interpreted on the level of content as well as on the level of processes and relationships. The study thus provides an overview of the different phases and areas of education policy in China, central mechanisms of action, as well as political priorities and their changes over time. |
| Keywords: | China, policy, education, strategy, informatization, digitalization, AI, document analysis |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:udedao:136&r=cna |
| By: | Zheng Liu; Mark M. Spiegel; Jingyi Zhang |
| Abstract: | We study the effectiveness of targeted reserve requirements (RR) as a policy tool for macroeconomic stabilization. Targeted RR adjustments were implemented in China during both the 2008-09 global financial crisis and the recent COVID-19 pandemic. We develop a model in which firms with idiosyncratic productivity can borrow from two types of banks---local or national---to finance working capital. National banks provide liquidity services, while local banks have superior monitoring technologies, such that both types coexist. Relationship banking is modeled in terms of a fixed cost of switching lenders, and banks choose to switch only under sufficiently large shocks. Reducing RR on local banks boosts leverage and aggregate output, whereas reducing RR on national banks has an ambiguous output effect. Following a large recessionary shock, a targeted RR policy that reduces RR for local banks relative to national banks can lower costs of switching lenders, stabilizing macroeconomic fluctuations. However, targeting RR in that manner also boosts local bank leverage, increasing risks of default and related liquidation losses. Our model's mechanism is supported by bank-level empirical evidence. |
| Keywords: | reserve requirements; macroeconomic stabilization; bank sizes |
| JEL: | E32 E52 E21 |
| Date: | 2023–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:96261&r=cna |
| By: | Chae, Minhee (Nankai University); Cai, Yong (University of North Carolina, Chapel Hill); Kim, Jun Hyung (Jinan University); Lavely, William (University of Washington) |
| Abstract: | We examine the effect of a Chinese family planning policy (FPP) known as "Later, Longer, and Fewer" on the gender gap in breastfeeding. We find that FPP increased the daughter-son breastfeeding gap in favor of sons in rural areas. Mean intensity of the FPP predicts the gender gap to be 35% greater than the gap without FPP. The effects are explained by the skewed gender composition of last-born children produced by sex-selective stopping behavior. The findings indicate a way in which FPP, in the context of son preference, widens gender gap in child development. |
| Keywords: | "Later, breastfeeding, son preference, family planning, Longer, Fewer" campaign |
| JEL: | J1 J13 J16 J18 |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16190&r=cna |