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on China |
| By: | Bumsoo Kim; Marc De la Barrea; Masao Fukui |
| Abstract: | We develop a dynamic quantitative model of trade and labor adjustment, incorporating nominal wage rigidity and consumption–saving decisions, to study how China’s currency peg interacted with its rapid growth in shaping the US economy. We show that the peg temporarily boosts China’s export growth by preventing an appreciation of the Chinese currency, thereby amplifying the US labor-market consequences of the China shock. At the same time, the temporary export boom increases China’s savings and leads to a larger US trade deficit. Calibrating the model to match trade and labor-market flow data, we find that China’s currency peg played a quantitatively important role in the US manufacturing decline, the widening US trade deficit, and unemployment dynamics. These results underscore the importance of exchange-rate adjustment (or the lack thereof) for understanding trade shocks. We also find that the overall welfare impact of the China shock remains significant and positive. |
| JEL: | F0 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34823 |
| By: | Isabella Damiani (LIMEEP – PS - Laboratoire Interdisciplinaire sur les Mutations des Espaces Économiques et Politiques – Paris Saclay - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - Université Paris-Saclay); Marie Hiliquin (TVES - Territoires, Villes, Environnement & Société - ULR 4477 - ULCO - Université du Littoral Côte d'Opale - Université de Lille) |
| Abstract: | This article examines the role of Khorgos, a special economic zone located on the border between China and Kazakhstan, within the framework of China's Belt and Road Initiative (BRI). In less than a decade, Khorgos has become a strategic hub for rail freight between China and Europe, increasing from 25 trains in 2013 to more than 8, 700 in 2024, reflecting China's efforts to strengthen overland connectivity and establish alternative corridors to maritime trade. This paper, drawing on satellite data and spatial analysis through remote sensing, focuses on three main dimensions. First, it analyses the peripheral urbanisation of the city of Khorgos, which is embedded in China's territorial strategies to connect the western region to the rest of the country through infrastructure development, securitisation, and territorial control. Second, it situates Khorgos within a regional scale, namely the Khorgos-Yining-Qingshuihe economic complex. This analysis highlights the functional division of employment between Yining, the true administrative centre, Qingshuihe as the production core, and Khorgos, which remains primarily a transit point for Chinese exports, thereby illustrating an asymmetry in cross-border exchanges with Kazakhstan. Third, the paper examines territorial production and environmental differentiation. Remote sensing analyses reveal pronounced asymmetries in land use and ecological transformations between the Chinese and Kazakh sides of the border: China has developed a diversified and tightly regulated territorial model, combining urban and agricultural infrastructures, whereas the Kazakh side remains less structured and less developed. Chinese ecological initiatives, such as photovoltaic projects and urban greening policies, further reinforce cross-border territorial asymmetries and raise critical questions about the actual impacts of the BRI and the associated "win-win" cooperation rhetoric. |
| Keywords: | Climate change, Urban planing, Borders, Kazakhstan, China, Belt Road Initiative, Khorgos |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05486194 |
| By: | Jin, Wenchao; Jin, Zhangfeng |
| Abstract: | How do institutional barriers to migration shape fertility in developing economies? We analyze the staggered removal of institutional barriers to rural-to-urban migration across 283 Chinese cities. We find that reducing these frictions led to a significant and persistent increase in fertility in sending rural communities. The average treatment effect is 0.011 newborns per household per year, representing approximately one-third of the sample mean. To interpret this result, we develop a unified household model endogenizing fertility and partial migration. The model identifies a positive income effect (higher expected lifetime earnings) that dominates the substitution effect (opportunity cost of time). Empirically, we show that the fertility response is concentrated in households with available grandparents and prior migration experience. This suggests that informal childcare provision is critical in neutralizing the time costs of migration, allowing rural households to realize the fertility gains from improved economic opportunities. These findings challenge the view that urbanization necessarily reduces fertility, highlighting instead how mobility restrictions acted to suppress fertility. |
| Keywords: | migration barriers, fertility, China |
| JEL: | R23 J13 J22 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1718 |
| By: | James J. Heckman; Haihan Tian; Zijian Zhang; Jin Zhou |
| Abstract: | Dynamic complementarity is the concept that past investments that lead to higher stocks of skill at one age promote the growth of skills from investment at that age. We define and provide evidence on dynamic complementarity using unique Chinese data from a home visiting program for young children targeted to parents in rural China. In addition, we investigate growth in learning due to innate, parental, and environmental factors that occur in the absence of any formal intervention. |
| JEL: | C1 C5 D83 J01 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34833 |
| By: | International Monetary Fund |
| Abstract: | Despite being buffeted by multiple shocks, the Chinese economy has shown remarkable resilience and continues to be a significant driver of global growth. China’s growth model, which has historically delivered impressive gains, now faces challenges. The protracted adjustment in the property sector and spillovers to local government (LG) finances, amid a debt overhang, have led to continued weakness in domestic demand and deflationary pressures. The deficiency in domestic demand has been mitigated by strong export growth, in part supported by real exchange rate depreciation reflecting weaker inflation in China relative to trading partners. Higher net exports have also resulted in the emergence of external imbalances, with adverse spillovers to trading partners. China’s large economic size and heightened global trade tensions make reliance on exports less viable for sustaining robust growth going forward. Furthermore, state-led and debt-financed investment and unwarranted industrial policy support have resulted in weakening productivity, build-up of financial vulnerabilities, and excess supply in some tradable sectors. Other structural challenges, including an aging population, will also weigh on the economy over the medium term. Recognizing these challenges, the authorities have implemented various welcome policy measures and appropriately highlighted the importance of boosting domestic demand, especially consumption. Nevertheless, the policy measures implemented thus far remain modest relative to the scale of the challenges. |
| Date: | 2026–02–18 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfscr:2026/044 |
| By: | Hale Utar |
| Abstract: | Using administrative longitudinal firm- and plant-level data from Mexico that links manufacturing firms to their customs records and covers the period 2014–2023, I examine whether US tariffs targeting China have contributed to a manufacturing revival in the southern part of North America. Leveraging the abrupt shift in US trade policy as a natural experiment, and constructing firm-level trade policy exposure measures based on firms’ pre-shock trade portfolios at the product level, I show that higher US tariffs on China significantly increased manufacturing output and employment. Adjustment occurs along both intensive and extensive margins, through expansion of existing plants and the establishment of new manufacturing plants by incumbent firms. Foreign multinationals and their domestic affiliates operating under Mexico’s export platform, IMMEX, drive these gains in manufacturing output and jobs, with U.S.-headquartered firms making a particularly notable contribution. The employment response is concentrated among production workers and technicians, particularly in technology-intensive industries embedded in North American supply-chains. These findings provide firm-level evidence that heightened import protection in the United States has stimulated manufacturing activity elsewhere in North America — namely, in Mexico. |
| Keywords: | trade war, global value chains, multinational firms, manufacturing, employment, nearshoring |
| JEL: | F13 F14 F23 F61 F68 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12425 |
| By: | Ho, Christine; McGarry, Kathleen |
| Abstract: | Adult children, especially sons, are often considered a linchpin of support to older parents in many patriarchal societies. We develop a model of transfers from adult children to older parents as existing in separate spheres depending on the child’s gender and type of transfer. Using data from the China Health and Retirement Longitudinal Study, we find strong evidence of such differentiation. Coresidential support comes almost exclusively from sons as do large transfers, while daughters are more likely to make smaller transfers. Interestingly, crowding-out of financial transfers by siblings occurs primarily within gender: sons give less when they have more brothers but not when they have more sisters, and daughters give less when they have more sisters but not when they have more brothers. This pattern is present for both in-kind and cash transfers, suggesting that support from adult children may not be substitutable between genders, even for relatively fungible currencies. |
| Keywords: | gendered public goods; old age support; separate spheres; son preference; AAM requested |
| JEL: | D13 J13 J14 J16 |
| Date: | 2025–02–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127537 |
| By: | Ralph Ossa; Stephen J. Redding |
| Abstract: | A central insight from neoclassical economics is that international trade operates like an improvement in production technology. It generates mutual aggregate welfare gains for countries as a whole, but creates winners and losers within countries. Tariffs are a tax on this trading technology and distort the prices faced by domestic consumers and producers. Large countries can use tariffs to improve their terms of trade on world markets. But if all countries try to do so, they can end up with lower welfare than if they cooperated to liberalize trade. Tariffs can be used to redistribute income between the winners and losers from trade within countries. But there can be other more efficient ways to achieve redistribution. Policies to promote economic activity in critical industries can be rationalized based on externalities or national security. But these arguments typically rationalize targeted policies towards those industries and tariffs can be dominated by other policy interventions. Empirical findings from the recent waves of US tariffs suggest that most of the incidence of these tariffs has been borne by US importers, wholesalers, retailers and consumers rather than by foreign exporters. These tariffs have led to a large-scale reorganization of US supply chains away from China to third countries. Although this reorganization has substantially reduced China's share of US imports, the US remains indirectly exposed to China through the imports of these third countries. |
| Keywords: | comparative advantage, tariffs, trade, and welfare |
| Date: | 2026–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2155 |
| By: | Jon Frost; Kumar Rishabh; Vatsala Shreeti |
| Abstract: | Globally, the largest artificial intelligence (AI) firms are based in the United States, China, Chinese Taipei, Korea and the Netherlands. These global AI giants account for an increasing share of total market capitalisation, capital expenditure and revenues in their respective jurisdictions. For many AI giants – and particularly those from the United States and China – scope and scale go together as they expand the breadth of their activities into multiple layers in the AI supply chain. |
| Date: | 2026–02–23 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:122 |
| By: | Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Russia’s full-scale invasion of Ukraine in February 2022 has triggered profound structural changes in the country’s economy, reshaping patterns of foreign trade, foreign direct investment and sectoral specialisation. This paper analyses the shifts in Ukraine’s trade and investment structures over the past three years and assesses their implications for Ukraine’s future competitiveness and for EU-Ukraine economic relations, with particular attention to the EU’s strategic autonomy in an increasingly fragmented global economy. The analysis shows a rapid reorientation of Ukraine’s merchandise exports towards the EU, driven by emergency trade liberalisation and alternative logistics routes, alongside a marked decline in exports to China. At the same time, Ukraine’s dependence on Chinese imports has intensified, especially for machinery and high-tech inputs critical to defence production, creating new security vulnerabilities. Agriculture has emerged as the most resilient export sector, while metallurgy and manufacturing have suffered lasting losses. Ukraine’s FDI inflows remain notably weak compared with regional peers, with limited progress in attracting investment into high-value and strategic sectors. The paper further examines Ukraine’s role in critical raw materials, renewable energy, agriculture and drone production, highlighting missed opportunities and emerging risks for the EU. It concludes that without faster, more co-ordinated EU engagement – particularly in critical minerals, green energy, defence-industrial integration and investment de-risking – the EU risks losing strategic influence in Ukraine and undermining its own long-term economic and security objectives. |
| Keywords: | Ukraine, the EU, China, the US, foreign trade, FDI, renewable energy, critical minerals, agriculture, competitiveness, security, DCFTA, CAP |
| JEL: | F10 F21 F50 F52 F55 O50 Q17 Q34 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:wii:pnotes:pn:103 |
| By: | Alexis Antoniades; Chuan He; Zheming Liang; Mingzhi Jimmy Xu |
| Abstract: | Early adoption of artificial intelligence (AI) reshaped how firms responded to market dynamics by enhancing data collection and analysis. Linking China's universe of customs shipments to millions of online job ads, we tracked AI hiring in sales, marketing, and analytics to build a firm-level proxy for non-production AI and map its exposure across products within firms. To structure our analysis, we introduce a model in which firms confront asymmetric information about heterogeneous consumer preferences and show that AI mitigates these frictions by sharpening firms' ability to learn demand patterns across markets. The model predicts — and the data confirm — that AI-intensive firms fine-tune their product mix and prices with greater precision: they are more likely to export, expand their product lines, and adjust market choices. Crucially, this refinement appears as narrower price dispersion but wider quantity dispersion across destinations — effects strongest for differentiated goods, larger firms, and sales to high-income economies. Together, the evidence shows that AI eases demand-side information frictions, allowing firms to optimize their global reach strategies. |
| Keywords: | artificial intelligence, export behavior, product differentiation |
| JEL: | F14 O14 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12456 |
| By: | Francisco Ferreira (London School of Economics); Paolo Brunori (London School of Economics); Pedro Salas-Rojo (CUNEF) |
| Abstract: | Researchers have sought to quantify the extent of inequality that is inherited from previous generations in multiple ways, including a large body of work on intergenerational mobility and inequality of opportunity. Many of the most frequently used approaches to measuring mobility or inequality of opportunity fit within a general framework which involves, as a first step, an estimation of the extent to which inherited personal characteristics can predict current incomes. We suggest a new method, within that broad framework, which is sensitive to differences across the entire conditional distributions of relevant population subgroups, rather than just in their means – a feature that makes it particularly well-suited to measuring ex-post inequality of opportunity. Sensitivity to differences in higher moments of the conditional distributions allow for a more comprehensive assessment of inherited inequality. We apply this approach to household income distributions in China, India, South Africa, and the United States, to illustrate how the method performs in different settings. We find that inherited inequality accounts for large shares of total inequality, from 36% in the United States to 59% in China, 62% in India, and 81% in South Africa. |
| Keywords: | Inherited inequality, opportunity, mobility, transformation trees, China, India, South Africa, United States |
| JEL: | D31 D63 J62 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2026-691 |
| By: | Wang, Shuaishuai; Meng, Jing; Li, Yitong |
| Abstract: | This article investigates how TikTok Shop reproduces the e‐commerce model of Douyin Shop against a backdrop of divergent regulatory challenges and geopolitical distrust. One of the strategic changes we observe in TikTok Shop is the shift of consumer goods suppliers from local merchants to China‐based sellers. The Chinese supply chain is thereby platformized into TikTok's global e‐commerce ecosystem through partnerships with local shipping, warehousing, and international settlements providers. Building on the paradigm shift from location analysis to spatial analysis, as proposed in existing scholarship, we argue that an analytical approach centered on the national origin of platforms obscures the corporate‐led, cross‐border deployment of resources, which scopes value spatially. Although transnational platforms may appear subordinate to state power under which they operate, there is a generative interplay between border‐bound components and borderless intangible assets such as data‐based digital intelligence. This interplay extends digital platforms both geographically and spatially by incorporating territory‐bound business actors into a reconfigured transnational space in pursuit of global profit. |
| Keywords: | digital globalization; livestream shopping; TikTok Shop; spatial analysis; e‐commerce; e-commerce |
| JEL: | L81 |
| Date: | 2026–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:136961 |
| By: | Eugenie Dugoua; Joelle Noailly |
| Abstract: | This paper examines the patterns and mechanisms of global clean technology diffusion over the last two decades. We document four stylized facts: uneven sectoral progress favoring power and light transport; China’s dominance in innovation and manufacturing; the role of modularity in driving cost declines; and limited adoption in developing economies. Through case studies of solar, electric vehicles, and hydrogen, we analyze how policy and infrastructure enable scale. Finally, we assess emerging challenges for the next phase of diffusion, including critical mineral constraints, artificial intelligence, and geopolitical fragmentation. |
| Keywords: | Clean technology diffusion, Climate change mitigation, Renewable energy, Industrial policy, Solar photovoltaics, Electric vehicles, Hydrogen |
| JEL: | O33 Q55 O25 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:wip:wpaper:95 |