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on China |
| By: | Shuhei Nishitateno; Yasuyuki Todo |
| Abstract: | China's Belt and Road Initiative (BRI) has driven a global surge in large-scale infrastructure projects. While existing research has focused primarily on the BRI's effects on economic outcomes in participating countries, such as investment, trade, and debt dynamics, its economic and diplomatic implications for Western nations that do not participate in the BRI yet compete with China in global infrastructure development remain underexplored. This study addresses this gap by examining how the BRI has affected Japanese overseas infrastructure projects and Japan's diplomatic engagement with BRI countries. Using an event-study framework within a staggered difference-in-differences design and a panel of 123 low- and middle-income countries from 2007 to 2020, we find that the BRI significantly crowded out Japanese infrastructure projects and reduced visits to Japan by political leaders from BRI countries. These effects are especially pronounced among countries geographically proximate to Japan and China, where competitive pressures are most intense. Â |
| Keywords: | China, Japan, Belt and Road Initiative, overseas infrastructure investment, diplomatic relations |
| JEL: | F21 O19 P00 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:pas:papers:2026-05 |
| By: | Yeling Tan (Peterson Institute for International Economics) |
| Abstract: | Traditional conceptions of export- or domestic investment-led growth no longer appropriately capture the dynamics shaping the Chinese economy. Rather, China has adopted a model in which national security logic increasingly underpins economic policy. This paper first outlines the main components of this growth model: a dual circulation strategy for balancing between external and domestic demand, a domestic industrial strategy premised on self-reliant innovation, and a legal and regulatory toolkit to respond to perceived acts of economic coercion from abroad. It then identifies potential implementation challenges and tensions emerging from such a growth strategy and discusses the ways these tensions might deepen the US-China security dilemma. The paper concludes with policy recommendations for mitigating these security dilemma risks, through unilateral and bilateral actions, some of which could be based on core principles in multilateral trade regimes. |
| Keywords: | China, economic security, security dilemma, weaponized interdependence |
| JEL: | F02 F50 F68 O53 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp26-15 |
| By: | Rodriguez-Clare, Andres; Ulate, Mauricio; Vasquez, Jose P. |
| Abstract: | We present a dynamic quantitative trade and migration model that incorporates downward nominal wage rigidities and show how this framework can generate changes in unemployment and labor participation that match those uncovered by the empirical literature studying the “China shock.†We find that the China shock leads to average welfare increases in most U.S. states, including many that experience unemployment during the transition. However, nominal rigidities reduce the overall U.S. gains by around two thirds. In addition, there are 18 states that experience welfare losses in the presence of downward nominal wage rigidity that would have experienced gains without it. |
| Keywords: | Downward nominal wage rigidity; China shock; Quantitative trade models |
| JEL: | F16 F40 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19222 |
| By: | Hinh T. Dinh |
| Abstract: | This paper examines the evolution of China’s services sector between 2012 and 2022, analyzing the country’s structural transformation based on a novel three-tier taxonomy: knowledge services (KS), enabling services (ES), and local services (LS). Using sixteen quantitative indicators from OECD databases, the study evaluates China’s transition in comparison to the EU15 benchmark, highlighting three core challenges: manufacturing rebalancing, labor absorption, and global integration. Three primary findings emerge. First, while manufacturing’s share of GDP in China has stabilized at approximately 29% due to active industrial policy, manufacturing employment has decoupled from output as automation has reduced labor intensity. Second, the services sector has absorbed this released labor, but the composition is problematic: local services (LS) have absorbed the bulk of new jobs at low productivity levels, while high-productivity gains in enabling services (ES) have generated limited direct employment. Knowledge services (KS) remain dynamic but are currently too small and skill-constrained to serve as a primary growth engine. Third, China’s external posture has shifted toward an ‘inward turn’ in direct services exports, countered by a strengthening indirect upstream channel via which producer services are increasingly embedded in other countries’ exports. The paper concludes that China faces a critical productivity/employment trade-off: a transition dominated by local services preserves social stability through job creation, but risks a structural ceiling on aggregate growth. Successful rebalancing will require resolving the structural conditions—specifically skill availability, geographic matching, and openness to foreign inputs—necessary to scale high-productivity knowledge services. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pp29_26 |
| By: | Jorrit Gosens; Alex B. H. Turnbull; Frank Jotzo |
| Abstract: | There is renewed attention for maritime chokepoints and their potential disruption of global trade in energy. We analyse global trade in coal, and find that it is highly resilient to maritime chokepoints. Feasible chokepoints do not truly sever any supply from the seaborne market. Potential re-routing of trade flows, and switching to alternative suppliers or consumers moderates effects on costs and revenues. We assess costs to importers would rise by as little as 0.5 \$/t or less in case of closures of most feasible chokepoints. The exception is a restriction to maritime traffic in the South and East China Sea, which could raise costs by 10 \$/t for China, whilst reducing costs for other importers in the region by similar levels. Maritime chokepoints do create geographical separation of regional markets, and therefore do not have a globally uniform effect on costs to importers and revenues to exporters. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.00328 |
| By: | Josh Kirk; Evgenia Passari; Hélène Rey |
| Abstract: | Trade networks underpinning the energy transition are endogenous economic objects, and their structure is a source of market power. Using bilateral trade data for thirteen electrification metals over 1995–2023, we show that trade in these materials has reorganised into a hub-and-spoke system centred on China, in sharp contrast to the diffuse, multilateral structure of fossil fuels. This centrality did not follow from resource endowments: China holds few of the underlying reserves. It was built through processing investment, industrial policy, and commodity-targeted development finance—an equilibrium outcome rather than a geographical accident. We formalise this in a stylised model in which a country chooses how central to become, and show that centrality maps into pricing power: the world price response to a strategic supply cut is stronger when the network is more concentrated and downstream demand and fringe supply are more inelastic. Constructing text-based, commodity-specific supply shocks and estimating local projections, we find that supply contractions in critical metals raise US and EU consumer prices by roughly twice as much as comparable fossil-fuel shocks, and more persistently. Centrality is therefore not merely descriptive: it creates leverage over global prices. The green transition reduces strategic dependence on hydrocarbon exporters but reconstitutes it around mineral supply chains. |
| JEL: | F49 F50 F60 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35497 |
| By: | Marcus Vinicius de Freitas |
| Abstract: | This policy paper explores how China’s economic development model—rooted in pragmatism, long-term planning, and civilizational renewal—has become its most compelling soft power asset, particularly in the eyes of the Global South. While critically engaging with Joseph Nye’s original conception of soft power as a primarily cultural and normative force, the paper argues that China’s ability to transform itself from an impoverished postimperial state into the world’s largest trading nation constitutes a far more persuasive and concrete form of attraction. Drawing on the historical context of China’s “Century of Humiliation”, the paper emphasizes the distinctiveness of the Chinese response—not one of nostalgic paralysis, but of strategic rejuvenation. Rejuvenation, as opposed to mere modernization, is presented as a deeply internal, spiritual, and civilizational force that animates the Chinese development project and distinguishes it from other postcolonial experiences. Additionally, the paper identifies key lessons from the Chinese model, including the strategic role of the state, the necessity of long-term and quantifiable development goals (such as GDP per capita targets), the centrality of public education and national security, the importance of meritocratic leadership, and the cultivation of national industries aligned with strategic vocation. These insights are positioned as highly relevant for countries in Latin America and Africa seeking to move beyond dependency and reclaim their development trajectories on sovereign and dignified terms. Ultimately, the paper calls for a new grammar of global development—one that places excellence, integrity, rejuvenation, and purpose at its core, and where multipolarity is not just a geopolitical condition but a civilizational imperative. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:pp20_26_1 |
| By: | Hanming Fang; Chang Liu |
| Abstract: | Total fertility rates in East Asia have fallen to levels without historical precedent, even though the region’s Confucian heritage long placed extraordinary emphasis on family continuity and large families. We argue that this “Confucian Fertility Paradox” dissolves once we separate two strands of the tradition and recognize that modernization affected them very differently. The pro-natal strand, built on lineage continuity, ancestor worship, and reliance on sons for old-age support, was gradually switched off as child mortality fell, incomes rose, women entered the labor force, and state pensions replaced the family as the main source of security in old age. What survived was the second strand: the veneration of education and of status won through examination success, rooted in the imperial examination tradition. Under modern conditions this surviving strand reverses sign with respect to its effect on fertility. Where the historical examination system rewarded having many sons so that one might succeed, the modern single-ranking tournament rewards concentrating resources on one or two intensively educated children, and the quantity–quality tradeoff turns a once pro-natal culture into a powerful engine of low fertility. Drawing on recent empirical evidence from China and Korea, we show how education competition becomes the channel through which traditional values now suppress childbearing. We explain why standard pro-natalist policies, such as removing birth restrictions or offering cash subsidies, accomplish little when the underlying problem is a competitive equilibrium in parental investment, and we argue that policies aimed at the source of the distortion, such as structural reform of educational pathways, hold more promise. |
| JEL: | J1 J10 J13 J18 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35532 |
| By: | Deborah Gefang; Stephen G. Hall; George S. Tavlas |
| Abstract: | We examine how macroeconomic and geopolitical developments in the United States, the euro area, and China affect the currency composition of central banks' foreign exchange reserves. Using an unbalanced panel of reserve shares for 53 countries over 1999-2023, we estimate a constrained system of equations that explicitly imposes the adding-up restriction on reserve shares. The results indicate substantial persistence in reserve holdings and significant cross-currency dependence, supporting a system-wide dynamics of reserve composition. In the country fixed-effects specification (1) issuer economic size, (2) uncertainty, (3) sanctions, (4) trade linkages, and (5) issuer credibility are significantly associated with reserve allocation across currencies. With the inclusion of year fixed effects, the persistence and cross-currency dependence remain, while trade linkages and sanctions emerge as the most important determinants of reserve composition. The results highlight the importance of accounting for the compositional nature and interdependence of reserve shares when examining the determinants of global reserve holdings. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.24468 |
| By: | Tao, Yingnian (Lancaster University); Ryan, Mark |
| Abstract: | Corporations’ sustainability communication is increasingly challenged by digital publics. Yet research on how netizens contest corporate sustainability narratives, and thereby construct environmental meanings, remains largely confined to Western contexts. This study addresses this gap by examining Chinese netizens’ discursive responses to a controversial fireworks display in the Himalayas staged by international mountaineering brand Arc’teryx. Comments from the seven most popular Weibo posts were selected to compile a corpus (140, 584 tokens), and analysed through corpus-assisted discourse analysis, particularly keyword and concordance analysis. Findings show that netizens mobilise multiple meaning systems to express strong disapproval, including scientific ecological knowledge, perceptions of environmental governance failure, spiritual-cultural references, consumer action, and nationalism. These interconnected meaning systems converge around a distinctive feature of Chinese digital environmentalism: a nature-centred view of human-nature relations and harmony. The study extends understanding of digital environmentalism beyond Western contexts by showing that environmental meanings in Chinese digital spaces are place- and culture-based, intertwining ecological concerns with emotion, spiritual wellbeing, perceptions of justice, and national interests. |
| Date: | 2026–08–11 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:dr9z3_v2 |
| By: | Fetzer, Thiemo; Lambert, Peter John |
| Abstract: | Policy debates on ‘critical minerals’ have multiplied faster than our empirical tools for identifying which products are system-critical. Most existing lists are expert-driven and static; they say little about how upstream raw materials and downstream technologies are knit together in global production networks, or about the asymmetric roles of large demand and supply hubs. This paper proposes a network index of criticality (NIC), built from trade data and a directed production network, that integrates (i) a product’s share in world trade, (ii) exporter and importer concentration, and (iii) its position in a product-input network. Criticality here refers to systemic exposure encoded in tradeable production networks; it is not a welfare metric and it is not a measure of physical scarcity. We show that NIC aligns with revealed policy attention in official critical-mineral lists. We then construct three families of counterfactuals that remove China, the United States, or the European Union from trade on either the export (supply) or import (demand) side. These scenarios yield product-level diagnostics of hub dependence and map directly to policy instrument choice (e.g. recycling standards, permitting and processing investment, strategic reserves, or trusted-partner agreements). |
| Keywords: | climate action;critical minerals;industrial policy;production networks;supply chain resilience;trade concentration |
| JEL: | F10 F40 F50 O30 L60 Q40 Q50 |
| Date: | 2026–08–04 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140668 |
| By: | Harald Fadinger; Lei Li; Sophia Praetorius; Jan Schymik |
| Abstract: | We study how the U.S.–China trade war affected manufacturing activity in third countries using a novel plant-level dataset covering millions of establishments in 50 major economies, including affiliates of more than 200, 000 multinational enterprises (MNEs). Combining establishment-level data with detailed tariff information, we estimate the effects of U.S. and Chinese punitive bilateral output and input tariffs on sales, employment, and establishments across countries, industries, and stages of production. We find that third-country effects of the trade war are highly heterogeneous and largely offsetting, yielding moderately negative net effects overall. Most of the adjustment is driven by multinational enterprises reallocating activity across affiliate networks, while domestic firms respond much less. |
| Keywords: | global value chains, firm location choice, multinational enterprise, trade policy, tariffs, tariff elasticity, upstreamness, downstreamness, output tariffs, input tariffs, third-country effects of trade policy |
| JEL: | F13 F14 F23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12942 |