nep-cna New Economics Papers
on China
Issue of 2023‒12‒04
fourteen papers chosen by
Zheng Fang, Ohio State University

  1. Nonmonetary Awards and Innovation: Evidence from Winning China's Top Brand Contest By Luo, Lianfa; Cheng, Zhiming; Ye, Qingqing; Cheng, Yanjun; Smyth, Russell; Yang, Zhiqing; Zhang, Le
  2. China's Bid for Supremacy in Chips and Batteries: Implications for Korean Policy By Cho, Eun Kyo
  3. Technological sophistication made in China? New insights from Germany's evaluation of COVID-19 antigen rapid tests By Dreier, Silas; Liu, Wan-hsin
  4. The rise of China's technological power: the perspective from frontier technologies By Antonin Bergeaud; Cyril Verluise
  5. The Impact of Chinese Regulation of Limitation on Currency Transactions (LCT) on Sydney Housing Prices By Song Shi; Xunpeng Shi
  6. Opposing firm-level responses to the China shock: output competition versus input supply By Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc J. Melitz; Thomas Zuber
  7. Heterogeneous Returns to Education across Hukou-Migration Subgroups in China By Juan Huang; Weerachart Kilenthong
  8. The Long-Term Impact of Parental Migration on the Health of Young Left-Behind Children By Bart Cockx; Jinkai Li; Erga Luo
  9. Despite disruptions, US-China trade is likely to grow By Megan Hogan; Gary Clyde Hufbauer
  10. Search Frictions in Rental Markets: Evidence from Urban China By Fan, Ying; Fu, Yuqi; Yang, Zan; Chen, Ming
  11. To Go Electric or To Burn Coal? A Randomized Field Experiment of Informational Nudges By Hanming Fang; King King Li; Peiyao Shen
  12. The changing geopolitics in the South Caucasus during the war in Ukraine: Chances and risks for the region By Wrobel, Ralph
  13. Land Markets and Labor Productivity: Empirical Evidence from China By Zhang, Jian; Mishra, Ashok K.; Zhu, Peixin
  14. "Tailoring Marketing to Young Chinese Car Buyers: Leveraging Automotive Cultural Experiences and Behavioral Personalities " By Rahinah Ibrahim

  1. By: Luo, Lianfa; Cheng, Zhiming; Ye, Qingqing; Cheng, Yanjun; Smyth, Russell; Yang, Zhiqing; Zhang, Le
    Abstract: We use the short-lived, but high-profile, China Top Brand Award to examine the causal effects of nonmonetary awards on firm innovation. To do so, we create a panel dataset by matching official China Top Brand Award recipients to the innovation outputs of listed companies. Results from difference-in-differences estimates show that firms that received the China Top Brand Award have a higher number, and better quality, of filed patents. We find that the positive effects of winning the China Top Brand Award on innovation outputs operate through higher government subsidies to winning firms. We also find that the positive effects of award-winning are stronger among state-owned enterprises, larger enterprises, and better-performing enterprises, as well as in provinces with stronger intellectual property rights protection. Our results are robust to a series of sensitivity checks.
    Keywords: China Top Brand Award, intellectual property rights, innovation outputs
    JEL: M2 O3
    Date: 2023
  2. By: Cho, Eun Kyo (Korea Institute for Industrial Economics and Trade)
    Abstract: Acute tensions persist between the United States and China, and nowhere is this more evident that in the field of cutting-edge technologies and industries. Washington has expanded semiconductor sanctions against China while major European countries have sought to reduce their exposure to China-based supply chains. Beijing has responded in kind by imposing restrictions on exports of key raw materials. China’s efforts to curtail exports are not only a retaliatory response to US sanctions, but they are also a crucial part of China’s long-term strategy to strengthen its supply chains for its cutting-edge industries. China is reinforcing its existing strengths in semiconductor and battery production and internalizing core technologies in an effort to establish self-a sufficient supply chain ecosystem. Beijing, in other words, is increasing its long-term investments in core technology R&D to reduce reliance on foreign sources, while giving given primacy to domestic sources of raw materials. It is also leveraging its production capacity, price competitiveness, and large domestic consumer market to its advantage. Chinese firms are competitors with Korean peers in key industries such semiconductors, batteries, and others. Critically, Korean industries depend upon China for critical materials and parts. It is therefore crucial that Korean policymakers not only to respond to China’s intensifying export controls, but also to establish a comprehensive and long-term industrial policy that can navigate China’s supply chain strategy. To that end, Korean must stay abreast of China’s evolving policies designed to foster its own cutting-edge industries and technologies and implement measures to prevent China from recruiting Korean experts. Korean needs to proactively address Chinese measures to lead next-generation technologies and markets by establishing more self-sufficient ecosystems for emerging technologies in the Korean semiconductor and battery industries.
    Keywords: US-China conflict; Chinese industry; Chinese technology; intellectual property; technological competitiveness; supply chains; supply chain strategy; semiconductors; batteries; chips; next-generation technology; technological development; economic security
    JEL: F02 F10 F13 F15 F50 F51 F52 L60 L63 O32 O34 O38
    Date: 2023–07–23
  3. By: Dreier, Silas; Liu, Wan-hsin
    Abstract: By analyzing a unique dataset from Germany's evaluation of COVID-19 antigen rapid tests, we show that Chinese firms can excel under today's global competition and produce tests at quality levels higher than China's income level would suggest. We find these achievements are positively associated with China's rising innovation capability and robust industrial base. Further strengthening China's innovation and industrial base to support Chinese firms' future accomplishments is what the Chinese government clearly aims for. This would intensify the challenges facing Western economies that strive for technological sovereignty and eagerly seek to de-risk their economic relations with China.
    Keywords: China, product quality, technological sophistication, trade, COVID-19
    JEL: F10 O10 O30
    Date: 2023
  4. By: Antonin Bergeaud; Cyril Verluise
    Abstract: We use patent data to study the contribution of the US, Europe, China and Japan to frontier technology using automated patent landscaping. We find that China's contribution to frontier technology has become quantitatively similar to the US in the late 2010s while overcoming the European and Japanese contributions respectively. Although China still exhibits the stigmas of a catching up economy, these stigmas are on the downside. The quality of frontier technology patents published at the Chinese Patent Office has leveled up to the quality of patents published at the European and Japanese patent offices. At the same time, frontier technology patenting at the Chinese Patent Office seems to have been increasingly supported by domestic patentees, suggesting the build up of domestic capabilities.
    Keywords: frontier technologies, China, patent landscaping, machine learning, patents
    Date: 2022–10–14
  5. By: Song Shi; Xunpeng Shi
    Abstract: Foreign capital and buyers are often blamed for pushing up housing prices and reducing the supply of affordable housing in Australia. We examine this issue by assessing the impact of Chinese macroprudential policies, such as the limitation on currency transactions (LCT), on Sydney housing prices. Using propensity score matching and difference-in-differences techniques, we find that the LCT policy issued by the People’s Bank of China in 2017 had a strongly negative impact (about -3%) on housing prices in suburbs with larger concentrations of Chinese residents, which are measured by multiple cutoff points—hereafter, Chinese suburbs—in Sydney, Australia. The results are consistent with home bias abroad, which implies that Chinese capital for residential real estate overseas most likely flows to predominately Chinese neighbourhoods in the destination city. We also find evidence that the relationship between this Chinese macroprudential policy and overseas housing prices is more direct to Chinese suburbs, with little impact on housing prices outside Chinese neighbourhoods within the studied period.
    Keywords: capital flight; Chinese buyers; foreign investment; limitation on currency transactions
    JEL: R3
    Date: 2023–01–01
  6. By: Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc J. Melitz; Thomas Zuber
    Abstract: We decompose the "China shock" into two components that induce different adjustments for firms exposed to Chinese exports: an output shock affecting firms selling goods that compete with similar imported Chinese goods, and an input supply shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm-level, we show that the output shock is detrimental to firms' sales, employment, and innovation. Moreover, this negative impact is concentrated on low-productivity firms. By contrast, we find a positive effect - although often not significant - of the input supply shock on firms' sales, employment and innovation.
    Keywords: Competition shock, patent, firms, import
    Date: 2022–11–30
  7. By: Juan Huang; Weerachart Kilenthong
    Abstract: This paper uses the China Household Income Project 2018 dataset to estimate returns to education for various Hukou-migration subgroups. We overcome the endogeneity problem of years of schooling using an instrument based on the Great Expansion of Higher Education policy. Our results indicate that the highest returns are for urban native workers (27.4%), followed by urban Hukou-converted (25.0%) and rural native workers (14.7%). In contrast, the returns to education for rural-urban migrant workers are insignificant. Further analyses suggest that Hukou conversion significantly increased the returns to education for rural-origin people by enabling them access to better job opportunities.
    Keywords: returns to education; Hukou system; migration; China
    JEL: I24 I26 J15 J61
    Date: 2023–11
  8. By: Bart Cockx (Department of Economics, Ghent University. CESifo (Munich), IRES (UCLouvain), IZA (Bonn), ROA (Maastricht University).); Jinkai Li (Department of Economics, Ghent University.); Erga Luo (Department of Agricultural Economics and Management, Zhejiang University.)
    Abstract: In 2015, 15% of all children in China were left behind in the countryside because at least one of their parents migrated to a city. We implement an event study analysis between 2010 and 2018 on five waves of the China Family Panel Studies (CFPS) to investigate the dynamic effects of parental migration on the health of left behind young children (LBC). While we find a gradual increase in medical expenditures, we do not detect any significant impact on the incidence of sickness. Furthermore, the analysis shows that the incidence of overweight declines gradually since their parents’ first migration and reports suggestive evidence for mental health improvement. We argue that these long-term positive effects on health and health consumption can be explained by the transitory nature of migration, the high-quality substitution of the caregiver role by grandparents, and by a reorientation in family expenditures, partly induced by government policy.
    Keywords: young left-behind children; parental migration; Hukou system; long-term impact on health; event study analysis; mechanisms analysis
    JEL: I15 J10 J61
    Date: 2023–11–12
  9. By: Megan Hogan (Peterson Institute for International Economics); Gary Clyde Hufbauer (Peterson Institute for International Economics)
    Abstract: The United States and China hit record trade levels in 2022, despite a prickly relationship, suggesting that calls for severe or even total economic decoupling between the world's two economic superpowers may be ill-advised, say Hogan and Hufbauer. The dollar value of US-China trade grew significantly between 2019 and 2022, notwithstanding declines in trade flows of certain products such as semiconductors and aircraft due to the trade war. The persistence and even growth of the two countries' total trade despite political and economic disputes reflects the mutual benefit that private firms see in this commercial relationship. The authors conclude that partial decoupling between the United States and China has not, so far, redrawn the world trade map. Nor does it seem likely to do so on an aggregate trade basis between now and 2025.
    Date: 2023–10
  10. By: Fan, Ying (Department of Building and Real Estate, The Hong Kong Polytechnic University); Fu, Yuqi (Department of Construction Management, Tsinghua University); Yang, Zan (Department of Real Estate and Construction Management, Royal Institute of Technology); Chen, Ming (Department of Building and Real Estate, The Hong Kong Polytechnic University)
    Abstract: In this paper, we study consumer search in a housing market subject to objective frictions induced by intermediaries and psychological frictions intrinsic to tenants themselves. Using rental data from a leading real estate brokerage company during 2016 and 2018, we find a unimodal distribution of objective search frictions and a bimodal distribution of psychological search frictions revealed by tenants’ search behaviors. This bimodal distribution originates from divergent search strategies of tenants with different search criteria. Furthermore, psychological search frictions explain the deviation between a tenant’s actual choice and stated preference, and enhance the degree of overpay/mark-up in the deal. These effects of psychological frictions led by divergent search strategies hold when we consider the expertise/incentive of agents and the rigidity/opportunity cost of tenants’ search. Aggregately, psychological search frictions result in a dispersed and asymmetric distribution of rent residuals.
    Keywords: Search strategy: Friction; Rental Market; China
    JEL: D83 D91 R30
    Date: 2023–11–08
  11. By: Hanming Fang; King King Li; Peiyao Shen
    Abstract: Coal heating in residential homes is an important source of indoor air pollution, leading to detrimental health effects. We conduct a randomized field experiment in northern China using three types of SMS campaigns targeting three potential biases that may hinder the adoption of electric heating: a Cost SMS campaign, designed to address the overestimation of electricity expenses; a Health SMS campaign, aimed at addressing the underestimation of health damage associated with coal heating; and a Social Comparison SMS campaign, intended to inform households about the popularity of electric heating. We find that the Cost SMS backfires: it instead leads to a substantial reduction in electric heating, which can be attributed to salience bias induced by the Cost SMS, which drew heightened attention to the cost of electricity. The Health SMS is ineffective for households that underestimate the health damage of coal heating and even backfires for those who expressed little concern about the health consequences. Social Comparison SMS is only effective for a small proportion of households who were concerned about their neighbors' heating choices. Overall, our findings suggest that SMS campaigns targeting these biases are largely ineffective, and caution should be exercised when applying plausible nudge interventions. The findings also suggest that households may be motivated to maintain their beliefs and resist paternalistic interventions.
    JEL: C93 D91 Q50 Q58
    Date: 2023–11
  12. By: Wrobel, Ralph
    Abstract: Since February 2022 - when Russia invaded the Ukraine - the geopolitical situation in the South Caucasus changed dramatically. On the one hand, EU sanctions on Russia made the "Middle Corridor" of the Chinese Belt and Road Initiative through the South Caucasus more attractive for China and Europe, on the other hand the "protective power" Russia is weakened by the war and the Western sanctions leaving a vacuum of power in the South Caucasus. As a result, Azerbaijan was able to reconquer the region Nagorno-Karabakh in September 2023 within a few days, only. Therefore, the region is still not more an unassailable Russian "backyard" or "sphere of interest" but place of a new "great game" of the main powers in the world. Beside Russia losing power - a slight rise of China can be observed while the West - U.S. and the EU - is still neglecting the region. Only Türkiye became a new active geopolitical player in the region. This may - beside all tragedy for the people of Nagorno-Karabakh - bring some "never ending conflicts" in the region to an end and may open up new opportunities for Armenia, Georgia and Azerbaijan to develop better economically in the near future.
    Keywords: Geopolitics, South Caucasus, Georgia, Armenia, Azerbaijan, EU, Belt & Road Initiative
    Date: 2023
  13. By: Zhang, Jian (China University of Mining and Technology); Mishra, Ashok K. (Arizona State University); Zhu, Peixin (Nanjing Agricultural University)
    Abstract: This study investigates the impact of the land rental market (LRM) on labor productivity in rural China. Particular attention is given to farm and non-farm labor productivity. Using 2012 household-level data and a multinomial endogenous switching treatment regression (MESTR) technique, we find that rural households renting-in farmland increased labor productivity in the farm sector by about 55%, while labor productivity in the non-farm sector decreased by about 6%. We also find that rural households renting-out farmland had lower labor productivity in both the farm and non-farm sectors by 13% and 9%, respectively. More family labor transferred from the farm to the non-farm sector after renting-out land.
    Keywords: land rental market, labor productivity, farm sector, non-farm sector
    JEL: C31 J22 Q15 Q18
    Date: 2023–11
  14. By: Rahinah Ibrahim (Faculty of Design and Architecture, Universiti Putra Malaysia, 43300, Serdang, Malaysia Author-2-Name: Chen Jiandou Author-2-Workplace-Name: "Faculty of Design and Architecture, Universiti Putra Malaysia, 43300, Serdang, Malaysia 11480 " Author-3-Name: Athira Azmi Author-3-Workplace-Name: "Faculty of Design and Architecture, Universiti Putra Malaysia, 43300, Serdang, Malaysia 11480 " Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - This study was initiated to develop an alternative positive car-user experience to enhance automotive sales by considering customers' desires. Method - The study employed the ""Systematic Literature Review Synthesis Process, "" harnessing the online EAGLE Navigator System to document the literature review synthesis process to identify relevant literature and establish a theoretical background for research ideation. Findings - A theoretical model for combining personal cultural customization, simplicity, accessibility, affordable technology, and sensory modalities could improve the in-car experience and satisfaction of younger Chinese car buyers, thus leading to satisfying car-user purchasing experiences. Novelty - This study breaks new ground by offering a holistic perspective on enhancing the automotive user experience within the context of the Chinese market. An innovative blend of cultural customization and technology accessibility is introduced, which is poised to reshape the automobile industry's engagement with younger consumers in China. Type of Paper - Review"
    Keywords: Automotive Marketing; Car-User Experience; Young Customers' Personalities; Automotive Culture; Sustainable Design Informatics
    JEL: M31 M39
    Date: 2023–09–30

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