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on China |
| By: | Ouyang, Hanzhen; Shi, Shuo |
| Abstract: | In 2023, Mexico exceeded China and became the largest trade partner of the US. Will Mexico further replace China and rise to a strategically vital supplier for US supply chains? This working paper shows that although US supply chain sources are shifting from China to Mexico, China remains the primary value-added source of Mexican exports to the US market. Moreover, Mexican exports to the US rely on low-skill sectors, whereas more Chinese exports are high-skill goods. The current US trade shift is likely caused by China’s FDI inflows to Mexico’s traditionally competitive export sector. However, Mexico lacks edge-cutting manufacturing firms to substitute China in US supply chains. Therefore, the US strategy of “trade diversion” cannot support Mexico’s role in reducing the US supply chain dependence on China. The US should rethink a sustainable trade framework that promotes stable cooperation with China. |
| Keywords: | supply chains; Mexico-China competition; USMCA; trade diversion |
| JEL: | L81 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123941 |
| By: | Margot Belguise; Yuchen Huang; Zhexun Mo |
| Abstract: | Recent experimental evidence contends that meritocratic ideals are mainly a Western phenomenon. Intriguingly, the Chinese public does not appear to differentiate between merit- and luck-based inequalities, despite China’s historical emphasis on meritocratic institutions. We propose that this phenomenon could be due to the Chinese public’s greater reluctance to make an active choice in realstake redistribution decisions. We run an incentivized redistribution experiment with elite university students in China and France, by varying the initial split of payoffs between two real-life workers to redistribute from. We show that, compared to French respondents, Chinese respondents consistently and significantly choose more non-redistribution across both highly unequal and relatively equal status quo scenarios. Additionally, we also find that Chinese respondents do differentiate between merit- and luck-based inequalities, and do not redistribute less than the French, excluding the individuals who engage in non-redistribution choices. Chinese respondents are also as reactive as the French towards scenarios with noisy signals of merit, such as inequalities of opportunities. Ultimately, we contend that the reluctance to make an active choice is indicative of diminished political agency to act upon redistribution decisions with real-life stakes, rather than apathy, inattention, having benefited from the status quo in Chinese society or libertarian preferences among the Chinese. Notably, our findings show that Chinese individuals’ reluctance to make a choice is particularly pronounced among those from families of working-class and farming backgrounds, while it is absent among individuals whose families have closer ties to the private sector. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2024-05 |
| By: | Hilpert, Hanns Günther |
| Abstract: | In China, money, currency and payment transactions are manifestations of state sovereignty and political power. The primary objective of Chinese monetary policy is to maintain domestic stability, expand the scope of its own influence internationally, and reshape the global financial and monetary system to make it more compatible with the structures of the Chinese one-party state. China is pursuing the internationalisation of the renminbi on several tracks in small persistent steps and with a long-term perspective, but it has so far shied away from the decisive transition to convertibility. For the time being, the renminbi does not play a significant role on the global financial and currency markets. However, it is gaining ground as a trading, credit and reserve currency in Asia and the Global South. China is a pioneer in the development and introduction of digital central bank money. It is striving to play a leading role in the digitalisation of international payment transactions. Prospectively, the technology and infrastructure developed in China and the standards set for cross-border payments using blockchain and real-time transactions could replace the current international banking and clearing system in a cost-effective manner. The Chinese leadership believes that digital central bank money offers great potential: In terms of domestic policy, it creates further opportunities for surveillance and repression. Internationally, it would become easier for China and third countries to circumvent Western financial sanctions. In response to China's currency campaign, the European Union and the European Central Bank should step up their own efforts to internationalise and digitise the euro. Europe should avoid dependence on China when it comes to the future critical infrastructure of an interoperable system for international payments with digital central bank money. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swprps:298842 |
| By: | Ruiyang Hu (Department of Economics, University of Macau); Chen Yin (School of Social Development and Public Policy, Fudan University); Zhijie Zheng (Bay Area International Business School, Beijing Normal University.); Sili Zhou (Faculty of Business and Administration, University of Macau, and Asia-Pacific Academy of Economics and Management, University of Macau) |
| Abstract: | If the domestic market operates under an inefficient economic structure, then access to foreign markets can lead to long-term benefits. In this paper, we examine the effect of free trade zones (FTZs), a progressive trade liberalization program, on corporate innovation. By using data on Chinese publicly listed firms, we find that firms operating in FTZs experience significant increases in their innovation output. These positive effects are primarily attributed to the easing of financial constraints, increased market competition, and improved access to foreign markets, even though their effects on the quantity and quality of corporate innovation can be noticeably distinct. Our empirical findings are rationalized by a simple Schumpeterian model with endogenous quality improvement, and they provide implications for policymakers to promote domestic firm growth in the global marketplace. |
| Keywords: | Free Trade Zone, Corporate Innovation, Financial Constraint, Market Competition, Trade Liberalization |
| JEL: | G30 G31 G32 O19 O30 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:boa:wpaper:202414 |
| By: | Willem THORBECKE; CHEN Chen; Nimesh SALIKE |
| Abstract: | Traditional models indicate that appreciations of the exporting country’s currency relative to the importing country’s currency decrease exports. The dominant currency paradigm (DCP) holds that, since so much trade is invoiced in U.S. dollars (USD), a change in the importing country’s currency relative to the USD rather than relative to the exporting country’s currency influences trade. We seek to choose between these hypotheses for China, the world’s largest exporter. The results indicate that both the traditional model and the DCP framework help to explain China’s exports over the 1995-2018 period. When we focus on the period before renminbi internationalization policies increased renminbi invoicing, we find that the DCP framework no longer has explanatory power, but the bilateral RMB exchange rate does. We find that one reason for this puzzling finding is that exchange rates in countries that provide parts and components to China are correlated with the bilateral RMB rate and influence China’s exports. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:24062 |
| By: | Shi, Xiangyu; Gong, Jiaowei; Zhang, Xin; Wang, Chang |
| Abstract: | In this paper, we document a novel fact that disclosures of public information reshape social dynamics in China. Using the staggered roll-out of a quasi-natural experiment of air pollution information disclosure and a novel high-frequency data set of social and public events, we find socioeconomic cooperation and protests both significantly decrease after disclosure. The negative effects are larger when the disclosed pollution level is higher and when residents have higher environmental awareness and lower trust in local governments. Our results are rationalized in a theoretical model and suggest that information disclosure involves a tradeoff between economic efficiency and political stability and leads to a dilemma for policymakers. |
| Keywords: | Air pollution; Information; Social dynamics; Public events; Socioeconomic cooperation; Protests; China |
| JEL: | D7 D9 O1 Q5 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121357 |
| By: | Shota Miki (Bank of Japan); Yoichiro Tamanyu (Bank of Japan) |
| Abstract: | This paper provides an overview of the ongoing restructuring of global semiconductor supply chains and investigates how long-term developments in competitiveness between trading countries as well as recent changes in trade policies have affected this restructuring. Using as an example the U.S. tariff hikes against China during 2018-19, which serves as a natural experiment, we first confirm that the stylized facts shown in previous studies--that China's exports to the U.S. decreased significantly, while bystander countries not directly involved in the tariff hikes increased their exports to the U.S.--hold true for semiconductor-related products. Then, to further examine the restructuring of global semiconductor supply chains, we calculate the upstreamness--the distance from final use--of each country's exports in the supply chain, and examine how this has evolved over time and how it can be related to wage differences between those countries. We find that export upstreamness is positively correlated with the wage gap between the trading countries and confirm that this tendency existed well before the recent tariff hikes. These observations imply that the restructuring of global semiconductor supply chains is not led solely by the direct consequences of the tariff hikes, but also by the endogenous response to changes in comparative advantage between the countries involved in the supply chain. |
| Keywords: | Tariffs; Semiconductors; Global supply chains; Upstreamness |
| JEL: | F13 F14 |
| Date: | 2024–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:boj:bojwps:wp24e06 |
| By: | Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Qiang Ji (Institutes of Science and Development, Chinese Academy of Sciences, Beijing, China; School of Public Policy and Management, University of Chinese Academy of Sciences, Beijing, China); Christian Pierdzioch (Department of Economics, Helmut Schmidt University, Holstenhofweg 85, P.O.B. 700822, 22008 Hamburg, Germany) |
| Abstract: | Focusing on China, we study the predictive value of Chinese climate policy uncertainty (CCPU) for subsequent stress in China’s financial markets in a sample of daily data running from October 2006 to December 2022. We control for the impact of international spillover effects of financial stress originating in the European Union (EU), the United Kingdom (UK), and the United States (US), and also for a large number of other important macroeconomic, financial, behavioral variables. Given the large number of predictors, we use random forests, an ensemble machine-learning technique, to trace out the impact of CCPU on financial stress by means of an out-of-sample forecasting experiment. We find that CCPU has predictive value for subsequent financial stress, and that its predictive power is stronger than that of measures of global climate risk. Its predictive value is strongest at a short (daily) forecast horizon and tends to decrease when the length of the forecast horizon increases. Moreover, we document the predictive value of CCPU across a spectrum of conditional quantiles of financial stress. |
| Keywords: | Financial stress, Climate risks, China, Random forests, Forecasting |
| JEL: | C22 C32 C53 G15 Q54 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:pre:wpaper:202428 |
| By: | Wu, Gerald; Lordan, Grace; Nikita, Nikita |
| Abstract: | Evidence from the lab suggests that women are not inclined to compete more than men, but the majority of this evidence relates to Western countries. Our study explores gender differences in the propensity to compete among Chinese individuals. The study uses an online survey distributed to undergraduate and postgraduate degree students in a university located in Shanghai and measures performance among Chinese men and women under different incentive schemes. The results of this study suggest that there are no differences in performance under competitive conditions between Chinese men and women. However, women perform slightly better than men when the element of risk is added in a competitive environment. This study underscores the importance of examining cultural nuances when evaluating gender dynamics in competition and contributes to a more comprehensive understanding of these dynamics in the Chinese context. |
| Keywords: | competition; China; gender differences; labor market; Global South; performance in competition |
| JEL: | N0 R14 J01 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123930 |