nep-cna New Economics Papers
on China
Issue of 2023‒07‒31
six papers chosen by
Zheng Fang, Ohio State University

  1. Is There An Income-Happiness Puzzle in China? A National Survey, 2003-2021 By Yang, Jinyang
  2. Decarbonization patterns of residential building operations in China and India By Ran Yan; Nan Zhou; Wei Feng; Minda Ma; Xiwang Xiang; Chao Mao
  3. The Internationalization of China's Equity Markets By Juan J. Cortina; Maria Soledad Martinez Peria; Sergio L. Schmukler; Jasmine Xiao
  4. Air Pollution and Mortality Impacts of Coal Mining: Evidence from Coalmine Accidents in China By Chu, Yin; Holladay, J. Scott; Qiu, Yun; Tian, Xian-Liang; Zhou, Maigeng
  5. China's Macroeconomic Development: The Role of Gradualist Reforms By Kaiji Chen; Tao Zha
  6. Familiarity Bias and Economic Decisions: Evidence from A Survey Experiment By Zhaobo Zhu; Zhenyan Qi; Yi Jin

  1. By: Yang, Jinyang
    Abstract: This study investigates the income-happiness puzzle in China by examining the trends in happiness and economic growth over the past two decades. It is the first long-term study in China to utilize a consistent national representative survey in the new century. Using data from the Chinese General Social Survey (CGSS) waves 2003-2021, the study reveals a substantial increase in average happiness alongside steady income growth. Income growth contributes to approximately 40% of rural residents' happiness improvement and 25% of that of urban residents during this period. I find the effect of income is positive and robust when examined using both regional aggregate data and individual data. Furthermore, the study finds that the effect of relative income, measured by local average income, does not have a significant impact on individual happiness. The research also highlights the persistent urban-rural happiness gap and explores the distinct happiness-age curves observed between urban and rural residents.
    Keywords: Subjective Well-Being, Economic Growth, Easterlin Paradox, Happiness-Age Curve
    JEL: H0 I30 O10 J10
    Date: 2023
  2. By: Ran Yan; Nan Zhou; Wei Feng; Minda Ma; Xiwang Xiang; Chao Mao
    Abstract: As the two largest emerging emitters with the highest growth in operational carbon from residential buildings, the historical emission patterns and decarbonization efforts of China and India warrant further exploration. This study aims to be the first to present a carbon intensity model considering end-use performances, assessing the operational decarbonization progress of residential building in India and China over the past two decades using the improved decomposing structural decomposition approach. Results indicate (1) the overall operational carbon intensity increased by 1.4% and 2.5% in China and India, respectively, between 2000 and 2020. Household expenditure-related energy intensity and emission factors were crucial in decarbonizing residential buildings. (2) Building electrification played a significant role in decarbonizing space cooling (-87.7 in China and -130.2 kilograms of carbon dioxide (kgCO2) per household in India) and appliances (-169.7 in China and -43.4 kgCO2 per household in India). (3) China and India collectively decarbonized 1498.3 and 399.7 mega-tons of CO2 in residential building operations, respectively. In terms of decarbonization intensity, India (164.8 kgCO2 per household) nearly caught up with China (182.5 kgCO2 per household) in 2020 and is expected to surpass China in the upcoming years, given the country's robust annual growth rate of 7.3%. Overall, this study provides an effective data-driven tool for investigating the building decarbonization potential in China and India, and offers valuable insights for other emerging economies seeking to decarbonize residential buildings in the forthcoming COP28 age.
    Date: 2023–06
  3. By: Juan J. Cortina (World Bank); Maria Soledad Martinez Peria (Research Department International Monetary Fund (IMF)); Sergio L. Schmukler (Economics Research World Bank Group); Jasmine Xiao (Department of Economics University of Notre Dame)
    Abstract: The internationalization of China's equity markets started in the early 2000s but accelerated after 2012, when Chinese firms' shares listed in Shanghai and Shenzhen gradually became available to international investors. This paper documents the effects of the post-2012 internationalization events by comparing the evolution of equity financing and investment activities for (i) domestic listed firms relative to firms that already had access to international investors and (ii) domestic listed firms that were directly connected to international markets relative to those that were not. The paper shows significant increases in financial and investment activities for domestic listed firms and connected firms, with sizable aggregate effects. The evidence also suggests that the rise in firms' equity issuances was primarily and initially financed by domestic investors. Foreign ownership of Chinese firms increased once the locally issued shares became part of the Morgan Stanley Capital International (MSCI) Emerging Markets Index in 2018.
    Keywords: equity financing; equity issuance activity; equity market liberalization; firm investment; foreign investors; international investors; Stock Connect
    JEL: F33 G00 G01 G15 G21 G23 G31
    Date: 2023–07
  4. By: Chu, Yin; Holladay, J. Scott; Qiu, Yun; Tian, Xian-Liang; Zhou, Maigeng
    Abstract: We leverage the timing of coalmine accidents to examine the effect of coal mining on air pollution. Safety regulations mandate that coal mining be suspended if a mine experiences an accident with 10 or more fatalities. We use a stacked difference-in-differences approach to compare counties with an accident to those experiencing an accident more than two years earlier or later. We provide evidence that the timing of accidents cannot be predicted. Next, we combine satellite-based air pollution data at the county-day level with the dates of accidents to show that on average, suspending coal mining reduces local air pollution by 8%. Changes in the level of coal consumption do not drive this reduction. We also find significant decreases in respiratory mortality after suspending coal mining with particularly large effects on vulnerable populations.
    Keywords: air pollution, coal mining, coalmine accidents, health impacts
    JEL: I10 Q40 Q53 R11
    Date: 2023
  5. By: Kaiji Chen; Tao Zha
    Abstract: This paper reviews recent literature on China's macroeconomic development, emphasizing the critical role of the gradualist approach over the past four decades. Beyond China's structural transformation, we explore various aspects such as high saving rates, the housing boom, an expanding current account surplus, and rising inequality. We propose a unifying framework that encapsulates key development stages, contrasting gradualism with a laissez-faire counterfactual. Our analysis illustrates how China's gradual policy reforms, amidst highly imperfect financial markets, have effectively helped spur GDP growth throughout its macroeconomic evolution. We highlight the tradeoffs between accelerating GDP growth and safeguarding China's long-term financial stability.
    JEL: E02 E2 E65 F43
    Date: 2023–06
  6. By: Zhaobo Zhu (Audencia Business School); Zhenyan Qi (Shenzhen University [Shenzhen]); Yi Jin (MUST - Macau University of Science and Technology)
    Abstract: This paper provides experimental evidence that people in China have strong familiarity bias identified by hometown and education locations when making merger and acquisition decisions. Emotions and genders could affect the role of familiarity bias in merger and acquisition decisions.
    Keywords: Familiarity bias, Home bias, Emotion, Merger and acquisition decisions
    Date: 2023–05

This nep-cna issue is ©2023 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.