nep-cna New Economics Papers
on China
Issue of 2023‒12‒11
five papers chosen by
Zheng Fang, Ohio State University

  1. China's Bid for Supremacy in Chips and Batteries: Implications for Korean Policy By Cho, Eun Kyo
  2. Trade Diversion Effects from Global Tensions—Higher Than We Think By Mengqi Wang; Mrs. Swarnali A Hannan
  3. How trade cooperation by the United States, the European Union, and China can fight climate change By Chad P. Bown; Kimberly A. Clausing
  4. The End of "Second Globalization" and Implications for the Korean Economy By Kang, Duyang
  5. Physician beneficence and profit-taking among private for profit clinics in China: A field study using a mystery shopper audit By Ge, Ge; Cheo, Roland; Liu, Rugang; Wang, Jian; Wang, Qiqi

  1. By: Cho, Eun Kyo (Korea Institute of 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. Thank you for reading this abstract of a report from the Korea Institute for Industrial Economics and Trade! Visit us on YouTube: Visit us on Instagram: Visit our website:
    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 O31 O32 O34 O38
    Date: 2023–07–23
  2. By: Mengqi Wang; Mrs. Swarnali A Hannan
    Abstract: The paper builds a unique industry-level dataset by combining Mexico’s nationally sourced inputoutput data (INEGI) with cross-country sources (WIOD, UN Comtrade). Using this dataset to exploit higher supply linkages across a larger number of industries than what is available in cross-country sources, the paper estimates the trade diversion effect on Mexico’s exports to the U.S. from two episodes, with a focus on the first: the U.S.-China trade tension in 2018 and the U.S. sanctions on Russia in 2014. Difference-in-differences, local projections and few other empirical methodologies are used. For the first episode, the paper finds higher trade diversion effects than estimates in literature. Output tariff plays an important role, and there is some evidence of a positive impact through downstream tariffs. The effects are stronger when nationally sourced input-output data is used compared to those derived from cross-country sources. Importantly, the magnitude of trade diversion across industries does not depend on Mexico’s industry-level trade exposure to the U.S., but rather on the U.S. tariff changes on Chinese goods, the decrease in imports from China, product substitutability with Chinese products, and (weakly) on Mexico’s GVC integration. Similarly, for the second episode, the paper finds positive trade diversion effects. Overall, the findings suggest that trade diversion effect might be higher than previously thought and the proper accounting of dataset and supply linkages makes a difference.
    Keywords: input-output linkages; trade diversion; U.S.-China trade tensions
    Date: 2023–11–10
  3. By: Chad P. Bown (Peterson Institute for International Economics); Kimberly A. Clausing (Peterson Institute for International Economics)
    Abstract: Recent efforts to reduce greenhouse gas emissions have revealed different policy priorities; the United States and China have emphasized subsidy-based approaches, and the European Union has emphasized carbon pricing. These divergent policy choices--some lowering energy costs, others raising them--raise concerns about industry competitiveness and have implications for upstream and downstream firms in supply chains. This paper identifies the trade tensions resulting from varying climate policy approaches and describes policy efforts to address them. It then describes the role of a rules-based trading system in tackling the challenges that these distinct policy approaches create, examining World Trade Organization (WTO) rules on subsidies, border measures, and export restrictions. The authors suggest that the United States, the European Union, and China prioritize reforms to those rules as a path forward for cooperation on trade and climate. Such an approach would be an important starting point toward creating a functioning multilateral system.
    Date: 2023–10
  4. By: Kang, Duyang (Korea Institute for Industrial Economics and Trade)
    Abstract: Insofar as we define globalization as the consistent growth in the volume of global trade relative to world GDP, we reasonably conclude that the second phase of globalization, which lasted for five decades since the signing of the General Agreement on Trade and Tariffs (GATT) in 1947, effectively ended with the global financial crisis of 2007-2008. Anti-globalization sentiment has taken root in many advanced countries since the global financial crisis and has conspired with an intensifying US-China rivalry to stem the erstwhile growth in trade relative to world GDP. The United States, the onetime champion of postwar globalization, has recently embraced a New Washington Consensus that represents a sharp departure from the original of the 1990s, effectively putting an end to globalization. The end of globalization means an end to a chapter in the history of global trade. It remains to be seen how the post-globalization trade environment will evolve. The actions of various countries over the next decade will ultimately shape this landscape. The United States and China will play significantly greater roles than other countries in the process, but the fact that no single country can claim unchallenged hegemony over the global economy also leaves room for concerted actions from smaller countries. The end of globalization is particularly significant to Korea, which has achieved a remarkable economic transformation thanks to the success of an export-led growth strategy. Several studies show in common that the US-China decoupling will have a significant negative impact on the global economy, and that Korea will be one of the countries hit the hardest. As a chief beneficiary of free trade and the world’s eighth-largest trading country, Korea has practical interests, a moral obligation, and the potential to help ameliorate worsening global trade conditions. By making it known that the fragmentation of the global economy is not in its interest, Korea ought to partner with countries that share the same perspective and mobilize international support toward maintaining an open, non-discriminatory, and free trade order against protectionist and fragmenting forces.
    Keywords: free trade; globalization; anti-globalization; protectionism; economic nationalism; economic security; exports; US-China conflict; Korea
    JEL: F01 F02 F10 F13 F15 F52 O20 O21 O24 O25
    Date: 2023–05–31
  5. By: Ge, Ge (Department of Health Management and Health Economics); Cheo, Roland (Centre for Behavioural and Implementation Science Interventions,); Liu, Rugang (School of Public Health and Policy, Nanjing Medical University); Wang, Jian (Dong Fureng Institute of Economic and Social Development and Center for Health Economics and Management, Wuhan University); Wang, Qiqi (School of Economics, Xian School of Economics and Finance)
    Abstract: This study employs a mystery shopper audit on a random sample of 96 for-profit private clinics in Jinan, China. We investigate two instruments which reflect beneficence among for-profit clinicians in private practice. The first is whether physicians returned a lost wallet “accidentally” left next to the physician’s table; and the second, whether physicians prescribed antibiotics to pseudopatients who displayed no symptoms of any illness but had complained of fever the night before. These measures quantify beneficence under two different valence framing: returning a wallet represents clinicians who “do good” at personal cost to themselves, while not prescribing antibiotics represents a choice “not to do harm” to patients. We look at the correlation between these beneficence measures and the physicians’ prescription behaviours, and their revenues from the consultation. We find that whether doctors return a lost wallet or not, and prescribe antibiotics or not, such physicians are still as likely to prescribe medications which increase their incomes.
    Keywords: mystery shopper audit; antibiotic prescription; lost wallet; beneficence; for-profit clinics; physicians
    JEL: C93 D64 D91 I18
    Date: 2023–11–16

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