nep-cna New Economics Papers
on China
Issue of 2023‒11‒13
five papers chosen by
Zheng Fang, Ohio State University

  1. A New Weighted Food CPI from Scanner Big Data in China By Zhenkun Zhou; Zikun Song; Tao Ren
  2. The Evolution of the European Union's China Strategy: Challenges in an era of economic security (Japanese) By TSURUOKA Michito
  3. Review - Ghassan Moazzin: Foreign banks and global finance in modern China. Banking on the Chinese frontier, 1870 1919 By Liu, Yi
  4. The Unintended Consequences of Trade Protection on the Environment By Taipeng Li; Lorenzo Trimarchi; Guohao Yang; Rui Xie
  5. High risk, low return (and vice versa): the effect of product innovation on firm performance in a transition economy By Li, Xu; Vermeulen, Freek

  1. By: Zhenkun Zhou; Zikun Song; Tao Ren
    Abstract: Scanner big data has potential to construct Consumer Price Index (CPI). The study introduces a new weighted price index called S-FCPIw, which is constructed using scanner big data from retail sales in China. We address the limitations of China's CPI especially for its high cost and untimely release, and demonstrate the reliability of S-FCPIw by comparing it with existing price indices. S-FCPIw can not only reflect the changes of goods prices in higher frequency and richer dimension, and the analysis results show that S-FCPIw has a significant and strong relationship with CPI and Food CPI. The findings suggest that scanner big data can supplement traditional CPI calculations in China and provide new insights into macroeconomic trends and inflation prediction. We have made S-FCPIw publicly available and update it on a weekly basis to facilitate further study in this field.
    Date: 2023–10
  2. By: TSURUOKA Michito
    Abstract: The European Union’s China strategy is undergoing a rapid and substantial transformation. While Japanese experts and officials have often criticized Europe of being too soft on China for many years, Europe is changing, albeit belatedly. This DP examines what the EU seeks to achieve in its relations with China, focusing particularly on the issues and the EU’s policy tools related to economic security. The most immediate policy goal is to safeguard the EU’s own economic interest. Brussels has been introducing a series of measures to strengthen investment screening and export control and to counter state aid by foreign countries and economic coercion in recent years. While those measures are global in scope, there is no doubt that the EU’s practical focus is always on China. The fact that the human rights concerns, particularly regarding the forced labor issues in Xinjiang province, are also playing an important part in Europe’s deliberations on China also needs to be highlighted.
    Date: 2023–10
  3. By: Liu, Yi
    Date: 2023
  4. By: Taipeng Li (Hunan University); Lorenzo Trimarchi (Development Finance and Public Policies, University of Namur); Guohao Yang (University College Dublin); Rui Xie (Hunan University)
    Abstract: We analyze the impact of a rise in protectionism on environmental regulation. Using the 2018 US-China trade war as a quasi-natural experiment, we find that higher exposure to Trump tariffs leads to less stringent regulation targets in China, increasing air pollution and carbon emissions. Politically motivated changes in environmental policies rationalize our results: the central government and local party secretaries relax environmental regulations to mitigate the negative consequences of trade protection for the polluting industries. We find heterogeneous effects depending on politicians’ characteristics: younger, recently appointed, and more connected local politicians are more likely to ease environmental regulation if their prefecture is more exposed to the tariff shock. This policy reaction benefits politicians: prefectures with the most considerable easing in environmental regulation manage to curb the negative economic consequences of the trade war, while their mayors have a relatively larger probability of promotion to a higher level of government. This paper presents the first empirical evidence documenting politicians manipulating environmental regulation to curb negative economic shocks.
    Date: 2023–10
  5. By: Li, Xu; Vermeulen, Freek
    Abstract: Common wisdom suggests that high-risk strategies will be associated with high expected returns and vice versa. Focusing on the effect of new product development on firm performance, in this paper we argue that this relationship may reverse in a market undergoing substantial institutional transition. We examine domestic pharmaceutical firms in China during the 1990s and find that in this context, introducing new products was associated with lower average firm profitability but higher variance. In conformity with our predictions, these relationships were stronger in areas where the rate of institutional change was higher and for product types that took longer to develop. Thus, we explain why, for particular strategic actions, high risk may be associated with low returns. A key conceptual corollary of these findings—and for strategic management research in general—is that firms may sometimes be more focused on the potential upside of their actions than on the expected value of those actions.
    Keywords: technology and innovation management; business policy and strategy; quantitative orientation
    JEL: J50
    Date: 2021–10–27

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