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on China |
| By: | Illenin O. Kondo; César Sosa-Padilla; Zachary J. Swaziek |
| Abstract: | China's rise as a major lender to emerging economies since the early 2000s has introduced a unique form of lender power: borrowers cannot default on the subsidized loans they receive, but may still face sudden rollover demands outside their control. We argue this distinctive structure—bilateral rollover risk without default risk—disciplines recipient countries' borrowing on international markets. In a quantitative long-term sovereign debt model, we show that such rollover-prone nondefaultable Chinese loans expose market debt to dilution risk: governments may need to tap international lenders when repayment to China comes due, and therefore choose to deleverage from private markets when Chinese inflows arrive. Market debt and bond yield dynamics in the data are consistent with this “disciplining effect.” We then use the model to study two geopolitical scenarios: a bloc-formation exercise in which China offers take-it-or-leave-it loans to induce the borrower's exit from international debt markets, and an optimal exposure-to-China problem under the risk of a permanent and sudden retrenchment of Chinese funding. Together, these results show how official finance à la China can simultaneously improve market borrowing conditions and become a new destabilizing force to the global sovereign debt architecture as geopolitical alliances shift. |
| JEL: | F34 F41 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35767 |
| By: | Yi Fan; Junjian Yi; Junsen Zhang |
| Abstract: | In this chapter, we provide a synthesis of empirical work on the intergenerational mobility in China, examining how much a child's success depends on their parents' success. We start with an overview of data sources and measure of intergenerational mobility in China's context, followed by discussion on the empirical findings in five categories of intergenerational mobility: income, education, social class, wealth, and health. Major channels of transmission of socioeconomic status across generations are investigated, including human and social capital, fertility and migration decision, housing price and trade liberalization in the market transition, and belief. Finally, we provide policy implications to promote upward mobility for children born to less advantaged parents in China's context. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.19033 |
| By: | Zongwu Cai (Department of Economics, The University of Kansas, Lawrence, KS 66045, USA); Muxuan Sun (School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China); Jing Yuan (School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China); Luping Zhang (School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China) |
| Abstract: | This paper integrates the theory of industrial structure evolution, factor allocation theory, and digital platform employment theory to construct a regional general equilibrium model encompassing both industrial and service sectors. It systematically delineates the transmission pathways through which artificial intelligence (AI) and the gig economy affect the transformation and upgrading of industrial structures. Utilizing panel data from 30 provinces in China spanning the period 2014 to 2024, we construct comprehensive indices for AI and the gig economy to systematically examine their impacts on industrial structure upgrading. Our empirical findings reveal three key insights: First, AI and the gig economy significantly promote the upgrading of industrial structures. Second, the impact exhibits substantial regional heterogeneity. Specifically, the promotion effect is significant in western China, insignificant in central China, and exhibits a marginally negative effect in eastern China. Third, both the employment structure and the level of technological innovation serve as full mediators in this process, with technological innovation acting as the core pathway through which the gig economy empowers industrial advancement. |
| Keywords: | Artificial Intelligence; Gig Economy; Industrial Structure Upgrading; Regional Heterogeneity; Mediating Effect |
| JEL: | O33 O14 R11 C33 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:kan:wpaper:202617 |
| By: | Estelle X Liu; Jibingxin Han |
| Abstract: | China's urban housing system is structurally segmented: market-based residential housing accounts for only about 40 percent of occupied urban dwellings, with the remainder split between rental and legacy housing acquired outside the market. Using 2000–2020 Population Censuses and the 2019 China Household Finance Survey, this paper documents that housing tenure is systematically associated with distinct household consumption patterns. Conditional on income, wealth, and household characteristics, legacy homeowners exhibit lower discretionary consumption and higher income responsiveness than renters, while market homeowners' consumption is closely tied to housing wealth. These patterns are stable across survey waves and broadly consistent with panel-based evidence, pointing to structural balance-sheet differences across residential regimes as important correlates of household consumption behavior in China. |
| Keywords: | China; housing market; housing misallocation; household consumption; affordability; household balance sheets |
| Date: | 2026–09–18 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/193 |
| By: | Tao Wang (EM - EMLyon Business School) |
| Abstract: | Painted horses and floating signifiers: How China talked its way into capitalism Review of Yuan Li (2024) China's Capitalist Transformation: The Rhetoric That Mattered. Berlin/Boston: De Gruyter. |
| Date: | 2026–08–23 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05731820 |
| By: | Federica Coelli; Difei Ouyang; Weidi Yuan; Yuan Zi |
| Abstract: | This paper shows that human capital accumulation can accelerate structural transformation without accelerating growth. We study China's 1999 higher education expansion, a large, rapid, and largely unanticipated increase in college graduates. We find that more exposed prefectures experienced larger increases in the skilled-labor share and shifted employment and value added from agriculture toward services. The reallocation extended to low-skilled workers. Consumer services absorbed most of the increase in employment, while producer services accounted for a disproportionate share of high-skilled employment growth. Yet more-exposed prefectures did not grow faster. A four-sector model rationalizes these patterns, showing how greater skill supply can generate broad-based servitization, but also a Baumol-type growth penalty when labor reallocates toward slower-growing sectors. Our findings highlight that the payoff to higher education depends not only on how much skill it creates, but also on whether the resulting structural transformation directs resources toward the economy’s engines of productivity growth. |
| Keywords: | human capital, structural transformation, higher education expansion, servitization, China |
| JEL: | I25 J24 L16 O11 O14 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13003 |
| By: | Andreas Baur; Lisandra Flach |
| Abstract: | Key MessagesEU tariffs on China are no silver bullet. They carry economic costs and unintended side effectsTariffs might raise the cost of imported inputs, weakening export-oriented manufacturers compared to foreign rivalsThe reach of countervailing duties is limited: they do not apply in third markets, where European manufacturing sells around a quarter of its output and still faces Chinese competitionRather than shaping its China policy on its own, the EU should actively seek allies; it should therefore avoid measures that hit the very partners it needs |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpb:_87 |
| By: | Pablo Aguilar (European Central Bank); Matthieu Darracq Pariès (European Central Bank); Alistair Dieppe (European Central Bank); Rubén Domínguez-Díaz (Banco de España); Antonio Eugenelo (University of Oxford); José-Elías Gallegos (Banco de España); Javier Quintana (Banco de España) |
| Abstract: | We study the short-run macroeconomic transmission of a US-China tariff war in an open economy multi-sector New Keynesian model with input-output linkages, sectoral nominal rigidities and heterogeneous currency invoicing. A reciprocal 10 percentage point tariff increase generates asymmetric incidence: the tariff-imposing country bears more of the inflationary burden, while the targeted country experiences the larger output contraction. Production networks amplify this contraction by propagating the shock beyond the directly tariffed bilateral margin. Currency invoicing further shapes transmission. Under heterogeneous invoicing, dollar-denominated border prices weaken the expenditure-switching role of exchange rates, deepening the contraction in China relative to producer-currency pricing and altering third-country spillovers. The euro area response is small in the aggregate, but only because positive trade-diversion margins are offset by weaker demand from China and multilateral adjustments. We then exploit the model’s sectoral structure by imposing tariffs on one Chinese sector at a time. Sectoral incidence is highly concentrated, but aggregate effects cannot be inferred from the directly tariffed sector alone: domestic propagation offsets own-sector gains in the United States, reinforces own-sector losses in China and leaves the euro area as a net object shaped by opposing trade margins. The results show that tariff incidence depends jointly on where the tariff lands, how the shock propagates through production networks and how invoicing governs border-price adjustment. A framework that combines these margins delivers a materially different assessment from one built on bilateral trade shares alone. |
| Keywords: | tariffs, trade, dynamic stochastic general equilibrium, multicountry, networks, dominant currency pricing |
| JEL: | E31 E32 E52 F13 F41 F42 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2632e |
| By: | Lingyu Kong (Adelaide University); Qixia Xu (Zhongnan University of Economics and Law) |
| Abstract: | We show that employee training in Republican-era Chinese banks served not just to build skills but to stabilize institutions and align workforce behavior with evolving organizational goals. Despite operating in skill-rich environments with simple job tasks, banks invested heavily in hierarchical training systems to maintain internal labor markets, enforce ethical conduct, and foster merit-based promotion. Training functioned as a mechanism for employee monitoring, governance control, and symbolic commitment to long-term employment. This reframing challenges human capital theory and contributes to a richer historical understanding of training as an organizational control mechanism, emphasizing its symbolic and structural significance in employment relations. |
| Keywords: | On-the-job training; Republican China banking; Internal labor markets; Employee monitoring; Job rotation |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:adl:wpaper:2026-08 |
| By: | Mélanie Coueffé |
| Abstract: | China’s share of French imports has been rising for several years, against a backdrop of growing trade tensions. A comparison between the structure of imports from China and that of domestic production shows that Chinese competition is putting pressure on a number of industries. Conversely, certain sectors could benefit from lower-cost imported inputs. <p> La part de la Chine dans les importations françaises progresse depuis plusieurs années, dans un contexte de tensions commerciales croissantes. La comparaison entre la structure des importations en provenance de Chine et celle de la production nationale montre que la concurrence chinoise pèse sur quelques branches. À l’inverse, certains secteurs pourraient bénéficier d’intrants importés à moindre coût. |
| Date: | 2026–09–28 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:econot:460 |
| By: | Kenney, Martin |
| Abstract: | Abstract The global transition toward electric vehicles and renewable energy represents a fundamental shift in the world’s techno-economic paradigm. Drawing on discussions during my June 2026 visit to ETLA in Helsinki, this brief argues that the true engine of this transformation is the battery, the foundational technology uniting production and consumption in the emerging electric age. This memorandum is published alongside a companion brief by Petri Rouvinen (2026) examining the EU’s response to this shift, the proposed Industrial Accelerator Act (IAA). Through decades of deliberate industrial policy, China has secured command over the entire clean technology triad of solar power, batteries, and electric vehicles. Meanwhile, Western automakers, particularly in the United States, risk being stranded on a shrinking island of internal combustion engine technology amid political whiplash. In this brief, I synthesize the mechanisms driving China’s rise, examine the strategic implications of the electric technology stack, and offer insights for decision-makers seeking to build a competitive and resilient industrial future. |
| Keywords: | Electric vehicles, Battery supply chain, Geopolitics, Industrial policy, Energy transition |
| JEL: | F13 L52 L62 O38 Q42 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:rif:briefs:188 |
| By: | Benedikt Heid (Universitat Jaume I); Kumuthini Sivathas (The University of Adelaide) |
| Abstract: | In the coming decades, Europe’s and China’s population will shrink, whereas other world regions will experience continuing population growth. Similarly, productivity growth will differ across developing and developed economies, leading to changes in future market sizes across countries. These changes will reshape countries’ attractiveness as partners in free trade agreements (FTAs), impacting the geopolitical influence of economies like the European Union (EU) and China. Standard methods for evaluating FTAs abstract from these changes in market sizes. We use population and productivity projections to evaluate the welfare effects of future trade agreements as a function of market size. We apply our method to a potential EU-China FTA. For the EU, we find that as the EU’s market size grows by 7.46% between 2025 and 2050, the welfare effect of a potential EU-China FTA increases by 23.8%. For China, a projected market size increase of 32.53% leads to a 13.3% decrease in the welfare effects of the FTA. We show that total factor productivity growth is a more relevant driver of welfare changes than population dynamics, suggesting that policy makers should prioritize future productivity growth when evaluating future trade agreements. |
| Keywords: | quantitative trade theory, trade predictions, population growth, productivity growth, EU-China trade. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:adl:wpaper:2024-04 |
| By: | Jayun Lee (Korea Institute for Industrial Economics and Trade) |
| Abstract: | China’s low-altitude economy is an emerging composite industry centered on the low-altitude flight of manned and unmanned aircraft, including drones (unmanned aerial vehicles, or UAVs) and electric vertical takeoff and landing (eVTOL) aircraft, and combined with applied services in logistics, tourism, and urban management.<p> Since its elevation to a national strategic industry in 2024, policy, markets, and technology have advanced together at an accelerating pace, and being written into the 15th Five-Year Plan as a strategic emerging industry in 2025 has established it as a medium- to long-term national strategy. The market is expanding quickly, from CNY 670 billion in 2024 to roughly CNY 1.5 trillion, or about KRW 280 trillion, in 2025, and routine operations are spreading through logistics, tourism, and urban management.<p> The industry’s development rests above all on a three-tier division of labor that binds three things into a single working structure: institutional and standards design by the central government, pilot zones operated by local governments, and technology and service delivery by private fi rms. Korea has strong technological capabilities in drones and urban air mobility (UAM), but gaps remain in institutions, infrastructure, and supply chains.<p> Drawing on China’s experience, Korea needs to consider, step by step, building institutional foundations ahead of deployment, establishing city-scale demonstration systems, and pursuing cooperation on international certification. |
| Keywords: | low-altitude economy; drones; eVTOL; China; industrial policy; K-UAM |
| JEL: | L93 L52 O25 O33 O53 |
| Date: | 2025–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kietrp:023645 |
| By: | Dorfs, Wiebke; Hampel, Maximilian; Bryson, Joanna J. (Hertie School) |
| Abstract: | Technological progress plays a crucial role in international relations. In particular, innovation has long been theorized as instrumental to power transitions. It is therefore unsurprising that the return of China as a global superpower and its technological advances has triggered considerable discussion. One narrative that has emerged is that of a binary "AI Cold War" competition between China and the US, similar to the 1947-1991 competition between nuclear superpowers. Another though is that the digital and information revolutions should facilitate technology and therefore power diffusion. Here we examine the claim of a binary competition, examining the state and trajectory of global AI competition for the years 2018, 2019, 2021, 2022, 2023, 2024 and 2025. We use AI patents defended globally in the WIPO database and the market capitalization of the companies holding them as proxies for innovation and market power. We find that the binary narrative underestimates the strength of other actors globally, notably but not exclusively the European Union and Japan. These are comparable to China, and on the innovation metric with the US. In terms of market power, the US is a significant outlier, with an order of magnitude more capital concentration. Our research therefore indicates that any binary AI cold war narrative is not data-led. |
| Date: | 2026–09–05 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:nk7ja_v1 |
| By: | Chansik Yoon (Adelaide University) |
| Abstract: | I study how developing-country governments decide the amount, sources, and sectoral allocation of development finance (DF) as China has emerged alongside traditional donors. Using project-level data from nearly 110 countries (2000–2021), I document systematic patterns in DF allocation across countries, sectors, and providers that vary with corruption and monitoring intensity. I develop a growth model in which governments allocate DF while choosing how much investment to divert under provider-specific monitoring and financing conditions. Calibrating the model to 108 countries shows heterogeneous welfare implications of Chinese DF: about 15% of countries gain while roughly 55% experience welfare losses. |
| Keywords: | Foreign aid;Growth;Development;Chinese lending; Corruption; Institutions; Public investment; Development assistance |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:adl:wpaper:2026-03 |
| By: | Pol Antràs; Adrian Kulesza; Andrea F. Presbitero |
| Abstract: | We study how the U.S.-China trade war has reshaped global trade patterns, creating significant spillovers to third countries. Using recent tariff policy changes and monthly international trade flow data, we document a redirection of Chinese exports away from the U.S. market and toward third countries. To interpret the impact of these reallocations on third countries, we introduce a taxonomy that separates four exposure margins - export competition, import competition, consumer gains, and sourcing gains - and construct theoretically-derived indices that map countries into these channels. Recent work often proxies such exposure with trade-basket similarity. We show why this can be problematic: similarity measures are symmetric and omit the size of product-specific shocks, Chinese market penetration, substitution elasticities, and incidence weights. Our model-based indices therefore generate country rankings that differ substantially from conventional similarity measures. |
| JEL: | F1 F2 F4 F6 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35785 |
| By: | Fang, Guanfu (School of Business, Shanghai University of International Business and Economics); Qian, Benyu (School of Economics, Jinan University); Zhao, Zhong (Renmin University of China) |
| Abstract: | This paper examines the labor market effects of China's After-School Care policy—commonly known as the After-School 3:30 PM Service reform—on maternal employment and earnings. Introduced in 2017, the policy addresses the longstanding mismatch between early school dismissal times and standard work schedules by extending on-campus supervision and enrichment activities into the late afternoon. Exploiting the staggered rollout of the program across counties and over time, we show that the policy significantly increases mothers' labor supply and earnings. We document null effects for fathers. The policy operates by reducing maternal housework time, enabling longer commutes, and facilitating access to formal employment, while also inducing firms to increase job postings for female workers. Effects are concentrated among mothers with egalitarian gender attitudes, with minimal impact on those holding traditional views. |
| Keywords: | after-school care, maternal labor supply, gender norms |
| JEL: | J13 J16 J18 J22 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18949 |
| By: | Zongwu Cai (Department of Economics, The University of Kansas, Lawrence, KS 66045, USA); Ying Fang (The Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen, Fujian 361005, China and Department of Statistics & Data Science, School of Economics, Xiamen University, Xiamen, Fujian 361005, China); Ming Lin (The Wang Yanan Institute for Studies in Economics, Xiamen University, Xiamen, Fujian 361005, China and Department of Statistics & Data Science, School of Economics, Xiamen University, Xiamen, Fujian 361005, China); Zeqin Liu (School of Statistics, Shanxi University of Finance and Economics, Taiyuan, Shanxi 030006, China) |
| Abstract: | We review applications of large language models (LLMs) in economic and financial research, focusing on text analysis and variable construction, forecasting and decision support, simulation of economic agents, and research assistance and automation. We examine what researchers use LLMs to do, how the reported results compare with existing methods, and what limits their use. Contextual interpretation improves several classification tasks, but variable construction and measurement error affect subsequent analysis. Some forecasts improve on benchmarks, although gains vary and predictive signals need not yield trading profits. Human observations help calibrate agents and improve predictions of survey responses. Automated systems generate economic mechanisms and connect empirical analysis with drafting, while researchers still judge questions and explanations. We then discuss future directions for improving research quality and making better use of researchers' expertise. |
| Keywords: | Large language models, text analysis, economic forecasting, economic agent simulation, research assistance and automation |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:kan:wpaper:202618 |