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on China |
| By: | Hunter L. Clark; Jeffrey B. Dawson |
| Abstract: | Amid increasing pressure on the Chinese economy from China’s trade conflict with the U.S., assessing the strength of the Chinese economy will be an important watch point. In this post, we provide an update on China’s recent economic performance and policy changes. While China is likely to counter growth headwinds from the escalating trade tensions with additional policy stimulus, the country’s complex fiscal dynamics and the varying interpretations of the strength of its economic growth made judgments of the efficacy of China’s policy response challenging even in a more predictable environment. In this respect, we argue that aggregate credit is a simple and effective measure to gauge policy stimulus in China. At present, China’s “credit impulse”—the change in the flow of new aggregate credit to the economy relative to GDP—appears likely sufficient to allow it to muddle through with steady but not strong growth over the next year despite the intensifying trade conflict. |
| Keywords: | China |
| JEL: | F0 |
| Date: | 2025–04–24 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:99899 |
| By: | Ma, Shuang (Guangzhou University); Mu, Ren (Texas A&M University) |
| Abstract: | This study investigates broadband internet's impact on rural-urban migration in China, using the Universal Broadband and Telecommunication Services pilot program as a quasi-experimental setting. Analyzing China Household Finance Survey data (2013-2021) through difference-in-differences estimation, we find that improved internet access significantly increased rural-urban migration. Effects were strongest in villages with initially low migrant populations, locations closer to county centers, and those with better road infrastructure. At the individual level, impacts were most pronounced among females, younger people, the more educated, and those from higher-income households. Increased attention to economic information, rather than enhanced e-commerce opportunities, appears to drive these migration decisions. Our findings suggest broadband creates “digital routes” facilitating outmigration rather than “digital roots” anchoring residents to rural areas. |
| Keywords: | migration, urbanization, information and communications technology, China |
| JEL: | O15 R2 L86 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17752 |
| By: | Eiichi TOMIURA; Banri ITO; Hiroyuki KUWAHATA |
| Abstract: | Dependence on China has become a serious concern amid the intensified tension between the U.S. and China. It has become difficult, however, to precisely measure the dependence of developed economies solely based on conventional trade statistics. Trade in service, or invisible trade, is a critical missing piece. Cross-border data transfer is another important issue as economies have increasingly digitized. To respond to these needs, we conducted a survey of Japanese mid- or large-sized firms in manufacturing, wholesale, retail and a part of service industries. We collect data on the number of firms outsourcing tasks to China, firms exporting/importing services to/from China, and firms transferring data to/from China. This survey is a preliminary first step toward capturing previously unnoticed and invisible links with China. We also collect data on firms’ expectations of uncertainty related with China’s economic policy. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rdpsjp:25009 |
| By: | Federico, Stefano; Hassan, Fadi; Rappoport, Veronica |
| Abstract: | This paper identifies a credit-supply contraction that arises endogenously after trade liberalization. Banks with loan portfolios concentrated in sectors exposed to competition from China face an increase in nonperforming loans after China’s entry into the World Trade Organization. As a result, they reduce the supply of credit to firms, irrespective of the firm’s sector of operation. This cut in credit translates into lower employment, investment, and output. Through this mechanism, the financial channel amplifies the shock to firms already hit by import competition from China and passes it on to firms in sectors expected to expand upon trade liberalization. |
| JEL: | F14 G31 G32 L25 P33 |
| Date: | 2025–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127945 |
| By: | Lutz Sager |
| Abstract: | In 2013, China introduced the ambitious Air Pollution Prevention and Control Action Plan (APPCAP) targeting ambient fine particle (PM2.5) pollution. Using panel data covering 239 countries and territories worldwide, from 2000 to 2019, I provide quasi-experimental estimates of nationwide reductions in PM2.5 exposure achieved since 2013. I find that the APPCAP lowered PM2.5 exposure of the average Chinese resident in 2019 by over 20%, reducing PM2.5-related deaths by between 220 and 280 thousand depending on estimation strategy. Monetizing the mortality reductions with recent values of statistical life suggests total benefits of up to 1 trillion Renminbi or 1% of Gross Domestic Output. |
| Keywords: | air pollution, health, mortality, regulation. |
| JEL: | I18 Q52 Q53 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11826 |
| By: | Zhangfeng Jin (Zhejiang University of Technology); Klaus Prettner (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | This paper examines the impact of technology transfers on long-term innovation. We propose an extended Schumpeterian growth framework to characterize the channels by which technology transfers impact on innovation. Exploiting variations in the adoption of Soviet-aided industrialization programs across Chinese cities, we find that firms located in cities affected by 156 major industrial projects of the Soviet Union witness fewer Investments in research and development on average after nearly half a century. The effect is particularly pronounced for non-state-owned firms. The decline in innovation inputs is further supported by a lower probability of patenting in these localities. A likely underlying mechanism is the low adoption of performance-based reward systems that influence labor reallocation within firms, rather than inadequate capital and skilled workers. Despite prior successes during the planned economy era, the adoption of such foreign aid tends to impede innovation as China transitions towards a more market-oriented economy. |
| Keywords: | Foreign Aid, Technology Transfers, Innovation Inputs, Pay for Performance, China |
| JEL: | F35 O30 M52 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp379 |
| By: | Mattia Longhi; Caterina Morelli |
| Abstract: | This paper examines the impact of China’s panda diplomacy—the practice of loaning giant pandas to foreign countries—on international trade, which prior literature has shown to be responsive to soft power influences. We investigate whether hosting giant pandas strengthens a country’s trade relations with China, particularly in years when a panda cub is born, as these animals serve as symbolic ambassadors that foster diplomatic and economic ties among the countries, while supporting China’s commitment to giant pandas conservation. To explore this, we construct a novel dataset tracking the movement of pandas as part of Chinas diplomatic initiatives and apply an augmented gravity model of trade using both annual and monthly data from UN-Comtrade. Our analysis reveals that countries hosting giant pandas experience a significant increase in exports to China between 5.9% and 7.2% in the year when a panda cub is born. This effect is short-lived, persisting up to four months after the cubs highly publicized 100-day naming ceremony. The impact is concentrated in specific sectors, including food and live animals, crude materials, and machinery. |
| Keywords: | Panda Diplomacy, political relationship, international trade, China, soft power |
| JEL: | F14 F50 P33 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:mib:wpaper:550 |
| By: | Galchenko, Valeria; Zubanov, Nick; Wong, Ho Lun; Zhou, Xiang |
| Abstract: | In a field experiment in China, we informed randomly selected workers that others received a higher wage for the same work. Compared to the uninformed but equally paid workers, the informed perceived their pay as less fair, but, surprisingly, increased their output without reducing quality. Although we did not communicate reasons for the pay difference, a post-experiment survey revealed that workers developed their own, predominantly benign, explanations, the leading one being higher quality of the better-paid workers. We validated our experimental results with a follow-up survey of 1100 people of working age in China whom we briefed about our findings and asked for their explanations. 57% believed that the informed workers perceived their higher-paid peers to be better workers and aspired to match them. When asked what they would do in a similar situation, 75% replied that they would work harder as well. Our results hint at the importance of culture in moderating behavioral responses to unequal pay, not all of them necessarily negative. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cexwps:316449 |
| By: | Lin, Jiang |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2025–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:agrebk:qt6nm5m57z |
| By: | Becker, Sascha O. (University of Warwick); Panin, Amma (Catholic University Louvain); Pfaff, Steven (Chapman University); Rubin, Jared (Chapman University) |
| Abstract: | This chapter examines the role of religion in economic development, both historically and today. Religion's influence varies globally, with high religiosity in countries like Pakistan and low rates in China. Despite declines in some Western countries, religion remains influential worldwide, with projected growth in Muslim populations due to higher fertility rates. Religion continues to shape societal norms and institutions, such as education and politics, even after its direct influence fades. The chapter explores how religious institutions and norms have impacted economic outcomes, focusing on both persistence and decline. It also examines cultural transmission, institutional entrenchment, networks, and religious competition as mechanisms sustaining religion's influence. We explore the relationship between religion and secularization, showing that economic development does not always reduce religiosity. Lastly, the chapter highlights gaps in the literature and suggests future research areas on the evolving role of religion in economic development. |
| Keywords: | networks, economic development, religiosity, cultural transmission, secularization, historical persistence, religion, religious competition, social norms |
| JEL: | D85 I25 J10 N30 O33 O43 P48 Z10 Z12 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17747 |
| By: | Bo Wu |
| Abstract: | Domestic and foreign scholars have conducted many studies on the influencing factors of digital inclusive finance, but few studies on the impact of the "Belt and Road" and the establishment of node cities on digital inclusive finance. Therefore, it is necessary to study the impact of the establishment of node cities in the "Belt and Road" on the development of digital inclusive finance. This paper mainly uses descriptive analysis and literature analysis to summarize and analyze the development status of China's digital inclusive finance and relevant theoretical research on the development of the "Belt and Road" Initiative, and analyzes and collates the background knowledge needed for the demonstration from the aspects of the development status of China's digital inclusive finance and the impact of digital inclusive finance on the economy. In this process, referring to the relevant economic theories, the theoretical model of this paper is proposed and the influence machine analysis is carried out. Empirically, this paper selects the development level of digital inclusive finance in 31 provinces in China from 2011 to 2020 as the explained variable, takes the establishment of "Belt and Road" node cities as a quasi-natural experiment, and verifies the promoting effect of the establishment of "Belt and Road" node cities on the development of digital inclusive finance in provinces through the differential differential method. And verify whether the level of Internet development is a mediating variable. The empirical results show that the establishment of node cities in the "Belt and Road" does promote the development of digital inclusive finance in provinces with the level of Internet development as an intermediary variable. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.15316 |
| By: | Qiaoyi Chen; Nicholas Ryan; Daniel Xu |
| Abstract: | We study carbon offsets sold by firms in China under the Clean Development Mechanism (CDM). We find that offset-selling firms, meant to cut carbon emissions, instead increase them by 49% after starting an offset project. In a model of firm investment decisions and offset review, we estimate that CDM firms increase emissions due to both the selection of higher-growth firms into projects (35 pp) and because offset projects themselves boost firm growth and therefore emissions (14 pp). The CDM reduces global surplus by causing damages from increased emissions four times greater than private gains from trade in the offset market. |
| JEL: | L51 O13 Q54 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33636 |
| By: | , YingyingLiu; Wang, Mengmeng; , selfdef; Shui, Yan; Deng, Yao; Xue, Chenye; Mao, Tianxin; Rao, Hengyi |
| Abstract: | Risk preference is a critical determinant of commercial insurance adoption, yet existing empirical studies present conflicting evidence regarding the relationship between risk preference and insurance purchasing behavior. This study challenges conventional adversarial or favorable selection perspectives by demonstrating a nonlinear inverse U-shaped association between risk preference and insurance uptake. Using two distinct samples, we provide robust evidence for this non-monotonic pattern. First, analysis of a nationally representative survey from the China Family Panel Studies (N = 9, 406) revealed that individuals with moderate risk preferences were more likely to purchase commercial insurance compared to those at the extremes of the risk spectrum (i.e., highly risk-seeking or risk-averse). Second, cross-validation through a separate sample (N = 208) confirmed the reliability of this inverted U-shaped relationship. Our findings suggest that moderate risk-tolerant individuals may strategically balance risk mitigation and cost-benefit considerations, driving their propensity to insure. These results advance theoretical frameworks in behavioral economics and have practical implications for insurers seeking to refine risk segmentation strategies and product design. By elucidating the nonlinear nature of risk preferences, this study bridges gaps in understanding insurance market dynamics therefore informs targeted marketing interventions for distinct consumer segments. |
| Date: | 2025–04–25 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:a543w_v1 |
| By: | Matano, Alessia (University of Barcelona); Naticchioni, Paolo (Roma Tre University) |
| Abstract: | This paper investigates the relationship between China’s import competition and the innovation strategies of domestic firms. Using firm level data from Italy spanning 2005-2010 and employing IV fixed effects estimation techniques, we find that the impact of China’s import competition on innovation varies depending on the type of goods imported (intermediate vs. final). Specifically, imports of final goods boost both product and process innovation, while imports of intermediate goods reduce both. Additionally, we extend the analysis to consider the role of unions in moderating these responses. We find that, in unionized firms, imports' impact on innovation is mitigated, specifically to protect workers' employment prospects. |
| Keywords: | unions, product and process innovation, final and intermediate goods, China’s import competition, IV fixed effects estimations |
| JEL: | C33 L25 F14 F60 O30 J50 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17764 |
| By: | George A. Alessandria; Shafaat Yar Khan; Armen Khederlarian; Kim J. Ruhl; Joseph B. Steinberg |
| Abstract: | We study how trade-policy dynamics affect the dynamics of trade volumes and the implications of these effects for estimates of the trade elasticity. We use data on US imports and trade policy from 1974–2017 for China and Vietnam—the countries with the largest import growth and the largest tariff reductions over the last fifty years—and a heterogeneous-firm dynamic trade model to recover the dynamic path of the trade elasticity following an unanticipated, permanent tariff change. We estimate a short-run trade elasticity of about three and a long-run trade elasticity of about 14, and find that it takes about five years to close half of the gap between the current and long-run levels of trade. We argue that the expected dynamics of future trade policy before and after these reforms biases down reduced-form estimates of the long-run trade elasticity and biases up estimates of the short-run elasticity. We argue that these measurement issues are even more problematic for other trade reforms, especially those within the Normal Trade Relations (NTR) regime that constitute the majority of the data. |
| JEL: | F12 F13 F14 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33568 |
| By: | Fang, Tony (Memorial University of Newfoundland); Ge, Lilac (Chinese University of Hong Kong); Hartley, John (Memorial University of Newfoundland); Ming, Hui (Sichuan University) |
| Abstract: | Using OLS, probit, and semi-nonparametric regression analysis on survey data, this article examines the factors associated with the successful economic integration of Chinese returnees, as indicated by their career and income satisfaction. Those motivated to return by talent policy are substantially more likely to be economically satisfied and satisfied with their career. The desire to find a marriage partner also positively correlates with satisfaction, while researchers are less likely to be satisfied than those in other professions. Moreover, concerns about spousal employment, trade relations and the rule of law correlate with a lower willingness to return among overseas Chinese. |
| Keywords: | attraction, retention, overseas Chinese, talent management, talent policy, career satisfaction, income satisfaction |
| JEL: | J15 J18 J24 J28 J33 J61 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17757 |
| By: | Liu, Lang; Plouffe, Michael (University College London) |
| Abstract: | Both foreign direct investment (FD) and special economic zones (SEZs) lie at the heart of the Chinese economic growth project. Research on this topic has largely debated the bidirectional causal relationship between FDI inflows and growth or described the mixed effects of FDI on economic and social development, both at the national level. However the link between inbound FDI and SEZ economic growth itself has bee ignored. Using an original panel dataset covering 19 Chinese SEZs (and SEZ-like zones) over 1996-2017, we explore the link between FDI and regional economic growth using a series of econometric models. We also examine the impact of the 2008 financial crisis on this relationship. Our results indicate a significant positive effect of inbound FDI on economic growth in SEZs. Following the 2008 crisis, the effect of FDI inflows on economic growth was reduced, pointing to the possibility of a lasting reduction in the relationship between the two as a result of the crisis. Finally, we identify the implications of our results for promoting sustainable economic development in SEZs, as well as potential points for reform in Chinese FDI policies more broadly. |
| Date: | 2025–03–05 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:nxv6a_v1 |
| By: | Brian J. Asquith (W.E. Upjohn Institute for Employment Research) |
| Abstract: | Do older workers change their labor supply in response to unexpected housing wealth losses (or gains)? Housing wealth is the largest component in most older Americans’ portfolios, and they may seek to recoup losses by working longer to help smooth consumption in retirement. Despite its importance, prior studies have not arrived at a consensus answer. I perform three different analyses to re-approach this question using Health and Retirement Study (HRS) data: a descriptive analysis, two separate differences-in-differences-indifferences analyses exploiting the China Shock and the Great Recession, and an analysis employing autoregressive models for estimating unexpected shocks to housing price appreciation. All three analyses concur that older homeowners do not significantly change their labor supply or Social Security claiming behavior in response to unexpected housing wealth gains or losses. Subgroup analyses suggest that college-educated workers may be the most responsive, even though housing wealth makes up a lower share of their total wealth, probably due to their comparably greater employment resiliency in weak labor markets. |
| Keywords: | older workers, labor supply, homeownership, Chinese import competition |
| JEL: | J26 J22 J21 R23 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:upj:weupjo:25-415 |
| By: | Ma, Yue; Fairlie, Robert; Loyalka, Prashant; Rozelle, Scott |
| Keywords: | Development Studies, Economics, Applied Economics, Human Society, Applied economics, Development studies |
| Date: | 2024–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:ucscec:qt99m4r92g |
| By: | John Zhuang Liu; Wenwei Peng; Shaoda Wang; Daniel Xu |
| Abstract: | This paper examines how power lawyers shape judicial and economic outcomes by studying the “revolving door” between judges and lawyers in China’s judicial system—namely, former judges who quit the bench to practice law. In otherwise identical lawsuits, revolving-door lawyers deliver 8−23% higher win rate for their clients. Their performance in home versus away courts suggests these gains stem from both “know how” and “know who.” We extend the theoretical framework of Dewatripont and Tirole (1999) to show that revolving-door lawyers create countervailing forces in society: they enhance judicial decision-making through evidence and reasoning, but also exploit strategic arguments and connections to bias outcomes in favor of their clients. We estimate a structural model of the judicial process to quantify these trade-offs and find that increasing the supply of power lawyers can have a non-monotonic effect on equilibrium judicial quality. |
| JEL: | K0 P48 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33708 |
| By: | Lin, Zhuoer (University of Illinois at Chicago); Qian, Yuting (Yale University); Gill, Thomas M. (Yale University); Hou, Xiaohui (World Bank); Allore, Heather (Yale University); Chen, Shanquan (University of Cambridge); Chen, Xi (Yale University) |
| Abstract: | Assistance with daily activities is crucial for persons living with dementia and disabilities, yet many face significant challenges in accessing adequate care and support. Using harmonized longitudinal survey data (2012-2018) from the United States, England, 18 European countries and Israel, and China, we found that at least one-fifth of persons with dementia and disabilities received no personal assistance for basic or instrumental activities of daily living (ADL/IADL), regardless of regional development level. Care gaps were widespread across both ADL and IADL limitations, as well as for informal and formal care. Disparities were evident, with less-educated individuals more likely to lack formal care, while those living alone often lacked informal support, resulting in the absence of any care. Alarmingly, care availability showed no improvement over time. Our findings underscore the urgent need for policies to address inequities and ensure critical access to care services for this vulnerable population worldwide. |
| Keywords: | IADL, ADL, disability, dementia, global aging, unmet need, elder care |
| JEL: | J14 J18 I11 I18 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17777 |
| By: | Xinquan Hu; Jun Zhang |
| Abstract: | We study the affirmative action policy in Chinese high school admissions, where high schools reserve a proportion of their quotas for graduates of low-performing middle schools. In line with the tradition of accountability, Chinese policymakers aim to ensure a verifiable allocation of reserved seats. We recognize the verifiability of widely used sequential mechanisms, which allocate reserved and open seats in separate stages. However, these mechanisms suffer from strategic complexity, leading to inefficiency and unfairness in the outcome. We then formalize a concept of verifiability for simultaneous mechanisms, which allocate all seats in one stage. We prove that a mechanism is individually rational, strategy-proof, and verifiable if and only if it is the deferred acceptance mechanism associated with one of two choice rules we characterize. We recommend a specific choice rule and mechanism, and discuss their benefits. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.04689 |
| By: | Li Li (Peking University, Guanghua School of Management, Students); Xiangyang Li (Nankai University); Steven Ongena (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)); Yabin Wang (Norwegian University of Science and Technology) |
| Abstract: | How do extreme weather and climate adaptation affect local financing cost? To answer this question, we examine the impact on Chinese municipal corporate bonds of both extreme rainfall and the Sponge City Pilot program. A one standard deviation increase in rainfall raises bond issuance spreads by 16 bps on average, but Sponge Cities manage to more than offset that. Further analysis demonstrates that the savings from reduced borrowing costs, coupled with broader economic gains in employment and corporate profits, far outweigh the program's investment costs. These findings underscore the importance of urban resiliency in shielding local finances from climate risks. |
| Keywords: | Extreme rainfall, Municipal corporate bond, Climate adaptation, Climate finance |
| JEL: | E32 E44 G32 Q54 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2525 |
| By: | Chen, Yuyu (Peking University); Hensel, Lukas (Peking University); Yao, Xinjue (University of Hong Kong) |
| Abstract: | How does manager quality affect subordinates' career progression? We examine the causal effect of manager quality on workers' career outcomes in the context of managerial teams at a large construction firm. We exploit quasi-random variation in worker-manager matching through frequent project reassignments to identify the causal effect of high-quality managers on promotions. Working under a high-quality manager increases workers' subsequent promotion rates by 13 percentage points. We provide evidence in support of managerial human capital transmission as the primary mechanism: effects are concentrated among workers and positions that require most managerial skills and exposed workers earn significantly higher performance-based bonuses. |
| Keywords: | skill transmission, promotions, manager quality |
| JEL: | M51 J24 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17848 |