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on China |
| By: | Horn, Sebastian Andreas; Parks, Bradley Christopher; Reinhart, Carmen M.; Trebesch, Christoph |
| Abstract: | This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. It builds the first comprehensive dataset on China’s overseas bailouts between 2000 and 2021 and provide new insights into China’s growing role in the global financial system. A key finding is that the global swap line network put in place by the People’s Bank of China is increasingly used as a financial rescue mechanism, with more than USD 170 billion in liquidity support extended to crisis countries, including repeated rollovers of swaps coming due. The swaps bolster gross reserves and are mostly drawn by distressed countries with low liquidity ratios. In addition, we show that Chinese state-owned banks and enterprises have given out an additional USD 70 billion in rescue loans for balance of payments support. Taken together, China’s overseas bailouts correspond to more than 20 percent of total IMF lending over the past decade and bailout amounts are growing fast. However, China’s rescue loans differ from those of established international lenders of last resort in that they (i) are opaque, (ii) carry relatively high interest rates, and (iii) are almost exclusively targeted to debtors of China's Belt and Road Initiative. These findings have implications for the international financial and monetary architecture, which is becoming more multipolar, less institutionalized, and less transparent. |
| Date: | 2023–03–27 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10380 |
| By: | Hanming Fang; Ming Li; Long Wang; Zoe Yang |
| Abstract: | Using China's expansion of the high-speed rail system (HSR) as a quasi-natural experiment, we analyze the comprehensive vehicle registration data from 2010 to 2023 to estimate the causal impact of HSR connectivity on the adoption of electric vehicles (EVs). Implementing several identification strategies, including staggered difference-in-differences (DID), Callaway and Sant'Anna (CS) DID, and two instrumental-variable approaches, we consistently find that, by alleviating range anxiety, the expansion of HSR can account for up to one third of the increase in EV market share and EV sales in China during our sample period, with effects particularly pronounced in cities served by faster HSR lines. The results remain robust when controlling for local industrial policies, charging infrastructure growth, supply-side factors, and economic development. We also find that HSR connectivity amplifies the effectiveness of charging infrastructure and consumer purchase subsidies in promoting EV adoption. |
| JEL: | L52 L53 O18 Q55 R41 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33489 |
| By: | Boeing, Philipp; Peters, Bettina |
| Abstract: | We investigate the misuse of R&D subsidies and evaluate its consequences for policy effectiveness. Developing a theoretical framework and using Chinese firm-level data for 2001-2011, we identify that 42% of grantees misappropriated R&D subsidies for non-R&D purposes, accounting for 53% of total R&D subsidies. Misuse leads to a substantial loss in the causal impact of R&D subsidies, as measured by the difference between the intention-to-treat and complier average causal effect. R&D expenditures could have been stimulated beyond the subsidy amount (additionality), but misuse (noncompliance) resulted in medium-level partial crowding out, reducing the effectiveness of China’s R&D policy by more than half. |
| Keywords: | R&D subsidies, policy evaluation, misuse, China |
| JEL: | O31 O38 C21 H21 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312195 |
| By: | Bharti, Nitin Kumar; Li, Yang |
| Abstract: | We construct a novel dataset of human capital accumulation in China and India from 1900 to 2020 by combining historical records and educational reports to analyze the role of education in economic divergence. Three key findings emerge. First, China pursued a bottom-up strategy, first expanding primary education, followed by secondary and tertiary levels. India, in contrast, adopted a top-down approach, gradually expanding its educational system but prioritizing secondary and higher education before primary. Second, China prioritized quantity over quality, whereas India's expansion attempted to balance quality through teachers' emoluments. Third, China's system features more diversified secondary and tertiary education, with a strong emphasis on vocational education and engineering than India. We highlight the role of educational policies in shaping these trajectories. Our findings on differences in the human capital accumulation in India and China have significant economic implications: education inequality (gini) is not only higher in India but also accounts for a larger share of wage inequality in India (25%), compared with less than 12% in China. Despite a larger share of tertiary-educated graduates, India also struggles with high illiteracy, possibly impeding structural transformation by confining many to the low-productivity agricultural sector. In contrast, China's approach created a larger share of primary, secondary, and vocational graduates combined with more tertiary-educated engineers, generating human capital that is more suitable for the manufacturing sector. India's focus on humanities and accounting in tertiary education fueled service sector growth. Overall, our findings illustrate the importance of human capital composition in shaping long-run economic development. |
| Keywords: | human capital accumulation, education, long run development, inequality, China, India |
| JEL: | D31 E02 E24 H52 I2 N30 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312196 |
| By: | Cortina Lorente, Juan Jose; Martinez Peria, Maria Soledad; Schmukler, Sergio L.; Xiao, Jasmine |
| Abstract: | The internationalization of China’s equity markets started in the early 2000s but accelerated after 2012, when Chinese firms’ shares listed in Shanghai and Shenzhen gradually became available to international investors. This paper documents the effects of the post-2012 internationalization events by comparing the evolution of equity financing and investment activities for (i) domestic listed firms relative to firms that already had access to international investors and (ii) domestic listed firms that were directly connected to international markets relative to those that were not. The paper shows significant increases in financial and investment activities for domestic listed firms and connected firms, with sizable aggregate effects. The evidence also suggests that the rise in firms’ equity issuances was primarily and initially financed by domestic investors. Foreign ownership of Chinese firms increased once the locally issued shares became part of the Morgan Stanley Capital International (MSCI) Emerging Markets Index in 2018. |
| Date: | 2023–06–28 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10513 |
| By: | Englander, Aaron Gabriel Ratliffe; Zhang, Jihua; Villaseñor-Derbez, Juan Carlos; Jiang, Qutu; Hu, Mingzhao; Deschenes, Olivier; Costello, Christopher |
| Abstract: | Input subsidies in natural resource sectors are widely believed to deplete the natural capital on which these sectors depend. However, estimating the causal effect of subsidies on resource extraction has been stymied by identification and data challenges. China’s fishing fleet is the world’s largest, and in 2016 the government changed its fuel subsidy policy for distant water vessels to one that increases with predetermined vessel characteristics. Regression discontinuity estimates imply a long-run elasticity of fishing hours with respect to fuel subsidies of 2.2. Consequently, reducing Chinese fuel subsidies by 50 percent could eliminate biological overfishing in several ocean regions. By demonstrating the substantial impact of fuel subsidies on fishing activity and fish stocks, the findings inform ongoing subsidy reform in China, other nations with subsidized fishing vessel fuel, and the World Trade Organization. |
| Date: | 2023–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10412 |
| By: | Jesús Fernández-Villaverde; Yiliang Li; Le Xu; Francesco Zanetti |
| Abstract: | We examine the rise of dark shipping – oil tankers disabling AIS transceivers to evade detection – amid Western sanctions on Iran, Syria, North Korea, Venezuela, and Russia. Using a machine learning-based ship clustering model, we track dark-shipped crude oil trade flows worldwide and detect unauthorized ship-to-ship transfers. From 2017 to 2023, dark ships transported an estimated 7.8 million metric tons of crude oil monthly – 43% of global seaborne crude exports – with China absorbing 15%. These sanctioned flows offset recorded declines in global oil exports but create distinct economic shifts. The U.S., a net oil exporter, faces lower oil prices but benefits from cheaper Chinese imports, driving deflationary growth. The EU, a net importer, contends with rising energy costs yet gains from Chinese demand, fueling inflationary expansion. China, leveraging discounted oil, boosts industrial output, propagating global economic shocks. Our findings expose dark shipping’s central role in reshaping oil markets and macroeconomic dynamics. |
| JEL: | C32 C38 E32 Q43 R40 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33486 |
| By: | Dupont-Sinhsattanak, Alexandre |
| Abstract: | In light of China’s objective of achieving complete military modernization by 2035 and becoming a world-class military by 2049, whether it will successfully modernize its military or not is a crucial question for the 21st century. Historically reliant on foreign technologies, China now faces challenges in developing indigenous innovation capabilities. Utilizing a mixed-methods approach, combining quantitative analysis of financial data from Chinese listed companies with case studies, this paper assesses the impact of military-civil fusion (MCF) on innovation in China’s defence-technological industry. Findings indicate that MCF pushed state-owned enterprises (SOE) to be more efficient and to recentre on core businesses, while encouraging the gradual entry of private firms into the industry. Yet, several limitations exist. SOEs continue to enjoy greater subsidies and better integration into the national innovation system, cementing their advantage over their private counterparts. Private companies function as suppliers of large conglomerates, which remain the only ones capable of assembling advanced weapon systems. By examining the interaction between market dynamics and state-driven strategies, this paper explores the evolving role of China’s private sector in military modernization and underscores the synergies between government support and market interests in fostering innovation. |
| Keywords: | China; defence-technological industry; Innovation; military modernization; military-civil fusion |
| JEL: | L64 O31 O38 |
| Date: | 2025–02–05 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127136 |
| By: | Jesús Fernández-Villaverde; Yiliang Li; Le Xu; Francesco Zanetti |
| Abstract: | We examine the rise of dark shipping – oil tankers disabling AIS transceivers to evade detection – amid Western sanctions on Iran, Syria, North Korea, Venezuela, and Russia. Using a machine learning-based ship clustering model, we track dark-shipped crude oil trade flows worldwide and detect unauthorized ship-to-ship transfers. From 2017 to 2023, dark ships transported an estimated 7.8 million metric tons of crude oil monthly – 43% of global seaborne crude exports – with China absorbing 15%. These sanctioned flows offset recorded declines in global oil exports but create distinct economic shifts. The U.S., a net oil exporter, faces lower oil prices but benefits from cheaper Chinese imports, driving deflationary growth. The EU, a net importer, contends with rising energy costs yet gains from Chinese demand, fueling inflationary expansion. China, leveraging discounted oil, boosts industrial output, propagating global economic shocks. Our findings expose dark shipping’s central role in reshaping oil markets and macroeconomic dynamics. |
| Keywords: | dark shipping, oil sanction, satellite data, clustering analysis, LP |
| JEL: | C32 C38 E32 Q43 R40 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11684 |
| By: | Yuhan He |
| Abstract: | This study examines the influence of employee education and health on firm-level Total Factor Productivity (TFP) in China, using panel data from A-share listed companies spanning from 2007 to 2022. The analysis shows that life expectancy and higher education have a significant impact on TFP. More optimal health conditions can result in increased productivity through decreased absenteeism and improved work efficiency. Similarly, higher levels of education can support technological adaptation, innovation, and managerial efficiency. Nevertheless, the correlation between health and higher education indicates that there may be a point where further improvements in health yield diminishing returns in terms of productivity for individuals with advanced education. These findings emphasise the importance of implementing comprehensive policies that improve both health and education, maximising their impact on productivity. This study adds to the current body of research by presenting empirical evidence at the firm-level in China. It also provides practical insights for policymakers and business leaders who want to improve economic growth and competitiveness. Future research should take into account wider datasets, more extensive health metrics, and delve into the mechanisms that contribute to the diminishing returns observed in the relationship between health and education. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.00085 |
| By: | Franco Bedoya, Sebastian |
| Abstract: | This paper studies globalization dynamics over 1965–2021. Based on the definition that refers to globalization as an extension beyond national borders of the same market forces that operate at all levels of economic activity, the paper is able to determine where the world economy stands compared to the 1960s. The results show that the world economy has not entered an era of deglobalization and that China’s role as one of the globalization leaders started in the mid-1980s. Also, contrary to what the tradeto- GDP ratio suggests, it is shown that China has outperformed the world economy since then. This paper builds on recent contributions in the structural gravity literature and adopts a long-run perspective to offer an analytical toolkit for the current debate around globalization dynamics. The methodology and empirical results provide deep insights across countries and sectors, showing that country-specific events are intuitively captured and illustrating how to disentangle the role of factors like trade agreements. |
| Date: | 2023–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10451 |
| By: | Steven J. Davis; Dingqian Liu; Xuguang Simon Sheng; Yan Wang |
| Abstract: | China’s stock market greatly outperformed other national markets during the first several months of the COVID-19 pandemic, and it did so even before it became evident that early containment efforts would flounder in the United States and many other countries. As to why, one view holds that aggressive monetary and credit easing propped up Chinese equity values. To assess this view, we consider several interventions that eased monetary and credit conditions in the first six months of 2020. Our analysis finds clear evidence that these interventions raised implied stock market volatility but little evidence that they influenced stock price levels. We also consider policy actions that restricted short selling, limited stock sales, and boosted stock purchases. These efforts to raise net equity demand were small in scale and highly time-limited, as we discuss, suggesting that any direct effects on stock prices were also modest. Neither our study nor other work known to us provides a ready explanation for the extraordinary performance of China’s stock market in the first half of 2020. This performance is even more striking in hindsight, given later developments in China’s economy and stock market. |
| JEL: | E52 E58 E65 G12 G18 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33485 |
| By: | Goldberg, Pinelopi Koujianou; Reed, Tristan |
| Abstract: | Data on global trade as well as capital and labor flows indicate a slowdown, but not reversal, of globalization post the 2008–09 financial crisis. Yet profound changes in the policy environment and public sentiment in the largest economies over the past five years suggest the beginning of a new era. Increasing anxiety about the labor market effects of import competition from low-wage countries, especially China, laid the groundwork, but was not the catalyst for the reversal in attitudes towards globalization. Similarly, the COVID pandemic provided novel arguments against free trade based on global supply chain resilience, but neither the pandemic nor short run policy response had enduring effects on trade flows. Global trade was remarkably resilient during the pandemic and that supply shortages would likely have been more severe in the absence of international trade. After a temporary decline in 2020, global trade in goods and services increased sharply in 2021. Russia’s invasion of Ukraine raised new concerns about national security and the exposure of supply chains to geopolitical risk. This was followed by demands to diversify away from “non-friendly” countries and to the employment of trade policy, export restrictions in particular, to halt China’s technological development. The future of globalization is highly uncertain at this point, but these new policies will likely slow global growth, innovation, and poverty reduction even if they benefit certain industries in certain countries. Regarding resilience, the main goal of recent trade policy changes, measures of trade volatility or concentration can be helpful, but resilience will be elusive as long as we lack benchmarks against which policy performance can be measured. |
| Date: | 2023–04–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10392 |
| By: | M, Dhasarathan; Singh, Ajmer; Sen, Biswajit |
| Abstract: | This study aims to compare the performance of India and China across various parameters of doing business such as starting a business, dealing with construction permits, obtaining electricity, registering property, accessing credit, protecting minority investors, tax payment processes, trade across borders, contract enforcement and resolving insolvency etc. for 2019-20. Business landscape was analyzed during two distinct periods: 2019-2020 (using Doing business report by World bank) and 2021-2023 (using business environment rankings by Economist Intelligence Unit). It was observed that recently India is performing well in creating business friendly environment than China. India's efforts have borne fruit, resulting in an improved ranking in the ease of doing business. This study relies on secondary data sources and aims to provide a conceptual understanding and current position of business environment in both India and China. |
| Keywords: | Ease of Doing Business, India, China, Business Environment Rankings, Economist Intelligence Unit |
| JEL: | G38 K22 M21 O53 |
| Date: | 2024–12–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123454 |
| By: | Jiranyakul, Komain |
| Abstract: | Asymmetric impacts of oil price shocks on key macroeconomic variables are caused by some important effects, such as income effect, uncertainty effect, precautionary saving effect, irreversible investment and reallocation effects. Due to these effects, output and prices respond diferently to oil price increases and decreases. This asymmetry hypothesis has been empirically tested by many economists. This paper surveys recent empirical studies on the asymmetric impacts of oil price shocks on economic activity and inflation in Asia. The empirical findings in Asian economies shows that the responses of output growth oil price shocks in Japan and South Korea tend to be asymmetric while the responses of inflation seem to be symmetric. For China, the largest oil-importing in Asia, the empirical results show that asymmetry is increasingly discovered. The results of the responses of inflation to oil price shocks in China do not favor the asymmetry hypothesis. The findings in the ASEAN5 economies are likely to support the symmetry hypothesis. In South Asian economies, only few studies favor the asymmetry hypothesis. Because empirical results for other Asian countries are not widely investigated, it is too early to draw some conclusions. One important finding is that Asian oil-exporting countries, Indonesia, Malaysia, and Vietnam, might not escape the adverse impacts of oil price shocks on output growth. Since output and inflation can be unfavorably affected by oil price shocks, some researchers will recommend accommodative monetary policy along with exchange rate policy to stabilize the responses of output and prices when oil price tends to increase. |
| Keywords: | Oil price shocks, output growth, inflation, asymmetric and symmetric impacts, Asian economies |
| JEL: | E31 E32 Q43 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123664 |
| By: | Shiqi Wang; Zhibo Zhang; Libing Fang; Cam-Tu Nguyen; Wenzhon Li |
| Abstract: | Corporate fraud detection aims to automatically recognize companies that conduct wrongful activities such as fraudulent financial statements or illegal insider trading. Previous learning-based methods fail to effectively integrate rich interactions in the company network. To close this gap, we collect 18-year financial records in China to form three graph datasets with fraud labels. We analyze the characteristics of the financial graphs, highlighting two pronounced issues: (1) information overload: the dominance of (noisy) non-company nodes over company nodes hinders the message-passing process in Graph Convolution Networks (GCN); and (2) hidden fraud: there exists a large percentage of possible undetected violations in the collected data. The hidden fraud problem will introduce noisy labels in the training dataset and compromise fraud detection results. To handle such challenges, we propose a novel graph-based method, namely, Knowledge-enhanced GCN with Robust Two-stage Learning (${\rm KeGCN}_{R}$), which leverages Knowledge Graph Embeddings to mitigate the information overload and effectively learns rich representations. The proposed model adopts a two-stage learning method to enhance robustness against hidden frauds. Extensive experimental results not only confirm the importance of interactions but also show the superiority of ${\rm KeGCN}_{R}$ over a number of strong baselines in terms of fraud detection effectiveness and robustness. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.19305 |
| By: | Yedong Zhang; Han Hua |
| Abstract: | Under the guidance of the dual-carbon target, the development of the carbon financial system is of great significance to compensate for the gap between green and low-carbon investment. Considering the current state of the development of carbon financial system, China has initially formed a carbon financial system, including participants, carbon financial products and macro and micro operation structures, but the system is still in the initial development stage. Given the current restrictions on the development of carbon finance, it can be seen that there are still problems such as unreasonable economic structure, insufficient market construction, single product category, low utilization rate and urgent construction of relevant judicial guarantee system. Therefore, the system should be improved at the economic level and the legal level. The economic level includes adjusting the layout of economic development structure, strengthening the construction of market infrastructure, encouraging the diversification of carbon financial products and strengthening publicity and education promotion strategies. The legal level includes improving the top-level design, formulating judicial interpretation to promote carbon financial trading, promoting commercial law amendment, and promoting the linkage mechanism between specialized environmental justice and carbon finance and other safeguard measures. Finally, improving the carbon finance system is required to promote and protect the orderly development of carbon finance. To promote the reform of the pattern of economic development, the concept of ecological and environmental protection in the financial sector needs to be implemented to form an overall pattern of pollution reduction, carbon reduction and synergistic efficiency improvement. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.15807 |
| By: | Jeronimo Carballo; Richard K. Mansfield |
| Abstract: | This paper examines how the composition of firm exposure and competition among imperfectly substitutable workers mediate the earnings, welfare, and unemployment incidence of changes in the international trade environment. We merge LEHD job match records with firm-level import and export records from the LFTTD and use them to estimate a large-scale assignment model of the entire U.S. labor market. The model flexibly accommodates frictions from switching regions, industries, trade engagement status, and even particular employers. We construct firm-level estimates of the employment impact of China's WTO entry using exogenous tariff gap variation via four different channels, import and export competition and import and export access, and combine them with the model to evaluate the shock's worker-level incidence. Our results show that the firm composition of shock exposure does matter for medium-run worker-level earnings incidence, with workers at the highly exposed multinational manufacturing firms experiencing the largest shock-induced earnings losses. However, labor market competition causes the shock's impact to spread to seemingly unaffected sectors and trickle down the skill ladder, so that entry-level non-traded service workers and initially unemployed job-seekers account for a large share of earnings losses and particularly unemployment increases. |
| JEL: | F15 F16 F6 J23 J6 J62 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33481 |
| By: | Julia Manso |
| Abstract: | This paper narrowly replicates Chen and Kung's 2019 paper ($The$ $Quarterly$ $Journal$ $of$ $Economics$ 134(1): 185-226). Inspecting the data reveals that nearly one-third of the transactions (388, 903 out of 1, 208, 621) are perfect duplicates of other rows, excluding the transaction number. Replicating the analysis on the data sans-duplicates yields a slightly smaller but still statistically significant princeling effect, robust across the regression results. Further analysis also reveals that coefficients interpreted as the effect of logarithm of area actually reflect the effect of scaled values of area; this paper also reinterprets and contextualizes these results in light of the true scaled values. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.07692 |