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on China |
| By: | Simola, Heli |
| Abstract: | This note discusses recent developments in economic relations between Russia and China. China has become an essential economic partner for Russia since the invasion of Ukraine. Cut off from most Western economies, Russia today is heavily dependent on trade with China and actively pursues greater cooperation with China. Yet new Chinese investment in Russia remains scarce. Indeed, foreign investment flows into Russia overall have collapsed and trends in Chinese investment are hardly better. |
| Keywords: | Russia, China, trade, investment |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitb:318191 |
| By: | Huang, Kaixing; Hou, Hao |
| Abstract: | This study evaluates the economic impact of the New Rural Cooperative Medical Scheme in China, the world's largest rural public health program, covering over 800 million rural residents. Using longitudinal survey data from villages that gained access to the program in different years, we find that the program improved the probability of being in good health by 4.4% to 8.2% across age groups. For the average participating household, per capita income increased by 20.3% over a decade, driven primarily by greater off-farm labor participation and higher wages, alongside significant agricultural income growth. The aggregate income gains were six times the government's program investments. These effects can be replicated by a structural model that characterizes the health investments and labor allocation of utility-maximizing rural residents. Counterfactual analyses based on the structural model suggest that China could further increase the program's benefits by raising the reimbursement rate up to 0.8 (but not beyond). Additionally, eliminating the current cross-province reimbursement constraints would further boost income gains by 18.7%. |
| Keywords: | rural public health insurance, income, health, migration |
| JEL: | I13 I38 R23 |
| Date: | 2025–05–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124703 |
| By: | Park, Byungyul (Korea Institute for Industrial Economics and Trade) |
| Abstract: | Escalating tensions between the United States and China and the prolonged conflict between Russia and Ukraine in Eastern Europe have pushed supply chain stability to the top of the agenda for South Korean automakers. In August 2022, during the administration of former US President Joe Biden, the US Congress passed two landmark pieces of legislation: the CHIPS and Science Act and the Inflation Reduction Act (IRA). These laws were designed to contain China’s expanding influence by reorganizing critical supply chains in semiconductors, batteries, and electric vehicles (EVs) around the US. The IRA offers consumers large federal tax credits on purchases of EVs, but only for vehicles assembled in North America. Moreover, it excludes batteries, parts, and materials produced in so-called “foreign entities of concern, ” principally China, from eligibility for subsidies. This has necessitated a significant realignment of the EV and auto parts supply chains. After the IRA became law, many cars made by automakers instantly became ineligible for subsidies, squeezing Korean EVs’ share of the American market. To mitigate this, Hyundai Motor expedited the construction of its EV plant in the US to ensure that its EVs would qualify for tax benefits. China responded to US sanctions with export controls on key materials critical in the automotive industry. In August 2023, it restricted the export of gallium and germanium, which are important materials used in the manufacture of semiconductors, and in October 2023, Beijing extended these restrictions to include graphite, a core component of lithium-ion batteries. These retaliatory measures have had both direct and indirect consequences on Korea’s automotive supply chains. As the geopolitical rivalry between the US and China heats up, the supply chains around these two superpowers are likely to ossify into two distinct blocs. This exposes Korean automakers to significant risk, given their dependence on China for auto parts and reliance on the US as a destination market for their exports. In this paper, we propose a diversification strategy for Korean automakers that leverages the country’s strong relationship with India in the automotive sector. We argue that such a strategy is required to safeguard the country’s automotive industry, a key strategic sector. |
| Keywords: | supply chains; batteries; electric vehicles; EVs; subsidies; battery industry; manufacturing; China; automotive industry; Hyundai; Kia; South Korea; Korea Institute for Industrial Economics and Trade; KIET |
| JEL: | L62 |
| Date: | 2025–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kieter:2025_009 |
| By: | Alper Arslan (Department of Economics at the University of Texas at San Antonio); Robert Clark (Queen's University); Qidi Hu (Queen's University) |
| Abstract: | This study investigates whether corruption differentially affects contracting through auctions and negotiations. Using data on Chinese land-market transactions, where corruption is known to be present, we first show that, on average, it exerts similar effects on transactions carried out via auctions and negotiation. However, this finding masks important heterogeneity – auctionsfeaturing healthy competition are less affected by corruption, and significantly less so than negotiation. We then develop a simple model of bidding under the possibility of corruption that rationalizes our findings. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:qed:wpaper:1524 |
| By: | Qianqian Yang (Graduate School of Economics, Kobe University, JAPAN); Nobuaki Hamaguchi (Research Institute for Economics and Business Administration, Kobe University, JAPAN) |
| Abstract: | This paper reviews the institutional background of China's minimum wage system, shaped by four key labor law regulations, with a focus on its defining feature of regional heterogeneity. We compile a unique and comprehensive database on minimum wage standards across all 31 provinces from 1995 to 2022, incorporating both nominal and real wage levels as well as their geographic distribution. The dataset and our analysis provide a valuable foundation for understanding the potential role of minimum wage policy in shaping labor market outcomes and regional economic dynamics in the context of a modernizing and developing economy. |
| Keywords: | Minimum Wage; China; Regional heterogeneity; Minimum wage database |
| JEL: | J30 J38 C81 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-10 |
| By: | Qianqian Yang (Graduate School of Economics, Kobe University, JAPAN); Nobuaki Hamaguchi (Research Institute for Economics and Business Administration, Kobe University, JAPAN) |
| Abstract: | This paper examines whether, and to what extent, inter-provincial migration in China responds to real minimum wage disparities. To conceptualize this relationship, we extend the Harris-Todaro framework by incorporating minimum wages in both rural and urban areas. For the empirical analysis, we utilize an origin-destination matrix constructed from Hukou-linked migration data (2000-2020) and match it with interprovincial minimum wage differentials. To address endogeneity concerns, we estimate a gravity-type model with fixed effects and apply an instrumental variable strategy. The baseline results indicate that a 1% increase in real minimum wage disparity leads to a 1.05% increase in inter-provincial migration. IV estimates suggest that simple OLS correlations may understate this positive effect. We also find significant heterogeneity: migrants from less developed provinces are more responsive to wage differentials, particularly when moving toward more urbanized regions. These findings highlight the role of minimum wage policy in shaping internal labor mobility within a developing and regionally diverse economy. |
| Keywords: | Minimum wage; Internal migration; China; Regional wage disparities; Instrumental variable strategy |
| JEL: | J38 J61 R23 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-11 |
| By: | Mitsuyo ANDO; Kazunobu HAYAKAWA; Fukunari KIMURA; Kenta YAMANOUCHI |
| Abstract: | This study empirically investigates how the US–China trade war affected sales to North America (i.e., Canada and the US) by Japanese manufacturing firms and their overseas affiliates between 2014 and 2021. Our findings are summarized as follows. All major sales channels to North America—except for sales by affiliates in Mexico, who enjoyed a positive trade diversion effect—were not significantly affected by US tariffs against China, on average. This includes sales by affiliates in the US and China. However, these effects are heterogeneous, depending on whether affiliates served as the main production bases for the North American market in their respective firms. We found such heterogeneity in affiliates in the US, ASEAN, and Mexico, as well as in firms located in Japan. For example, affiliates in ASEAN experienced a positive trade diversion effect when they were the main production bases. Our results suggest that Japanese manufacturing firms did not respond significantly to tariff changes during the Trump 1.0 period, with only minor quantitative changes and heterogeneous effects on sales to North America. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25046 |
| By: | Katrin Hussinger (DEM, Université du Luxembourg); Lorenzo Palladini (Stockholm School of Economics, SE) |
| Abstract: | China’s special economic zones (SEZs) have been established to foster business growth and innovation by improving the institutional context of specific sub-regional areas. We examine the effect of SEZs on the contribution of research and development (R&D) to the market value of firms located in these areas. The market value reflects investors’ expectations of future returns to R&D, providing crucial information for strategic investment decisions. Larger R&D contributions to the market value create stronger incentives for firms to invest in innovation. Empirical results suggest that the contribution of R&D to the market value increases through the SEZs program, particularly for R&D intensive firms. This suggests that regional policies, while increasing incentives to innovate, may widen the gap between less and more R&D intensive firms, potentially impacting competition and long-term growth. |
| Keywords: | Special economic zones (SEZs); China; Market value; R&D; Institutional development; Innovation incentives. |
| JEL: | O32 R58 O25 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:25-10 |
| By: | Hyejin Ku (University College London); Tianrui Mu (University College London) |
| Abstract: | This paper examines how China’s growing research capabilities impact global research universities across scientific fields. Using bibliometric data from 1980 to 2020, we assess the effects of the “China shock†on high-impact publications, novel concepts, and citation patterns. Our analysis reveals a positive net effect in Chemistry and Engineering & Materials Science (EMS), but a negative effect in Clinical & Life Sciences (CLS). In other fields, the effects are mostly positive but imprecise. We highlight the coexistence of competition and spillover effects, with their relative strength shaped by field characteristics, such as expansion potential and the quality of China’s research. |
| Keywords: | China shock in science, knowledge production, ideas, competition, spillovers |
| JEL: | J24 I23 O31 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2513 |
| By: | Peter Chai (Kai Shibata) (Graduate School of Political Science, Waseda University) |
| Abstract: | This study uses the latest three waves of the transnational survey database World Values Survey to empirically investigate the relationships between environmental concern and a set of demographic variables relevant for the postmaterialist thesis such as (1) age (2) education (3) income and (4) urbanization in Mainland China. Responses on (1) priority over economic growth or environmental protection and (2) activeness in environmental organizations are chosen to represent environmental concern. This study employs a two-step approach conducting both separate regressions for each wave and an aggregate regression with all the waves combined. Results show that age and education seem to be better “predictors” for environmental concern than the other demographic variables, in other words, the “socialization hypotheses” seem to work better than the “scarcity hypotheses” under the postmaterialist framework in Mainland China. The inconsistencies in how the demographic variables perform by question item and wave and the difference in the separate and aggregated regression results show the relevance of the “Asian uniqueness” argument. To address limitations in the survey design and sample quality and provide qualitative explanations, other methods such as survey experiments, text analysis, interviews, and fieldwork can be incorporated. |
| Keywords: | Environmental Values, World Values Survey, Mainland China |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2510 |
| By: | Kuusi, Tero; Lähdemäki, Sakari |
| Abstract: | Abstract We examine value chain productivity within the EU15 from 1995 to 2017; a period marked by growth and its subsequent slowdown following the 2008 Financial Crisis. Using data on global value chains from the new OECD Inter-Country Input-Output Tables and KLEMS data, we construct a measure of total factor productivity (TFP) of value chains, indexed by their final producer industry. Our findings indicate that the post-crisis slowdown in productivity growth within the EU15 is attributable to both weakened TFP growth in final producer industries and slightly negative TFP growth in the rest of the value chain. Using dynamic panel estimation, we demonstrate that the spillover effects of business-related intangibles on VC TFP growth were a significant contributor to growth before the crisis, whereas the returns to tangible investments have been weak. In addition, we perform an event study analysis of globalization shocks by examining the impact of bilateral investment agreements with China. Following the implementation of the agreement, we observe a positive impact on TFP. This improvement is accompanied by an increase in business-related intangibles within the final industry of the value chain, along with modest growth in tangibles. These findings suggest a positive productivity impact of globalization, and underscore the significant role of business-related intangibles over tangibles. |
| Keywords: | Global value chains, Intangibles, Productivity, Globalization |
| JEL: | F60 O47 L16 O14 E22 |
| Date: | 2025–05–26 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:128 |
| By: | Xiao Ma (Peking University); Alejandro Nakab (Universidad Torcuato Di Tella); Daniela Vidart (University of Connecticut) |
| Abstract: | We investigate how on-the-job training varies with firm characteristics and how this informs the distribution of training costs between firms and workers. Using data from over 100 countries, we document that smaller firms consistently offer fewer training opportunities to their workers. Drawing on administrative data from China and Mexico, we identify differences in labor share and productivity levels as key factors explaining this pattern. We then build a general equilibrium model with various training costsharing schemes and show that only those in which firms bear a substantial share of training costs after hiring align with the empirical evidence. A quantitative version of the model calibrated to the US reveals significant inefficiencies in training provision, particularly among smaller firms, and suggests that (1) optimal training subsidies are higher for smaller firms, though even a uniform subsidy can raise net output by 7%; and (2) increasing the labor market share of larger firms can signifcantly impact on-the-job human capital formation. |
| Keywords: | On-the-job training; Human capital accumulation; Firm heterogeneity |
| JEL: | E24 J24 M53 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:uct:uconnp:2025-05 |
| By: | Chen, Kong-Pin; Dai, Xiaoyong; Li, Kai; Lin, Pingxin |
| Abstract: | This paper proposes a tournament theory to explain the year-end rush phenomenon—the pervasive surge in organizational activities or investments at period-ends. In a multi-period tournament with observable interim performance, lagging contestants exert disproportionately high effort in later periods to catch up. Because the final period is not subject to future catching-up, the marginal return to effort peaks at the end, generating an effort surge. The model predicts a monotonically increasing relationship between a contestant's interim performance rank and the extent of his year-end rush. We test these predictions using data on patent applications across Chinese cities, where official promotion is well-known to follow tournament-style competition. Our results show: (i) a robust year-end patent application surge, and (ii) a monotonic relationship between a city’s rush intensity and its interim performance rank within its province. While China’s patent growth target policy has been criticized for exacerbating year-end rushes and reducing patent quality, we demonstrate that the underlying driver is the bureaucratic tournament; growth targets merely exacerbate it. Additional evidence highlights the role of patent agencies in facilitating patent rush. |
| Keywords: | year-end rush, fourth-quarter effect, multi-stage tournament, interim relative performance, career concern, Chinese economy, Chinese patent policy |
| JEL: | D0 D04 L2 M5 M54 |
| Date: | 2025–05–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124898 |
| By: | muhammad islam, Muqeem |
| Abstract: | The evolution of innovation dates back to ancient civilizations and continues to shape modern economies through high-tech advancements. Reverse engineering—a process of deconstructing and enhancing technologies—has been instrumental in industrial growth worldwide, notably in countries like China and Japan. Pakistan’s potential in leveraging reverse engineering remains underutilized, hindered by outdated infrastructure, inadequate R&D investments, weak institutional frameworks, and fragmented policies. Initiatives like STZs and the Digital Pakistan Policy offer promise but suffer from misaligned execution. This study underscores the transformative potential of reverse engineering in Pakistan’s defense, agriculture, pharmaceuticals, and renewable energy sectors. By fostering academia-industry-government collaboration, improving infrastructure, and adopting global best practices, Pakistan can bridge its technological gaps, enhance export competitiveness, and reduce its import dependency. A robust reverse engineering strategy will catalyze innovation, strengthen industrial output, and pave the way for long-term economic sustainability and self-reliance. |
| Keywords: | Reverse engineering, innovation, economic sustainability, high-tech industries Pakistan |
| JEL: | O2 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124837 |
| By: | Yuhong Gao (Fudan University [Shanghai]); Thierry Blayac (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Marc Willinger (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier) |
| Abstract: | We conducted a study to assess the impact of a delegation option on moral decision-making using an online questionnaire based on the Moral Machine paradigm1. Interestingly, the inclusion of a delegation option did not significantly alter individuals' moral tradeoffs. Nevertheless, when presented with the option, most participants opted for delegation as a means to avoid the moral burden of challenging decisions, regardless of the delegate's profile. Factors influencing this choice included gender (favoring females), occupation (doctors), education level (lower), a strong sense of altruism, less frequent driving, and greater risk aversion. Additionally, participants displayed a preference for saving more lives, with particular emphasis on babies, pregnant women, doctors, and law-abiding victims, indicating a general aversion to death. |
| Keywords: | Transport Policy Moral machine paradigm, moral dilemma, delegation, freedom of choice, behavioral economics |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05058037 |
| By: | Panle Jia Barwick; Ashley T. Swanson; Tianli Xia |
| Abstract: | Making innovative drugs affordable and accessible is a pressing global challenge. Centralized negotiation is an increasingly popular policy solution, but it remains understudied despite wide variation in implementation. This paper studies China’s ongoing NRDL Reform, which combines centralized drug price negotiation with expanded insurance coverage. The reform reduced retail prices by 48% and out-of-pocket costs by 80%, and increased drug utilization by 350%. At the same time, the insurance design was regressive, and 25% of negotiations failed. Focusing on cancer drugs, we estimate a flexible demand and supply model that features heterogeneous households, bargaining with potential breakdowns, and a government objective function that depends on consumer surplus and insurance spending. We estimate that including innovative cancer drugs in the NRDL generated Y40 billion ($5.6 billion) in annual consumer surplus gains and increased survival by 900, 000 life-years among Chinese cancer patients each year. Among the counterfactual policies we examined, centralized market-access negotiation with an optimal coinsurance schedule raises social surplus by 19% relative to the observed policy and achieves 90% of the social surplus of an efficient benchmark. |
| JEL: | I0 L0 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33832 |
| By: | James Giesecke; Robert Waschik |
| Abstract: | This paper examines the economic impacts of U.S. tariff increases announced over March-April 2025 using GTAP-FIN, a dynamic global general equilibrium model. We simulate six scenarios, comprised of the product of three retaliation and fiscal cases (i. U.S. tariff increases without retaliation; ii. retaliation by all trading partners except Australia, Japan, and South Korea; and, iii. retaliation coupled with U.S. fiscal consolidation via tariff revenue) and two U.S. tariff policy cases (i. without the U.S.' "reciprocal" tariff package, and, ii. with the "reciprocal" package). Economic impacts are larger in the three scenarios that include the U.S.' "reciprocal" tariff package. Across all scenarios, U.S. real GDP falls, driven by deep short-run employment losses, long-run capital stock contractions, and persistent allocative efficiency losses. In the no retaliation scenarios, improved U.S. terms of trade buoy U.S. real consumption outcomes relative to the contractions in real GDP. However, this benefit is reversed under retaliation, which lowers U.S. export prices and consumption. Fiscal consolidation amplifies U.S. consumption losses but mitigates investment declines. Australia is modestly affected, benefiting from improved terms of trade and investment in the retaliation scenarios. For China (PRC), heavy tariff exposure results in sustained terms of trade and consumption losses, although outcomes improve marginally with U.S. fiscal consolidation. Globally, regions most exposed to U.S. tariffs see the sharpest consumption declines, particularly under the no retaliation scenario. The analysis does not capture the heightened investor uncertainty arising from the unclear policy rationale behind the tariffs, suggesting that adverse economic impacts may exceed those estimated in this paper. |
| Keywords: | U S tariffs, Trump tariffs, "Reciprocal" tariffs, "Liberation Day" tariffs, retaliation |
| JEL: | F13 F47 C68 D58 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cop:wpaper:g-355 |