nep-cna New Economics Papers
on China
Issue of 2024‒03‒25
thirteen papers chosen by
Zheng Fang, Ohio State University

  1. Navigating the Evolving Landscape between China and Africa’s Economic Engagements By Ms. Wenjie Chen; Michele Fornino; Henry Rawlings
  2. Appropriate Entrepreneurship? The Rise of China and the Developing World By Josh Lerner; Junxi Liu; Jacob Moscona; David Y. Yang
  3. The Relationship between Literary Development and Traditional Medicine in the Southern Dynasty of China By Xuebei HU
  4. Assessing China's Efforts to Increase Self-Reliance By Francois de Soyres; Dylan Moore
  5. An Analysis of the Recovery Path of the Consumer Sector in the Post-Pandemic Era By Wenbo Lyu; Jiayi Zhu; Yunan Ding; Keming Zhang
  6. The Wage Effects of Polytechnic Degrees: Evidence from the 1999 China Higher Education Expansion By Dai, Li; Martins, Pedro S.
  7. Occupational dualism and intergenerational educational mobility in the rural economy: evidence from China and India By Shahe Emran, M.; Ferreira, Francisco; Jiang, Yajing; Sun, Yan
  8. The anatomy of a peg: lessons from China’s parallel currencies By Saleem Bahaj; Ricardo Reis
  9. The Impact of Monetary and Fiscal Stimulus on Stock Returns During the COVID-19 Pandemic By Chinmaya Behera; Badri Narayan Rath; Pramod Kumar Mishra
  10. Global Supply Chains and U.S. Import Price Inflation By Mary Amiti; Oleg Itskhoki; David E. Weinstein
  11. US Inequality in the 1980s: The Tokyo Round Trade Liberalization and the Swiss Formula By James Lake; Andrew Greenland; John Lopresti
  12. Assessment of low-carbon tourism development from multi-aspect analysis: A case study of the Yellow River Basin, China By Xiaopeng Si; Zi Tang
  13. Globalization and Profitability of US Firms: The Role of Intangibles By Bullipe R. Chintha; Ravi Jagannathan; Sri S. Sridhar

  1. By: Ms. Wenjie Chen; Michele Fornino; Henry Rawlings
    Abstract: China and Africa have forged a strong economic relationship since China’s accession to the WTO in 2001. This paper examines the evolution of these economic ties starting in the early 2000s, and the subsequent shift in the relationship triggered by the commodity price collapse in 2015 and by the COVID-19 pandemic. The potential effects on the African continent of a further slowdown in Chinese growth are analyzed, highlighting the varying effects on different countries in Africa, especially those heavily dependent on their economic relationship with China. The conclusion offers a discussion of ways how African countries and China could adapt to the changing relationship.
    Keywords: Africa; sub-Saharan Africa; China; Trade; Debt; Lending; Investment; Belt and Road Initiative.
    Date: 2024–02–23
  2. By: Josh Lerner; Junxi Liu; Jacob Moscona; David Y. Yang
    Abstract: Global innovation and entrepreneurship has traditionally been dominated by a handful of high-income countries, especially the US. This paper investigates the international consequences of the rise of a new hub for innovation, focusing on the dramatic growth of high-potential entrepreneurship and venture capital in China. First, using comprehensive data on global venture activities, we show that as the Chinese venture industry rose in importance, entrepreneurship increased substantially in other emerging markets, particularly in sectors dominated by Chinese companies. Using a broad set of country-level economic indicators, we find that this effect was driven by country-sector pairs most similar to their counterparts in China. Second, turning to mechanisms, we show that the baseline findings are driven by local investors and by new firms that more closely resemble existing Chinese companies. Third, we find that this growth in emerging-market investment had wide-ranging positive consequences, including a rise in serial entrepreneurship, cross-sector spillovers, innovation, and broader measures of socioeconomic well-being. Together, our findings suggest that developing countries benefited from more “appropriate” businesses and technology pioneered by China, and that a system where only rich countries lead in innovation could limit entrepreneurial activity in large parts of the world.
    JEL: O11 O33
    Date: 2024–03
  3. By: Xuebei HU (Chongqing Three Gorges University, China)
    Abstract: During the Southern Dynasty of China, the belief that human physiology and temperament derived from innate nature and external influences persisted, leading to a close relationship between personal constitution and literary style. This study investigates the connection between Chinese traditional medicine and literature in the Southern Dynasty. The weakened health of the aristocratic families in the Jiangdong region became a backdrop to showcase their political talents and moral integrity, establishing that a weak physical constitution symbolized high literary excellence, as evidenced by the famous, flamboyant literary style of the time. In this context, physical health was intimately linked to literary creation and style, forming a dynamic cycle through mutual resonance. This research provides a new interdisciplinary perspective for studying classical Chinese literature and is significant for East Asian cultural studies.
    Keywords: East Asian cultural studies, classical Chinese literature, the Southern Dynasty, personal constitution, literary style
    Date: 2023–06
  4. By: Francois de Soyres; Dylan Moore
    Abstract: Since the beginning of 2018, the United States and China have been increasing tariff rates on each other's imports, spurring debates about a possible fragmentation of trade into blocs of aligned countries (Pierce and Yu (2023), Alfaro and Chor (2023)). Later that year, in a November 2018 speech to workers at a state-owned enterprise, President Xi Jinping mentioned that current events were forcing China to "travel the road of self-reliance."
    Date: 2024–02–02
  5. By: Wenbo Lyu; Jiayi Zhu; Yunan Ding; Keming Zhang
    Abstract: This paper proposes a referencable pattern of the recovery of the consumption sector, a new dimension to observe and evaluate the intrinsic value of the consumption sector, and proposes the concept of sensory-based consumption and the ranking of the weights of different categories;creates the concept of digital consumption index, coupled with digital RMB index and China-style digital economy index. Finally we explain the internal logic of digital consumption as a consumption upgrade tool and a higher valuation target in the context of China's economic performance in 2022 and the Chinese government's policy in 2023, leading to the investment strategy of roller conduction effect.
    Date: 2024–02
  6. By: Dai, Li; Martins, Pedro S.
    Abstract: While the wage effects of vocational versus academic secondary education are well documented, there is little evidence on how polytechnics degrees pay off compared to university degrees. In this paper, we estimate the polytechnic degree wage effect in China, drawing on an unprecedented higher education expansion initially focused on universities and only later covering polytechnics. We find a large polytechnic wage penalty, of 35%, larger than what could be driven by the shorter duration of these degrees. While this result is robust to several checks, the penalty is found to be more pronounced for workers of lower earnings potential, when using IV-QR methods. Our results are consistent with a significant human capital gap of polytechnic degrees compared to university degrees.
    Keywords: Returns to education, Polytechnics, Higher Education Expansion, China
    JEL: I23 I26 J24
    Date: 2024
  7. By: Shahe Emran, M.; Ferreira, Francisco; Jiang, Yajing; Sun, Yan
    Abstract: We extend the Becker-Tomes model to a rural economy with farm-nonfarm occupational dualism to study intergenerational educational mobility in rural China and India. Using data free of coresidency bias, we find that fathers’ nonfarm occupation and education were complementary in determining sons schooling in India, but separable in China. Sons faced lower mobility in India irrespective of fathers’ occupation. Sensitivity analysis using the Altonji et al. (J. Polit. Econ. 113(1), 151–84, 2005) approach suggests that genetic correlations alone could explain the intergenerational persistence in China, but not in India. Farm-nonfarm differences in returns to education, and geographic mobility are plausible mechanisms behind the contrasting cross-country evidence.
    Keywords: educational mobility; rural economy; occupational dualism; farm-nonfarm; complementarity; coresidency bias; China; India; This project was partially funded by World Bank RSB.; Springer deal
    JEL: O12 J62
    Date: 2023–11–30
  8. 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
  9. By: Chinmaya Behera (Economics and General Management, Goa Institute of Management, Goa, India, (Corresponding author: Goa Institute of Management, Poriem, Sattari, Goa)); Badri Narayan Rath (Department of Liberal Arts, IIT Hyderabad, Kandi, Sangareddy, India); Pramod Kumar Mishra (School of Management, University of Hyderabad, Telangana, India)
    Abstract: We contribute to the literature by investing the impact of monetary and fiscal stimulus and exchange rate on stock returns during the COVID-19 pandemic in Australia, China, India, and Indonesia. By employing the machine learning approach, We find that monetary stimulus positively boosts the stock return of Indonesia. Contrary, fiscal stimulus adversely affected stock return in Australia. The exchange rate positively impacts stock return for both India and Indonesia during the COVID-19 pandemic. However, the findings from this study reveal that both monetary and fiscal stimulus have no effect on the stock market return in the case of China and India. Policymakers needs better strategy to counter the extreme events like pandemic. Our model is robust to the alternative model specification.
    Keywords: Monetary Policy, Fiscal Policy, Stock Return, Machine Learning, COVID-19
    JEL: G11 G15 G18
    Date: 2023–09
  10. By: Mary Amiti; Oleg Itskhoki; David E. Weinstein
    Abstract: Inflation around the world increased dramatically with the reopening of economies following COVID-19. After reaching a peak of 11 percent in the second quarter of 2021, world trade prices dropped by more than five percentage points by the middle of 2023. U.S. import prices followed a similar pattern, albeit with a lower peak and a deeper trough. In a new study, we investigate what drove these price movements by using information on the prices charged for products shipped from fifty-two exporters to fifty-two importers, comprising more than twenty-five million trade flows. We uncover several patterns in the data: (i) From 2021:Q1 to 2022:Q2, almost all of the growth in U.S. import prices can be attributed to global factors, that is, trends present in most countries; (ii) at the end of 2022, U.S. import price inflation started to be driven by U.S. demand factors; (iii) in 2023, foreign suppliers to the U.S. market caught up with demand and account for the decline in import price inflation, with a significant role played by China.
    Keywords: global supply chains; imports; inflation; China
    JEL: E31 F14 F42
    Date: 2024–03–04
  11. By: James Lake (Department of Economics, University of Tennessee); Andrew Greenland (Department of Economics, North Carolina State University); John Lopresti (Department of Economics, William and Mary)
    Abstract: Against a backdrop of sharply rising inequality, the Tokyo Round of the GATT resulted in a 1.6 percentage point reduction in average US tariffs – larger than CUSFTA, NAFTA, and the liberalization accompanying the granting of PNTR to China. We construct a novel IV based on the so-called ``Swiss formula'' that governed Tokyo Round tariff liberalization to provide the first evidence of its effects on imports and inequality. Instrumented tariff reductions explain 17% of the within-industry rise in income inequality between skilled and unskilled workers between 1979 and 1988. This effect is largest in more technology-intensive industries, suggesting a complementarity between trade liberalization and skill-biased technological change. We also show that tariff liberalization in upstream industries produced a shift away from labor more broadly and towards intermediate inputs. Finally, we show that policymakers dampened the observed impact of tariffs on inequality by assigning smaller tariff reductions to industries more reliant on low-skilled labor.
    JEL: F13 F14 F66
    Date: 2024–02
  12. By: Xiaopeng Si (School of Tourism and Cuisine, Harbin University of Commerce, Harbin); Zi Tang (School of Tourism and Cuisine, Harbin University of Commerce, Harbin)
    Abstract: Climate change has become an unavoidable problem in achieving sustainable development. As one of the major industries worldwide, tourism can make a significant contribution to mitigating climate change. The main objective of the paper is to assess the development level of low-carbon tourism from multi-aspect, using the Yellow River Basin as an example. Firstly, this study quantified tourism carbon dioxide emissions and tourism economy, and analyzed their evolution characteristics. The interaction and coordination degree between tourism carbon dioxide emissions and tourism economy were then analyzed using the improved coupling coordination degree model. Finally, this study analyzed the change in total factor productivity of low-carbon tourism by calculating the Malmquist-Luenberger productivity index. The results showed that: (1) The tourism industry in the Yellow River Basin has the characteristics of the initial environmental Kuznets curve. (2) There was a strong interaction between tourism carbon dioxide emissions and tourism economy, which was manifested as mutual promotion. (3) The total factor productivity of low-carbon tourism was increasing. Based on the above results, it could be concluded that the development level of low-carbon tourism in the Yellow River Basin has been continuously improved from 2000 to 2019, but it is still in the early development stage with the continuous growth of carbon dioxide emissions.
    Date: 2024–02
  13. By: Bullipe R. Chintha; Ravi Jagannathan; Sri S. Sridhar
    Abstract: China's admission into the WTO in 2001 heralded a new era of globalization, increasing both import competition in domestic markets and foreign opportunities for US firms. In the aggregate, the average annual profitability of US public firms during the post globalization period (2003-2019) increased by 11.5% of the corresponding pre-globalization period (1984-2002) profitability. This increase in overall aggregate profitability was primarily driven by foreign profitability increasing by 47.4% for firms in the S&P 500 index, which are larger and have more intangible assets created by R&D and SG&A expenditures. In contrast, following globalization, the average aggregate domestic profitability of US firms remained flat, and firms employed more capital to generate sales. Firms with higher intangible assets benefited more from globalization.
    JEL: F20 F30 G0 G12 G30 L1 L25
    Date: 2024–03

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