|
on China |
| By: | Siwar Khelifa; Jie He |
| Abstract: | This paper provides the first evidence from a developing-country setting on the long-term educational impacts of early-life exposure to a major environmental regulation. We study China's 1998 Two Control Zones policy and implement a difference-in-differences design comparing adjacent birth cohorts in targeted and non-targeted counties. We find no detectable effects of early-life exposure to the policy on long-term educational outcomes. Across a wide range of measures, including high school attendance, academic versus vocational track placement, and high-quality school attendance around age 15, as well as college entrance exam participation, exam scores, and post-secondary enrollment around age 18, the estimates are statistically indistinguishable from zero. These null results are robust across alternative specifications and hold in subgroups defined by gender and maternal education. |
| Keywords: | Education, environmental regulation, TCZ policy, early-life conditions, China |
| JEL: | I18 I24 J24 Q51 Q56 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:irn:wpaper:25-08 |
| By: | Nicholas R. Lardy (Peterson Institute for International Economics) |
| Abstract: | Many experts see China's economy as constrained because of a weak social safety net, especially the retirement system, resulting in anemic domestic consumption spending. This view is out of date. Recent data indicate that China has expanded many parts of its social safety net and that consumption spending has accelerated. Social expenditures in China have more than doubled as a share of GDP since 2010 and are on par with Mexico and Turkey. But given China's aging population, safety net spending and domestic consumption spending will need to expand further to put China's economy on a more sustainable path. The latest data should clear the cobwebs of misunderstanding that have led to both complacency and unnecessary alarm about China's economic prospects among observers in the United States and other countries. China's government is hardly unaware of the importance of stronger household consumption and has announced policies to increase consumer spending, including more generous pension benefits for farmers and rural migrant workers. If these initiatives are implemented, the growth of household consumption is likely to accelerate. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:iie:pbrief:pb25-7 |
| By: | Yizhi Xu; Fan Zhang; Rongyu Cui; Ding Hua |
| Abstract: | Household savings in China are markedly higher than in peer economies, which have been channeled into financing excessive investment. This paper examines the structural and cyclical factors contributing to China’s elevated household savings. The analysis suggests that low government social spending in rural areas and residency (“Hukou”) restrictions in urban areas play a significant role in increasing household savings. In addition, the paper provides evidence that fluctuations in real estate prices significantly impact household savings, both through the wealth effect and the downpayment effect (i.e., need for non-homeowners to save so as to afford downpayments), though the latter channel has weakened after the recent real estate market correction. These findings suggest that further strengthening social safety nets, continuing Hukou reforms, and policies that promote a more efficient transition for the housing market can help reduce household savings and boost private consumption, thus facilitating China’s economic rebalancing. |
| Keywords: | Household saving; precautionary saving; social safety net; demographics; migrant workers; homeownership |
| Date: | 2025–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/259 |
| By: | Barthélémy Bonadio; Zhen Huo; Elliot Kang; Mr. Andrei A Levchenko; Nitya Pandalai-Nayar; Hiroshi Toma; Petia Topalova |
| Abstract: | We adopt a data-driven approach to measure trade decoupling over 2015-2023. Countries are classified into three groups according to changes in their data-inferred trade costs with the US and China: those shifting toward the US bloc, those shifting toward the China bloc, and those with no change in alignment. We document that while cross-bloc trade costs rose, they were accompanied by falling within-bloc trade costs, with average trade costs falling marginally in line with global trade resilience. We use a quantitative model to compute the real income effects of this reconfiguration of trade costs. Model simulations suggest that real income in the median country in the world, and the median country within each bloc, rose by 0.4-0.6%. Finally, we find a modest amount of bloc misalignment: the median country would be better off switching blocs. These results suggest that trade decoupling may not follow trade-driven economic interests. |
| Keywords: | decoupling; fragmentation; global value chains |
| Date: | 2025–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/263 |
| By: | Démurger, Sylvie (CNRS); Lin, Carl (Bucknell University); Schmillen, Achim (World Bank); Wang, Dewen (World Bank) |
| Abstract: | Minimum wages are found to have an inconclusive impact on poverty. Using China’s individual-level panel dataset combined with county-level minimum wages, our paper shows that minimum wages have a moderate yet sustained effect on poverty reduction. The results show a two-sided effect: higher minimum wages help pull some workers out of poverty, while simultaneously pushing others in. This dynamic of larger “pulling” effects being counterbalanced by smaller “pushing” effects explains why existing studies often find that minimum wages have a negligible or minimal impact on poverty reduction. Notably, the poverty reduction effect is most pronounced for female workers. |
| Keywords: | poverty, minimum wages, China |
| JEL: | I32 J3 J88 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18326 |
| By: | Frank Tian-Fang Ye (Division of Social Sciences, The HKU SPACE Community College, Hong Kong SAR, PRC); Xiaozi Gao (Department of Early Childhood Education, Education University of Hong Kong, Hong Kong SAR, PRC) |
| Abstract: | China's marriage registrations have declined dramatically, dropping from 13.47 million couples in 2013 to 6.1 million in 2024. Understanding public attitudes toward marriage requires examining not only emotional sentiment but also the moral reasoning underlying these evaluations. This study analyzed 219, 358 marriage-related posts from two major Chinese social media platforms (Sina Weibo and Xiaohongshu) using large language model (LLM)-assisted content analysis. Drawing on Shweder's Big Three moral ethics framework, posts were coded for sentiment (positive, negative, neutral) and moral dimensions (Autonomy, Community, Divinity). Results revealed platform differences: Weibo discourse skewed positive, while Xiaohongshu was predominantly neutral. Most posts across both platforms lacked explicit moral framing. However, when moral ethics were invoked, significant associations with sentiment emerged. Posts invoking Autonomy ethics and Community ethics were predominantly negative, whereas Divinity-framed posts tended toward neutral or positive sentiment. These findings suggest that concerns about both personal autonomy constraints and communal obligations drive negative marriage attitudes in contemporary China. The study demonstrates LLMs' utility for scaling qualitative analysis and offers insights for developing culturally informed policies addressing marriage decline in Chinese contexts. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.23609 |
| By: | Ma, Chang; Rebucci, Alessandro; Zhou, Sili |
| Abstract: | Chinese private portfolio equity outflows, though small compared to other Chinese outflows, are growing rapidly because of capital account liberalization and capital flight. Using granular stock-holding data on Qualified Domestic Institutional Investor (QDII) mutual funds, we identify a nascent financial channel of international transmission of Chinese monetary policy to world stocks. Event study analysis around monetary policy announcement days reveals that monetary policy tightening depresses returns of country equity indexes and individual U.S. stocks with QDII fund exposure relative to non-exposed stocks. The results are robust to controlling for the real transmission channel of Chinese monetary policy and other confounders. The effect is driven by smaller and less liquid firms, but not by China-concept stocks or those highly exposed to China's macroeconomic shocks. We also find that the results are driven by household portfolio rebalancing from more to less risky assets following the announcement. |
| Keywords: | QDII Funds, Chinese Monetary Policy, Household Rebalancing, Foreign Portfolio Equity Flows |
| JEL: | F30 G10 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:333958 |
| By: | Benoit Mojon; Han Qiu; Fang Wang; Michael Weber |
| Abstract: | We estimate the effects of changes in house prices on consumption using unique data of Alipay transactions from Chinese households, spanning from January 2017 to March 2023. We find significant housing wealth effects: changes in house prices are positively associated with future changes in consumption in 33 Tier 1 and Tier 2 cities. Specifically, in these cities, a 10% increase in house prices leads to a 1.6% increase in consumption. However, this relationship is not observed in smaller Tier 3 and Tier 4 cities. We also find that housing wealth effects are more pronounced among older households and homeowners, while renters show no such effect. Additionally, in Tier 3 and Tier 4 cities, higher house prices tend to crowd out consumption among younger households. |
| Keywords: | consumption, house prices, savings |
| JEL: | R2 R3 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1319 |
| By: | Shenglong Liu; Yuanyuan Wan; Shengxiang Xie; Xiaoming Zhang |
| Abstract: | Although education fever is widespread across East Asia, the role of public education investment in intensifying this fever remains underexamined. By leveraging the staggered rollout of county-level free senior high school education pilots in China, we find that this major expansion of public education increased the number of registrations at private tutoring centers by about 20% and doubled household spending on tutoring. Using administrative night-light data and elite university admission records, we show that the effect is driven by more intensive competition for scarce top-tier college placements rather than by declining public school quality. The response is strongest in regions with greater income inequality and lower elite university admission rates, but substantially weaker in areas with better outside options, such as higher local employment rates. Our findings suggest that expanding access to senior high school alone may exacerbate educational arms races, underscoring the need for complementary policies that reduce income disparities and broaden postsecondary opportunities. |
| Keywords: | Education Competition; Public Education Investment; Crowd-in Effect |
| JEL: | I22 I28 O15 H41 |
| Date: | 2025–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-812 |
| By: | Gradstein, Mark |
| Abstract: | Demand for skilled labor and social status accorded by educational achievements induce a race to acquire education, dubbed "education fever". In conjunction with credit market constraints and in the context of quantityquality tradeoff, this, in turn, may reduce fertility, especially in well-educated families, and create cross section inequality while limiting intergenerational mobility. The resulting inequality is persistent which, in turn, may have adverse implications for economic growth. It is argued that these phenomena are consistent with recent economic and social developments in China. |
| Keywords: | Education fever, human capital, fertility, inequality, China |
| JEL: | D13 J13 O11 Z13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:333960 |
| By: | Ziran Ding (University of St Andrews); Adam Hal Spencer (University of Bonn); Zinan Wang (Tianjin University) |
| Abstract: | Amid ongoing geoeconomic tensions, industrial policy has emerged as a prominent tool for policymakers. What are the dynamic and welfare effects of these policies? How does the short-sightedness of policymakers influence their choice of instruments? What are the distributional consequences of these protectionist measures? We address these questions with a dynamic two-country general equilibrium framework that incorporates firm heterogeneity, trade, and the offshoring of tasks. By calibrating the model to the contexts of the US and China, we explore the effects of three popular industrial policies: import tariffs, domestic production subsidies, and entry subsidies. Our findings indicate that, from an initial state free of interventions, myopic policymakers are incentivized to subsidize production, while more forward-looking ones favor imposing import tariffs. Although all of these policies initially reduce wage inequality, some result in aggregate welfare losses, either in the short run or the long run. |
| Keywords: | Macroeconomic dynamics; Firm heterogeneity; Trade; Trade-in-tasks; Industrial policies; Welfare; Global value chains |
| JEL: | F23 F41 F51 F62 L51 |
| Date: | 2024–11–26 |
| URL: | https://d.repec.org/n?u=RePEc:san:econdp:2504 |
| By: | Wang, Yitian (Department of Economics, Monash University, Clayton, Australia); Vespignani, Joaquin (Tasmanian School of Business & Economics, University of Tasmania); Smyth, Russell (Department of Economics, Monash University, Clayton, Australia) |
| Abstract: | Accelerating transport electrification is vital for net-zero goals, yet remains hindered by slow, uncertain development of battery minerals. We show how non-technical risk, such as policy, regulatory, social, and geopolitical risk, inflate capital costs, delay greenfield supply, and heighten price volatility for lithium, cobalt, nickel, manganese, graphite, and copper. Combining Fraser Institute investment scores with reserve shares of these critical minerals, we construct dynamic, mineral-specific risk premiums, derive an optimal stockpiling rule balancing risk and storage costs and introduce a distance-to-iso-cost map comparing recycling and stockpiling strategies. Our framework suggests that in 2040 recycling-led stabilization will be the optimal strategy for mitigating non-technical risk for Japan and Korea, strategic stockpiling will be the optimal strategy for China and the United States, and mixed outcomes for Europe. The method that we propose provides a tractable and updateable toolkit for deciding optimal stockpiles and prioritising recycling where it is most cost-effective. |
| Keywords: | economics; finance; energy economics |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tas:wpaper:60464201 |