nep-cna New Economics Papers
on China
Issue of 2024‒03‒04
nine papers chosen by
Zheng Fang, Ohio State University

  1. Hukou Status and Children's Education in China By Sun, Yue; Zhao, Liqiu; Zhao, Zhong
  2. Balancing Climate Change and Economic Development: the Case of China By Lin, Fan; Xie, Danyang
  3. Who stands on the shoulders of Chinese (scientific) giants? Evidence from chemistry By Azoulay, Pierre; Qiu, Shumin; Steinwender, Claudia
  4. Childhood Circumstances and Health of American and Chinese Older Adults: A Machine Learning Evaluation of Inequality of Opportunity in Health By Huo, Shutong; Feng, Derek; Gill, Thomas M.; Chen, Xi
  5. Constructing Quarterly Chinese Time Series Usable for Macroeconomic Analysis By Kaiji Chen; Patrick C. Higgins; Tao Zha
  6. The "real" exchange rate regime in China since 2015's exchange rate reform By Jinzhao Chen
  7. The anatomy of a peg: lessons from China’s parallel currencies By Saleem Bahaj; Ricardo Reis
  8. Platform Information Provision and Consumer Search: A Field Experiment By Lu Fang; Yanyou Chen; Chiara Farronato; Zhe Yuan; Yitong Wang
  9. Long-Term Impacts of Growth and Development Monitoring: Evidence from Routine Health Examinations in Early Childhood By Yinhe Liang; Xiaobo Peng; Meiping Aggie Sun

  1. By: Sun, Yue (Renmin University of China); Zhao, Liqiu (Renmin University of China); Zhao, Zhong (Renmin University of China)
    Abstract: Under China's household registration (hukou) system, children with rural hukou do not have equal rights to access education in urban areas. This paper investigates the causal effect of hukou status on children's education by exploiting an exogenous change in hukou status induced by the hukou reform in 1998. Before the reform, children could only inherit their mother's hukou status. After 1998, newborns and preschoolers could inherit either their father's or mother's hukou status, which provided a unique exogenous opportunity for children with urban fathers and rural mothers to obtain urban hukou. Using China's 2010 population census data, we employ a difference-in-differences strategy to examine the impact of hukou status on children's education. We show that the younger cohorts exposed to the reform are 15.1 percentage points more likely to have urban hukou and are 18.9 percentage points more likely to be at the grade level appropriate for their age. Moreover, the effect is more pronounced amongst girls, and children from educated families or from large cities.
    Keywords: Hukou reform, grade-for-age, education equality, rural-urban disparity
    JEL: I24 I28 O15 R28
    Date: 2024–01
  2. By: Lin, Fan; Xie, Danyang
    Abstract: We analyze China's economic growth and climate change relationship using a dynamic equilibrium model with regional disparity. Our simulation findings suggest that without intervention, China's temperatures could rise to 4.7◦C and 3.4◦C in advanced and backward regions, respectively, by mid-next century. A social planner path could limit this rise to 3.3◦C across both regions, yielding welfare benefits. However, if China adheres to the Paris Agreement's 2◦C limit without exceptional low-carbon technology advancements, significant social welfare losses could occur.
    Keywords: Economic Development, Climate Change, China
    JEL: E27 E61 Q54
    Date: 2023
  3. By: Azoulay, Pierre; Qiu, Shumin; Steinwender, Claudia
    Abstract: In recent decades, Chinese researchers have become preeminent contributors to the scientific enterprise, as reflected by the number of publications originating from Chinese research institutions. China's rise in science has the potential to push forward the global frontier, but mere production of knowledge does not guarantee that others are able to build on it. In this manuscript, we study how fertile Chinese research is, as measured by citations. Using publication and citation data for elite Chemistry researchers, we show that Chinese authored articles receive only half the citations from the US compared to articles from other countries. We show that even after carefully controlling for the "quality" of Chinese research, Chinese PIs' articles receive 28% fewer citations from US researchers. Our results imply that US researchers do not build as readily on the work of Chinese researchers, relative to the work of other foreign scientists, even in a setting where Chinese scientists have long excelled.
    Keywords: research and development; international spillovers; economics of science; citations; patent citations
    JEL: I23 O30
    Date: 2023–03–13
  4. By: Huo, Shutong (University of California, Irvine); Feng, Derek (Yale University); Gill, Thomas M. (Yale University); Chen, Xi (Yale University)
    Abstract: Childhood circumstances may impact senior health, prompting this study to introduce novel machine learning methods to assess their individual and collective contributions to health inequality in old age. Using the US Health and Retirement Study (HRS) and the China Health and Retirement Longitudinal Study (CHARLS), we analyzed health outcomes of American and Chinese participants aged 60 and above. Conditional inference trees and forest were employed to estimate the influence of childhood circumstances on self-rated health (SRH), comparing with the conventional parametric Roemer method. The conventional parametric Roemer method estimated higher IOP in health ( China: 0.039, 22.67% of the total Gini coefficient 0.172; US: 0.067, 35.08% of the total Gini coefficient 0.191) than conditional inference tree ( China: 0.022, 12.79% of 0.172; US: 0.044, 23.04% of 0.191) and forest ( China: 0.035, 20.35% of 0.172; US: 0.054, 28.27% of 0.191). Key determinants of health in old age were identified, including childhood health, family financial status, and regional differences. The conditional inference forest consistently outperformed other methods in predictive accuracy as measured by out-of-sample mean squared error (MSE). The findings demonstrate the importance of early-life circumstances in shaping later health outcomes and stress the early-life interventions for health equity in aging societies. Our methods highlight the utility of machine learning in public health to identify determinants of health inequality.
    Keywords: life course, inequality of opportunity, childhood circumstances, machine learning, conditional inference tree, random forest
    JEL: I14 J13 J14 O57 C53
    Date: 2024–01
  5. By: Kaiji Chen; Patrick C. Higgins; Tao Zha
    Abstract: During episodes such as the global financial crisis and the Covid-19 pandemic, China experienced notable fluctuations in its GDP growth and key expenditure components. To explore the primary sources of these fluctuations, we construct a comprehensive dataset of GDP and its components in both nominal and real terms at a quarterly frequency. Applying two SVAR models to this dataset, we uncover the principal drivers of China's economic fluctuations across different episodes. In particular, our findings underscore the distinct impacts of consumption-constrained shocks on household consumption and its various subcomponents throughout the Covid-19 pandemic.
    JEL: C82 E02
    Date: 2024–01
  6. By: Jinzhao Chen (CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne, ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand)
    Abstract: Moving away from a fixed exchange rate in 2005, China has gradually enlarged the band of fluctuations of Renminbi (RMB) and implemented various reforms on its central parity to have a more flexible exchange rate regime. This paper studies the nature of the exchange rate regime in China since the exchange regime reform of August 2015. Relying on the selfexciting threshold autoregressive (SETAR) model, it identifies endogenously the band of inaction beyond which the People's bank of China (China's central bank) starts to intervene in the foreign exchange market to restrict further fluctuations. Based on the comparison of the estimated threshold with the official band, this paper shows that the RMB/USD exchange rate followed an intermediate regime similar to the crawling band but with only one single threshold of intervention which is much lower than the upper boundary of the announced band.
    Keywords: Exchange rate regime, self-exciting threshold autoregressive model (SETAR), Renminbi (RMB), Central bank intervention
    Date: 2023
  7. By: Saleem Bahaj (UCL); Ricardo Reis (London School of Economics (LSE); Centre for Macroeconomics (CFM))
    Abstract: China’s current account transactions use an offshore international currency, the CNH, that co-exists as a parallel currency with the mainland domestic currency, the CNY. The CNH is freely used, but by restricting its exchange for CNY, the authorities can enforce capital controls. Sustaining these controls requires tight management of the money supply and liquidity to keep the exchange rate between the dual currencies pegged. After describing how the central bank implements this system, we find a rare instance of identified, exogenous, transitory increases in the supply of money and estimate by how much they depreciate the exchange rate. Theory and evidence show that elastically supplying money in response to demand shocks can maintain a currency peg. Liquidity policies complement these monetary interventions to deal with the pressure on the peg from financial innovation. Finally, deviations from the CNH/CNY peg act as a pressure valve to manage the exchange rate between the yuan and the US dollar.
    Keywords: Chinese monetary policy, Gresham’s law, Goodhart’s law, Money markets, RMB
    JEL: F31 F33 E51 G15
    Date: 2024–01
  8. By: Lu Fang; Yanyou Chen; Chiara Farronato; Zhe Yuan; Yitong Wang
    Abstract: Despite substantial efforts to help consumers search in more intuitive ways, text search remains the predominant tool for product discovery online. In this paper, we explore the effects of visual and textual cues for search refinement on consumer search and purchasing behavior. We collaborate with one of the largest e-commerce platforms in China and study its roll out of a new search tool. When a customer searches for a general term (e.g., “headphones”), the tool suggests refined queries (e.g., “bluetooth headphones” or “noise-canceling headphones”) with the help of images and texts. The search tool was rolled out with a long-run experiment, which allows us to measure its short-run and long-run effects. We find that, although there was no immediate effect on orders or total expenditures, the search tool changed customers’ search and purchasing behavior in the long-run. Customers with access to the new tool eventually increased orders and expenditures compared to those in the control group, especially for non top-selling products. The purchase increase comes from more effective searches, rather than an increase in activity on the platform. We also find that the effect is not only driven by the direct value of suggested searches, but also by customers indirectly learning to perform more effective searches on their own.
    JEL: D81 D83 L2 L81 L86
    Date: 2024–02
  9. By: Yinhe Liang; Xiaobo Peng; Meiping Aggie Sun
    Abstract: This paper examines the long-term impacts of growth and development monitoring in early childhood. For this purpose, we evaluate a pediatric healthcare program, the Systematic Management of Children (SMC), which offers growth and development monitoring through routine health checkups for all young children (0-6 years) in China. Using data on the program’s county-by-county rollout from 1950 to 2010, we find that full exposure to the SMC from birth increases lifetime income by 5%. We further provide evidence of several underlying mechanisms, including improved physical and mental health, better educational outcomes, increased cognitive skills, and sustained use of routine health checkups among adolescents.
    Keywords: growth and development monitoring, adult earnings, human capital, health, public goods
    JEL: H75 I15 I18 J24 N35 O12 O15
    Date: 2024

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