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on China |
| By: | Brühl, Volker |
| Abstract: | The economic rise of China has changed the global economy. The authors explore China's transformation from a low-cost manufacturing hub to an increasingly innovation- and service-driven economy. Major growth drivers for the period 2010-2025 are analysed, including the paradigms of "Made in China" and the "Dual Circulation Strategy". The export intensity of China's economy is declining overall, with a tendency towards greater regional diversification and a gradual decoupling from North America and the European Union. At the same time, trade and investment activities are increasingly geared to the Belt and Road Initiative. Furthermore, labour and energy cost advantages for manufacturing operations in China are likely to diminish in the coming years, calling into question China's attractiveness as a global manufacturing hub. In this regard, the further development of regional and industrial clusters is pivotal for China to enhance its global competitiveness and remain an attractive destination for foreign direct investment (FDI) in the medium term. On the other hand, high productivity in science and technology and rich deposits of critical minerals put China in a favourable position in advanced industries. Important challenges include the still wide development gap between rural and urban areas, the structural mismatch in the labour market, with persistently high youth unemployment, and the race to achieve carbon neutrality by 2060. |
| JEL: | F01 F14 O1 O53 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:290395&r=cna |
| By: | Rabah Arezki; Duong Trung Le; Ha Nguyen; Hieu Nguyen |
| Abstract: | We empirically examine how import competition affects sentiment toward China in local communities in the United States using a news-based index for sentiment. Results are threefold. First, U.S. sentiment toward China peaked in 2007 before turning negative. Second, communities more exposed to import competition from China have experienced a greater deterioration in sentiment. Third, the trade-induced U.S. sentiment toward China is broad-based, encompassing political, military, and national security issues. These findings suggest that competition over trade may have important geopolitical implications through sentiment of local communities. |
| Keywords: | import competition, sentiment, fragmentation |
| JEL: | E24 F14 F16 J23 J31 L60 O47 R12 R23 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11044&r=cna |
| By: | Flora Haberkorn; Trang T. Hoang; Gordon Lewis; Carter Mix; Dylan Moore |
| Abstract: | In 2018, the U.S. government announced bilateral tariff increases on a number of Chinese goods. Thus began a tit-for-tat exchange of increasing bilateral tariffs between the U.S. and China until, by the end of 2019, most of the goods traded between the U.S. and China were subject to additional tariffs. In this note, we use Census and UN Comtrade data to study the effects of the 2018-19 U.S.-China tariff hikes on global trade patterns. |
| Date: | 2024–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2024-04-12-2&r=cna |
| By: | Matteo Crosignani; Lina Han; Marco Macchiavelli; André F. Silva |
| Abstract: | Amid the current U.S.-China technological race, the U.S. has imposed export controls to deny China access to strategic technologies. We document that these measures prompted a broad-based decoupling of U.S. and Chinese supply chains. Once their Chinese customers are subject to export controls, U.S. suppliers are more likely to terminate relations with Chinese customers, including those not targeted by export controls. However, we find no evidence of reshoring or friend-shoring. As a result of these disruptions, affected suppliers have negative abnormal stock returns, wiping out $130 billion in market capitalization, and experience a drop in bank lending, profitability, and employment. |
| Keywords: | geopolitical risk; Export controls; decoupling; supply chains |
| JEL: | G12 F51 F38 |
| Date: | 2024–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:98127&r=cna |
| By: | Rabah Arezki (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne, FERDI - Fondation pour les Etudes et Recherches sur le Développement International, Harvard Kennedy School - Harvard Kennedy School); Ha Nguyen (International Monetary Fund (IMF)); Duong Trung Le (World Bank Group); Hieu Nguyen (WUSTL - Washington University in Saint Louis) |
| Abstract: | We empirically examine how import competition affects sentiment toward China in local communities in the United States using a news-based index for sentiment. Results are threefold. First; U.S. sentiment toward China peaked in 2007 before turning negative. Second; communities more exposed to import competition from China have experienced a greater deterioration in sentiment. Third; the trade-induced U.S. sentiment toward China is broad-based; encompassing political; military; and national security issues. These findings suggest that competition over trade may have important geopolitical implications through sentiment of local communities. |
| Keywords: | Import competition, Sentiment, Fragmentation |
| Date: | 2024–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cdiwps:hal-04546270&r=cna |
| By: | Heimonen, Kari; Rönkkö, Risto |
| Abstract: | This study examines the role of the Chinese renminbi (RMB) as an international anchor currency. After China abandoned its tight US dollar (USD) peg in 2005, the RMB found greater popularity as a reserve currency. This change in the RMB's role reflected China's growing presence in the global economy, even challenging the USD in some of the 155 countries that signed on to the Belt and Road initiative (BRI). Modifying the approach of Ahmed (2021) to estimate basket weights in exchange rate policy for the currencies of 63 advanced and emerging economy currencies, we account for potential drivers of the exchange rate omitted in previous studies to obtain unbiased anchor weight estimates. Unlike earlier studies, we find that the RMB's anchor weight in exchange rate policies remains low irrespective of China's global role. Overall, the weight of the RMB averaged 6 %, compared to an average share of 58 % for the USD and 35 % for the euro. We also find that the USD, euro and yen anchor choices are strongly interlinked. A change in the anchor weight of any of these three currencies results in a strong opposite change in the weights of other two. Changes in RMB anchoring, however, do not materially impact USD, euro and yen weights. An increase in financial markets volatility leads developing countries to increase anchor weights of the developed countries currencies USD, euro and yen. Heightened geopolitical uncertainty only increases the weights of the USD and euro. |
| Keywords: | exchange rate, currency peg, RMB |
| JEL: | F31 F33 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bofitp:290408&r=cna |
| By: | Marcus Vinicius de Freitas |
| Abstract: | China is the largest developing country. Africa is the continent with the largest number of developing countries. The China-Africa economic relationship has developed rapidly over the last two decades. China has increased its investment in Africa over the last four decades. Flows surged from $75 million (2003) to $5 billion (2021). This has had both positive and negative impacts on Africa. Infrastructure improvement, job creation, and overall economic growth can be listed as positive results, leading to improved connectivity, trade, and transportation in a continent where infrastructure integration has always been challenging. Creating such opportunities in Africa has supported lower unemployment rates, particularly among young people, which is fundamental in a continent that enjoys a positive demographic bonus. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:ocp:ppaper:pb30-23&r=cna |
| By: | Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); Yishuo Ma (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan) |
| Abstract: | While policy reaction functions of most major central banks are routinely approximated by fitting Taylor (type) rules to their policy rate, there is no such consensus for the People's Bank of China (PBoC). What makes it hard to get a clear impression of the “true†reaction function is that most papers in the extensive literature focus on a single aspect of the reaction function typically mostly comparing it to one (or a few) widely used baseline models. Contrarily, we assess a broad range of questions regarding the reaction function in a unified approach, estimating several hundred reaction functions. While we find that no single policy measure fully captures all aspects of the PBoC's policy, our paper provides clear evidence for asymmetric behavior, support for an important role of monetary aggregates, and robust evidence for the PBoC considering both financial stability and exchange rate stabilization in its policy deliberations. |
| Keywords: | China, monetary policy, reaction function, Taylor rule |
| JEL: | E58 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:fds:dpaper:202405&r=cna |
| By: | Otaviano Canuto |
| Abstract: | Recent initiatives and policy moves by China and other countries to extend the reach of use of the renminbi in the international monetary system, while the U.S. dollar share in global reserves has slightly shrunk in relative terms, have sparked frequent discussions about a hypothetical “de-dollarization” of the global economy. We approach here what that would mean in terms of global currency functions as means of payment and store of value. While we point out a relative decline of the U.S. dollar weight in those functions more recently, we also highlight gravitational factors that tend to uphold its position. Therefore, the “exorbitant privilege” that the U.S. dollar has provided to its issuer is likely to remain. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:ocp:ppaper:pb21-23&r=cna |
| By: | J. Lu Jin; L. Wang (Audencia Business School) |
| Abstract: | Using the exploitation-exploration framework to conceptualize international joint ventures (IJVs)' innovation strategy, this study develops a contingent governance view to posit that the effectiveness of exploitative and explorative innovation strategies depends critically on the governance mechanisms between IJV partners. Based on empirical analyses of 187 IJVs in China, our results reveal that explorative innovation strategy generates a greater positive effect on IJV new product performance than exploitative innovation strategy. Furthermore, exploitative innovation strategy has a positive impact on IJV new product performance at high levels of contractual governance but has a negative effect at high levels of relational governance. In contrast, explorative innovation strategy contributes more to IJV new product performance at high levels of relational governance but shows a negative effect at high levels of contractual governance. This study offers important implications for IJVs to better design and manage their innovation strategies. |
| Keywords: | Innovation strategy, International joint venture, Exploitation, Exploration, Contractual governance, Relational governance |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04538031&r=cna |
| By: | Garnache, Cloé; Ghosh, Arijit; Gibney, Garreth |
| Abstract: | Greenstone et al. examine the effect of the introduction of automatic air pollution monitoring on the reporting of local air pollution in China. Using 654 regression discontinuity designs (RDDs) based on city-level variation in the day that monitoring was automated, they find an immediate and lasting increase of 35 percent in reported PM10 concentrations post-automation. Moreover, they find that automation's introduction increases online searches for face masks and air filters by 200 percent and 28 percent, respectively, using an RDD. Results are consistent when using an event study design. First, we were able to computationally replicate the results. Second, we find that results are robust to more flexible specifications of the weather variables, to re-constructed weather variables using the same matching procedure as the authors (i.e., closest station) and meteorological data with additional weather stations, to alternative construction of the weather variables using an inverse distance weighted approach of the surrounding weather stations, and to more flexible choices of fixed effects (up to the city level). Finally, we find limited evidence of discontinuity in objective measures of ground pollution (i.e., AOD) for a sub-sample using alternative weather variables. The estimate, however, is economically insignificant. Moreover, no discontinuity is observed in the full sample. Therefore, we believe this result does not invalidate the original study's findings. |
| JEL: | D82 O13 P28 Q53 Q55 Q58 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:i4rdps:113&r=cna |
| By: | Peng Liu |
| Abstract: | The correlation-based financial networks, constructed with the correlation relationships among the time series of fluctuations of daily logarithmic prices of stocks, are intensively studied. However, these studies ignore the importance of negative correlations. This paper is the first time to consider the negative and positive correlations separately, and accordingly to construct weighted temporal antinetwork and network among stocks listed in the Shanghai and Shenzhen stock exchanges. For (anti)networks during the first 24 years of the 21st century, the node's degree and strength, the assortativity coefficient, the average local clustering coefficient, and the average shortest path length are analyzed systematically. This paper unveils some essential differences in these topological measurements between antinetwork and network. The findings of the differences between antinetwork and network have an important role in understanding the dynamics of a financial complex system. The observation of antinetwork is of great importance in optimizing investment portfolios and risk management. More importantly, this paper proposes a new direction for studying complex systems, namely the correlation-based antinetwork. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.00028&r=cna |
| By: | Mr. Serhan Cevik; Gyowon Gwon |
| Abstract: | As climate change accelerates, the frequency and severity of extreme weather events are expected to worsen and have greater adverse consequences for ecosystems, physical infrastructure, and economic activity across the world. This paper investigates how weather anomalies affect global supply chains and inflation dynamics. Using monthly data for six large and well-diversified economies (China, the Euro area, Japan, Korea, the United Kingdom, and the United States) over the period 1997-2021, we implement a structural vector autoregressive model and document that weather anomalies could disrupt supply chains and subsequently lead to inflationary pressures. Our results—based on high-frequency data and robust to alternative estimation methodologies—show that these effects vary across countries, depending on the severity of weather shocks and vulnerability to supply chain disruptions. The impact of weather shocks on supply chains and inflation dynamics is likely to become more pronounced with accelerating climate change that can have non-linear effects. These findings have important policy implications. Central bankers should consider the impact of weather anomalies on supply chains and inflation dynamics to prevent entrenching second-round effects and de-anchoring of inflation expectations. More directly, however, governments can invest more for climate change adaptation to strengthen critical infrastructure and thereby minimize supply chain disruptions. |
| Keywords: | Climate change; weather anomalies; temperature; supply chain pressures; inflation; structural VAR |
| Date: | 2024–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/079&r=cna |