|
on China |
| By: | Thomas Lapi (LIED (UMR_8236) - Laboratoire Interdisciplinaire des Energies de Demain - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité); Joseph Le Bihan (LIED (UMR_8236) - Laboratoire Interdisciplinaire des Energies de Demain - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité); José Halloy (LIED (UMR_8236) - Laboratoire Interdisciplinaire des Energies de Demain - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité, UFR Physique UPCité - UFR Physique [Sciences] - Université Paris Cité - UPCité - Université Paris Cité); Sabina Issehnane (LIED (UMR_8236) - Laboratoire Interdisciplinaire des Energies de Demain - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité); Florian Vidal (UiT - The Arctic University of Norway [Tromsø, Norway], LIED (UMR_8236) - Laboratoire Interdisciplinaire des Energies de Demain - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité) |
| Abstract: | Minerals and metals are crucial to modern technologies. Over the past decades, China has built up a dominant position on the value chain of energy and digital technologies through domestic mining, refining and manufacturing. Chinese foreign direct investments (FDI) in the metal sector are integral to this strategy: by investing abroad, Chinese firms establish a global value chain system that contributes to securing the supply of raw materials for domestic industries. This paper assesses global Chinese FDI in the metal sector from 2005 to 2024 and discusses their integration into China's global political strategy. Using quantitative and qualitative analysis, we show that China's investments reflect an integrated supply security approach, with interlinked investments in metals, energy and transport infrastructures, exemplified with a case study in Peru. We identified a sharp decline of Chinese FDI in the Australian metal sector over the period studied, reflecting geopolitical tensions and the tightening relationship between Australia and the United States. Chinese firms preferentially target countries with high-market concentration of specific strategic materials such as Indonesia, the Democratic Republic of Congo and Peru, to control extraterritorial mineral reserves. Overall, this mining diplomacy enables China to secure the supply of its industrial sector and strengthen its dominant position in the value chains of strategic technologies. |
| Keywords: | China, Critical raw materials, Supply chains SC, Foreign direct investments, Geopolitics |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05293866 |
| By: | Nguemgaing, Hélène; Kannan, Sangita; Spiller, Beia (Resources for the Future); Toman, Michael A. (Resources for the Future) |
| Abstract: | In April 2025, China imposed export controls on seven rare earth elements (REEs) and related embedded products to all countries (Jackson et al. 2025), intensifying an already critical debate over the security and resilience of global supply chains. The Chinese announced that exporters must apply for licenses to sell these materials overseas, a move widely seen as a strategic maneuver. The restriction, though not an outright ban, introduces review mechanisms that complicate export logistics and international procurement. The elements subject to the restrictions include scandium, yttrium, samarium, gadolinium, terbium, dysprosium, and lutetium. These materials are classified as medium and heavy rare earths, known for their magnetic, optical, and catalytic properties. Each plays a specific and often irreplaceable role in a range of high-tech and strategic sectors. These restrictions came at a time when trade tensions were escalating between the United States and China and sent ripple effects through industries that rely on rare earths for advanced manufacturing, defense, clean energy, and digital infrastructure. In June 2025, a framework for a trade deal was agreed upon between the United States and China, which was expected to ease export restrictions of rare earth products (Miao and Feng 2025). Despite the trade deal, it is important to note that the licensing system to obtain approvals from China still holds good for rare earth and related product exports. Though it is too early to state the effects of the trade deal on exports of rare earth products for all sectors, it is being reported that exports to the United States surged in June 2025 compared to May (Reuters 2025), though approvals for western companies are taking longer and there is increased scrutiny (Emont et al. 2025). China dominates the entire rare earths value chain. With China mining over 60 percent and processing over 80 percent of the world’s rare earths (REIA, 2025; Baskaran, 2024), and producing around 90 percent of the world’s high-performance rare earth magnets (Bradsher 2025), significant global dependence on a single country for these materials creates both economic vulnerabilities and strategic concerns. This article explores the implications of the current restrictions, the industrial relevance of the targeted elements, and how the situation can be understood through the lens of game theory. Specifically, our lens on this issue provides an understanding of why China reversed course in terms of restricting exports of rare earth products. |
| Date: | 2025–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-25-12 |
| By: | Yibo Qiao; Yingcheng Li; Ron Boschma |
| Abstract: | Place dependence is a widely recognized concept but has rarely been quantified in existing research. Employing the Wasserstein Distance algorithm from machine learning literature and China’s Annual Survey of Industrial Firms dataset, this paper introduces a novel method to measure the place dependence of industrial dynamics in Chinese cities, and explore its impact on urban economic performance. Our empirical findings confirm the presence of place dependence in Chinese cities, and show that cities diversifying into more related and complex industries tend to exhibit higher levels of place dependence. Moreover, place dependence appears to complement the effects of relatedness and complexity in enhancing urban economic performance. These findings offer important insights for regional industrial development and urban planning practices. |
| Keywords: | Place dependence, path dependence, knowledge complexity, industrial dynamics, economic performance, China |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2531 |
| By: | Anna Gelpern (Peterson Institute for International Economics); Omar Haddad (Oxford University); Sebastian Horn (University of Hamburg, Kiel Institute for the World Economy); Paulina Kintzinger (Kiel Institute for the World Economy); Bradley C. Parks (AidData, William & Mary); Christoph Trebesch (Kiel University, Kiel Institute for the World Economy) |
| Abstract: | This paper is the first comprehensive analysis of the secured lending practices of Chinese creditors in emerging market and developing economies (EMDEs). The authors present a new dataset and detailed case studies of collateralized public and publicly guaranteed (PPG) loans from Chinese state-owned institutions in EMDEs between 2000 and 2021. Almost half of China's total PPG loan portfolio in EMDEs is effectively collateralized--amounting to $420 billion in collateralized debt across 57 countries. The authors document that Chinese lenders use techniques adapted from export and project finance to build multi-layered legal safety nets, which help ensure that risky EMDE loans will be repaid. As security, they use liquid, easily accessible assets, such as cash in bank accounts located in China. They rarely take infrastructure project assets as collateral, but often rely for repayment on established commodity revenue streams unrelated to the project. Typically, EMDE governments and state-owned enterprises commit to route foreign currency proceeds from commodity sales through bank accounts controlled by the lender. The cash balances in these accounts can be very large; in low-income, commodity-exporting countries, they average more than 20 percent of annual PPG debt service to all external creditors. The same revenue source can secure multiple successive borrowings over many years. The paper's findings reveal a previously undocumented pattern of revenue ring-fencing, where a significant share of commodity export receipts never reaches the exporting countries. Revenues routed overseas secure priority repayment for the creditor; they remain out of public sight and largely beyond the borrower's reach until the secured debts are repaid. These findings raise new concerns about debt transparency, fiscal management, fiscal autonomy, and the quality of macroeconomic surveillance, particularly in commodity-exporting EMDEs. |
| Keywords: | China, collateral, sovereign debt and default, lending, Belt and Road Initiative |
| JEL: | F34 G15 H63 H81 K12 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp25-20 |
| By: | Liping Gao; Ghislain N. Gueye; Hyeongwoo Kim; Jisoo Son |
| Abstract: | Using data from 29 regional housing markets in China, this study examines the long-run relationships between housing prices and key macroeconomic variables. Conventional cointegration methods can be misleading, as estimated coefficients often contradict standard demand-supply theory even when statistical tests indicate cointegration. Among the variables, only real income consistently explains regional housing price dynamics, whereas real interest rates and building costs fail to do so consistently across markets. Region-specific models reveal substantial heterogeneity and are both statistically robust and economically meaningful. Panel cointegration tests that account for cross-sectional dependence fail to detect cointegration when such heterogeneity is ignored. These findings highlight the limitations of uniform national approaches and underscore the need for tailored, region-specific housing policies. |
| Keywords: | Housing Market; Cointegration; Dynamic Ordinary Least Squares; Panel Cointegration Test with CSD; Disaggregated Regional Data |
| JEL: | R30 E00 C51 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:abn:wpaper:auwp2025-07 |
| By: | Sebastian Horn; Carmen M. Reinhart; Christoph Trebesch |
| Abstract: | This paper provides a comprehensive overview of China’s lending to developing countries—a central feature of today’s international financial system. Building on our previous research and the work of others, we document the scale, destination, and terms of China’s overseas lending boom, as well as the lending bust and defaults that have followed. We compare China’s lending boom to past boom-bust cycles and discuss the implications of China’s rise as an international creditor on recipient countries and sovereign debt markets. The evidence indicates that Chinese state banks are assertive and commercially sophisticated lenders. For recipient countries, however, the jury is still out: it remains to be seen whether the gains from China’s lending—through growth and improved infrastructure—will outweigh the more immediate burdens of debt service or the multifaceted costs of default. |
| JEL: | E3 F34 F65 F68 N2 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34359 |
| By: | Xiqian Cai; Shuai Chen; Zhengquan Cheng; Emily E. Nix |
| Abstract: | In China, only 37% of divorce petitions citing domestic violence are granted, with evidence suggesting that judges often prioritize preserving marriages even in cases of abuse. We investigate whether judicial decision-making can shift in response to broader social change. Exploiting the rise of the #MeToo movement, which reshaped societal perceptions of gender-based violence, we find that female judges in China became 8 percentage points more likely to grant divorces in domestic violence cases. These results suggest that judicial attitudes and actions on gender-based violence cases are malleable. |
| JEL: | J12 K36 K38 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34345 |
| By: | Matthew Higgins; Thomas Klitgaard |
| Abstract: | U.S. trade policy remains in flux. Nevertheless, important elements of the new policy regime are apparent in data through July. What stands out are the large differences in realized tariff rates by trading partner, ranging from less than 5 percent for Canada and Mexico to 15 percent for Japan and to 40 percent for China. This post shows that the bulk of cross-country differences in tariff rates is explained by two factors: the U.S.-Canada-Mexico free trade agreement and differing sales shares in tariff-exempt categories. |
| Keywords: | tariffs; trade policy; international trade |
| JEL: | F13 |
| Date: | 2025–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:101923 |
| By: | Qu Feng; Shang-Jin Wei; Guiying Laura Wu; Mengying Yuan |
| Abstract: | Capital controls and other policy distortions in the capital market are costly to entrepreneurs. We propose a structural estimation approach to quantify the effect using IPO locational choices. We estimate the willingness-to-pay to bypass these distortions by the Chinese entrepreneurs with overseas listed firms to be a haircut in firm value by 50-60%. We infer that the welfare for the entrepreneurs could rise by 22% from the relevant capital market reforms. |
| JEL: | F30 O16 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34341 |
| By: | Ikonen, Pasi; Kurronen, Sanna; Rönkkö, Risto; Vilmi, Lauri |
| Abstract: | This brief presents impact assessments of increased tariffs based on simulations using the Global Integrated Monetary and Fiscal (GIMF) macroeconomic model. The current increases in US import tariffs are shown to reduce aggregate output across all major economic regions. The most pronounced negative effects in the simulations are observed in the United States and China. For the euro area, the estimated decline in aggregate output due to the currently implemented tariffs is around 0.2 percent-relatively modest. However, the final effects are subject to considerable uncertainty, including potential shifts in trade flows and the impact of trade barriers on investment. These estimates do not account for any additional uncertainty related to the future path of tariffs. |
| Keywords: | global trade, tariffs, trade war |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitb:328266 |
| By: | Jakob Vestergaard (Roskilde University); Robert H. Wade (London School of Economics) |
| Abstract: | This paper examines the World Bank's protracted and conflicted attempts at shareholding reform from 2008 to the present, situating them within the broader context of multipolarity and intensifying geopolitical rivalries. Despite repeated commitments since the Bretton Woods conference that voting power should reflect countries' relative weight in the world economy, the Bank's governance remains strikingly misaligned. China, India, and Indonesia—three of the four most populous countries—remain markedly underrepresented relative to their economic size, while many advanced economies retain disproportionate influence.Drawing on interviews with Executive Directors, Bank staff, and external observers, the paper traces the reform trajectory across successive rounds of review (2008, 2010, 2015, 2018, 2020, and the ongoing 2025 process). It highlights how technical proposals for "dynamic formulas" and equitable redistribution have consistently collided with entrenched geopolitical interests, notably U.S. resistance to a meaningful increase in China’s voting power, European reluctance to relinquish single-seat privileges, and Japan’s determination not to be overtaken by China. At the same time, institutional design—particularly the constitutionalized principle of “preemptive rights” in capital increases—has entrenched inertia by allowing any shareholder to veto dilution of its relative voting share. The result is a widening gap between rhetoric and reality: while official discourse stresses "equitable voting power, " actual reforms have delivered only fractional adjustments, often eroded in subsequent years. The paper sets out three scenarios for the 2025 shareholding review—a worst-case outcome of stalemate, a modest reform limited to symbolic gestures, and a best-case scenario involving a new institutional design based on misalignment limits, responsible shareholding, and open leadership selection. We argue that unless substantive reform is forthcoming, the Bank risks undermining its legitimacy as the world’s premier development finance institution in an increasingly multipolar world. |
| Keywords: | World Bank reform, Equitable voting power, geopolitics |
| JEL: | F53 F55 O19 P16 |
| Date: | 2025–09–24 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp241 |
| By: | Jean, Sebastian; Méjean, Isabelle; Schularick, Moritz |
| Abstract: | • In this paper, we (i) discuss the drivers of Chinese success in manufacturing; (ii) analyse the resulting challenges for the German and French economies: and (iii) present economic guidelines for economic policies to deal with China. • Over the past two decades, China has emerged as the world's leading industrial power, accounting for roughly one-third of global manufacturing value. Chinese industrial success was driven by a combination of supportive industrial and macroeconomic policies, but also by fierce domestic competition and economies of scale. • European businesses face acute challenges due to growing competition at home and in export markets, declining demand from China, and increasing protectionism in the global economy. China now leads Europe in a number of cutting-edge technologies. • Confronted with these challenges, we propose a precautionary strategy for Europe that maintains the benefits of openness, but does not naively hand over sensitive areas of the European economy to Chinese dominance. This applies most clearly to sectors closely linked to national security in the communication, technology, and defence space. • In important sectors where Europe lags technologically (e.g., batteries), the best policy is a strategy that welcomes Chinese and other countries' foreign direct investment in Europe, preferably linked to technology transfers and joint ventures. In sectors that have little strategic relevance and where Europe is not competitive, the best policy response is to let European buyers reap the benefits of low Chinese prices. |
| Abstract: | • In diesem Papier (i) erörtern wir die Treiber des chinesischen Erfolgs in der Industrie, (ii) analysieren die daraus resultierenden Herausforderungen für die europäische Wirtschaft und (iii) präsentieren wirtschaftspolitische Leitlinien für die Wirtschaftspolitik im Umgang mit China. • In den vergangenen zwei Jahrzehnten hat sich China zur weltweit führenden Industrienation entwickelt und steht inzwischen für rund ein Drittel der globalen Wertschöpfung im verarbeitenden Gewerbe. Der industrielle Erfolg Chinas wurde durch eine Kombination aus unterstützender Industrie- und Makropolitik, aber ebenso durch intensiven binnenwirtschaftlichen Wettbewerb und Skaleneffekte begünstigt. • Europäische Unternehmen sehen sich zunehmend mit gravierenden Herausforderungen konfrontiert: wachsender Konkurrenz im Binnen- und Exportmarkt, rückläufige Nachfrage aus China sowie einer Zunahme des Protektionismus in der Weltwirtschaft. In mehreren Schlüsseltechnologien hat China Europa inzwischen überholt. • Angesichts dieser Herausforderungen schlagen wir für Europa eine Strategie vor, welche die Vorteile wirtschaftlicher Offenheit wahrt, ohne jedoch in naiver Weise sensible Bereiche der europäischen Ökonomie einer chinesischen Dominanz zu überlassen. Dies gilt in besonderem Maße für Sektoren, die eng mit nationaler Sicherheit im Bereich Kommunikation, Hochtechnologie und Verteidigung verknüpft sind. • In bedeutenden Sektoren, in denen Europa technologisch im Rückstand ist (z. B. Batterien), besteht die beste Politikstrategie darin, chinesische wie auch andere ausländische Direktinvestitionen in Europa zuzulassen - vorzugsweise gekoppelt an Technologietransfers und Joint Ventures. In Sektoren, die weder strategisch relevant sind noch in denen Europa wettbewerbsfähig ist, besteht die sinnvollste Politikantwort darin, europäischen Konsumenten und Produzenten die Vorteile niedriger chinesischer Preise zugutekommen zu lassen. |
| Keywords: | EU, China, Trade policy, Handelspolitik |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkpb:328251 |