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on China |
| By: | Lorenzo Garlanda-Longueville |
| Abstract: | Hong Kong has been China’s largest net banking creditor from 2009 to 2023, with an important decline starting in 2015. This paper presents an explanation for this decline and assess the impact of Chinese and US monetary policy on international positions between China and Hong Kong during this period, using a local projection approach. Our results indicate that a large part of the decline in the level of outstanding amounts can be attributed to the People’s Bank of China’s (PBoC) accommodative monetary policy and its direct consequence: the narrowing of the spread between Chinese interest rates and those of advanced countries. We explain this development by yield-seeking behavior on the part of international banks resident in Hong Kong. In line with recent literature on the transmission of Chinese monetary policy, we show that the PBoC now operates fully within a market interest rate logic and no longer through purely quantitative instruments (quotas, credit controls and reserve requirements). Finally, our results indicate that the effect of Chinese monetary policy on Hong Kong’s international banking assets is stronger than that of Fed policy, despite the currency peg to the dollar. |
| Keywords: | International Banking, Hong Kong, China, Monetary Policy |
| JEL: | E52 G21 F34 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2025-16 |
| By: | Hanhui Guan; K. Kivanc Karaman; Nuno Palma; Zhiyin Xu |
| Abstract: | We examine the fiscal trajectory of the Chinese state from the late Qing period to the founding of the People’s Republic of China. To do so, we construct the first continuous tax revenue and public debt series and interpret the trends in the context of the era’s political and economic developments. Our findings indicate that China’s state capacity remained low throughout this period, a pattern that reflects the central government’s failure to monopolize control over violence. This persistent weakness had lasting consequences, not only shaping the political landscape but also hindering economic modernization. |
| Keywords: | State Capacity, Fiscal Capacity, Public Debt, Taxation |
| JEL: | N15 N25 N45 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:man:allwps:0009 |
| By: | Yanxia Yu; Chenfei Qu; Tom Coupé (University of Canterbury); Mathilda Featherston-Lardeux; Andreas Loeschel; Arne R. Weiss; Da Zhang |
| Abstract: | How effective are Emission Trading Schemes (ETS) in reducing carbon emissions? This paper addresses this question using a meta-analysis of 80 primary studies and 732 effect size estimates assessing the impact of China’s pilot ETS, introduced in seven provinces and cities in 2011. Our findings suggest that China’s pilot ETS led to small to medium-sized reductions in CO2 emissions, with estimated reductions ranging from 5.5% to 16.6% compared to a no-ETS counterfactual. Meta-regression and Bayesian Model Averaging analyses further show that the estimated impacts of the ETS vary with the empirical methods employed and the control variables used. The range of estimates we obtain from synthesizing the literature provides policy-makers with an evidence-based expectation of the potential scale of emissions reductions in the initial phase of developing an ETS. |
| Keywords: | Meta-analysis, Emission trading scheme |
| JEL: | C18 Q58 |
| Date: | 2025–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:cbt:econwp:25/04 |
| By: | Li, Yanjun; Liu, Xinyan; Tanaka, Ryuichi |
| Abstract: | Violence against children, especially trafficking, is a global concern. This paper proposes that nearby educational institutions can help reduce such violence. Using a quasi-experiment in China from 1999, where university campuses were exogenously established, the study shows that these institutions led to fewer trafficked children. The mechanism involves economic development, improved public safety, and changes in family behavior, ultimately reducing child trafficking. The findings highlight that the establishment of social facilities, such as universities, can unintentionally enhance children's safety and well-being by improving the surrounding community's economic and social conditions. |
| Keywords: | Childhood Maltreatment, Child trafficking, Illegal behaviors, University expansion policy |
| JEL: | H54 K42 O15 O18 R23 J13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1590 |
| By: | Stephen Broadberry; Kyoji Fukao; Hanhui Guan |
| Abstract: | Comparing the major Asian economies of China, India and Japan without taking account of variations in size suggests that the Asian Little Divergence began in the eighteenth century when Japan overtook first India and then China. However, the Great Divergence debate has focused on when the leading regions of the declining countries first fell behind and there was significant regional variation in GDP per capita in all three countries. Allowing for regional variation significantly changes the dating of the Asian Little Divergence: (1) In China, the Yangzi Delta, with a population about the same size as the whole of Japan, did not fall behind until around the time of the Meiji restoration in 1868. (2) In Japan, the Kinai region forged ahead of the Yangzi Delta around 1800. (3) In India, Mysore remained behind the Yangzi Delta throughout the period 1600-1870 and therefore has less significance for the timing of the Asian Little Divergence. |
| Date: | 2025–04–03 |
| URL: | https://d.repec.org/n?u=RePEc:oxf:esohwp:_219 |
| By: | Chunlin Hua; Zejun Li; Jeremy Clark (University of Canterbury) |
| Abstract: | Agricultural nonpoint source pollution (ANSP) from farmers’ use of chemical fertilizers is one of the outstanding problems in resource management across the world. Alongside the three traditional policy responses of encouraging voluntary adoption of best management practices (BMP’s), weakly enforced command and control, or economic incentives over what can be observed, we consider a fourth approach of incidental ANSP pollution control. Here small farms may voluntarily adopt BMP’s and reduce excessive fertilizer as an incidental by-product of changing production to increase profit or reduce risk. We examine specifically the option for smaller scale crop farms in Sichuan Province China to collaborate with large or new agricultural operations (LNAO’s). Collaboration can take the form of 1) technical assistance for payment or as part of 2) production orders, or 3) temporarily providing land, labour or capital in exchange for payment or share of profit. Evaluating the effects of small farms’ voluntary collaboration on their fertilizer use is hampered by their self-selection to enter such arrangements, and by their potential hesitancy to honestly reveal their (high) levels of fertilizer use. In this paper, we use 364 proximity surveys of 3528 small crop farmers located in villages primarily in Sichuan Province, China, regarding their production methods, output, and collaboration. The surveys are conducted by undergraduate/masters students from the same villages, to increase trust and encourage honest reporting of fertilizer use. We use propensity score matching (PSM) to compare the fertilizer use of farmers who do collaborate, against 1) observably matched farmers who do not, then 2) against more narrowly matched non-collaborators who express a desire to collaborate, or 3) against matched non-collaborators whose villages do not contain LNAO’s with whom to collaborate, or finally 4) against matched non-collaborators who satisfy both conditions. We find robust evidence that small farmers use substantially less nitrogen or total chemical fertilizer if they collaborate with LNAO’s via production orders. In our most credible specification, such collaboration causes small farmers to reduce their total chemical fertilizer use by 27.7%, or by 30.4 kg/Mu from a sample mean of 109.9 kg/Mu. In contrast, we find only mixed evidence of effect if farmers collaborate via technical assistance, and no significant effect if they collaborate via supplying inputs for payment or profit share. |
| Keywords: | Agricultural nonpoint source pollution (ANPS), Best management practices (BMPs), Voluntary collaboration, Fertilizer use reduction, Propensity score matching (PSM) |
| JEL: | O13 Q12 Q18 Q52 Q56 |
| Date: | 2025–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:cbt:econwp:25/03 |
| By: | Jie, Yangyang; Zhang, Peikang; Shen, Tiyan |
| Abstract: | Institutional changes have a significant impact on government capabilities and hierarchical relationships, especially in developing countries that characterized by governmental intervention for regional development. Using data from China's districts and counties from 1993 to 2022, this paper examines how administrative division adjustments, exemplified by the re-designation of counties as city districts, redefine the power and capability dynamics among bureaucratic entities. We find evidence that such redesignations widen regional disparities between transformed counties and other areas in four dimensions, including economic output, financial resources, fiscal capacity, and public services. We further identify three key mechanisms: reduce autonomy for former county governments, local government competition that leads to short-term efficacy, and resource siphoning from former counties to other regions. The effectiveness of the policy depends on changes in central policies, particularly on the trade-off between scale and incentives. |
| Keywords: | Regional disparity, Administrative division adjustment, Autonomy, Power structure |
| JEL: | H11 H77 R12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1589 |
| By: | Alessandro Borin (Bank of Italy); Peonare Caka (Bank of Slovenia); Gianmarco Cariola (Bank of Italy); Dennis Essers (National Bank of Belgium); Elena Gentili (Bank of Italy); Laura Lebastard (Bank of Italy); Andrea Linarello (Bank of Italy); Michele Mancini (Bank of Italy); Tullia Padellini (Bank of Italy); Ludovic Panon (Bank of Italy); Francisco Requena (University of Valencia); Jacopo Timini (Bank of Spain) |
| Abstract: | We study how disruptions to the supply of foreign critical inputs (FCIs) —defined as vulnerable inputs and key inputs for the digital and green transition —may affect value-added at different levels of aggregation. Using firmlevel customs and balance sheet data for Belgium, France, Italy, Slovenia and Spain, our framework allows us to assess how geoeconomic fragmentation may affect European economies differently. Our baseline calibration suggests that a 50% reduction in imports of FCIs from China and other countries with a similar geopolitical orientation would result in sizable losses with significant heterogeneity across firms, sectors, regions, and countries, driven by the heterogeneous exposure of firms. Our findings highlight that the short-term costs of supply disruptions of FCIs can be substantial, especially when firms cannot easily substitute away from these products. |
| Keywords: | Geoeconomic fragmentation, global value chains, global sourcing, international trade, imported inputs. |
| JEL: | F10 F14 F50 F60 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2506 |
| By: | Tao Chen; Shuwen Pi; Qing Sophie Wang (University of Canterbury) |
| Abstract: | This study examines the impact of artificial intelligence (AI) on corporate investment efficiency. Our analysis of recruitment data from Chinese listed companies reveals a positive correlation between AI and investment efficiency, primarily driven by a reduction in over-investment. Specifically, a one-standard-deviation increase in AI hiring is associated with a 3.1% improvement in investment efficiency. This improvement results from better investment decisions (e.g., greater responsiveness to growth opportunities and fewer value-destroying mergers and acquisitions), and more effective internal capital allocation (e.g., improvements in innovation and operational efficiency). The positive impact of AI is stronger in firms with less government intervention, flatter organizational structures, technically experienced boards, poorer information environments, and traditional and lowly competitive industries. Overall, our findings highlight the importance of AI skills in shaping corporate investment decisions. |
| Keywords: | Artificial intelligence, AI hiring, investment efficiency |
| JEL: | O14 O33 G31 G34 |
| Date: | 2025–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:cbt:econwp:25/05 |
| By: | Sascha O. Becker; Amma Panin; Steven J. Pfaff; Jared Rubin (Chapman University) |
| Abstract: | This chapter examines the role of religion in economic development, both historically and today. Religion's influence varies globally, with high religiosity in countries like Pakistan and low rates in China. Despite declines in some Western countries, religion remains influential worldwide, with projected growth in Muslim populations due to higher fertility rates. Religion continues to shape societal norms and institutions, such as education and politics, even after its direct influence fades. The chapter explores how religious institutions and norms have impacted economic outcomes, focusing on both persistence and decline. It also examines cultural transmission, institutional entrenchment, networks, and religious competition as mechanisms sustaining religion's influence. We explore the relationship between religion and secularization, showing that economic development does not always reduce religiosity. Lastly, the chapter highlights gaps in the literature and suggests future research areas on the evolving role of religion in economic development. |
| Keywords: | Religion; Economic Development; Religiosity; Cultural Transmission; Secularization; Historical Persistence; Religious Competition; Networks; Social Norms |
| JEL: | D85 I25 J10 N30 O33 O43 P48 Z10 Z12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:chu:wpaper:25-01 |
| By: | Becker, Sascha O (University of Warwick); Panin, Amma (UC Louvain); Pfaff, Steven (CWES); Rubin, Jared (Chapman University) |
| Abstract: | This chapter examines the role of religion in economic development, both historically and today. Religion's influence varies globally, with high religiosity in countries like Pakistan and low rates in China. Despite declines in some Western countries, religion remains influential worldwide, with projected growth in Muslim populations due to higher fertility rates. Religion continues to shape societal norms and institutions, such as education and politics, even after its direct influence fades. The chapter explores how religious institutions and norms have impacted economic outcomes, focusing on both persistence and decline. It also examines cultural transmission, institutional entrenchment, networks, and religious competition as mechanisms sustaining religion's influence. We explore the relationship between religion and secularization, showing that economic development does not always reduce religiosity. Lastly, the chapter highlights gaps in the literature and suggests future research areas on the evolving role of religion in economic development |
| Keywords: | Religion ; Economic Development ; Religiosity ; Cultural Transmission ; Secularization ; Historical Persistence ; Religious Competition ; Networks ; Social Norms JEL Codes: D85 ; I25 ; J10 ; N30 ; O33 ; O43 ; P48 ; Z10 ; Z12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1550 |
| By: | Heng-fu Zou |
| Abstract: | This study models the cyclical rise and fall of Chinese dynasties through the interplay of power and corruption using the Van der Pol equation. It captures the historical pattern where dynasties emerge with low corruption and rising power, reach a peak, and collapse as corruption undermines authority. The Van der Pol model, known for generating self-sustaining cycles, reflects how early dynastic reforms drive rapid power growth, while increasing corruption accelerates decline and collapse. The system then resets, mirroring the continuous rise and fall observed in Chinese history. Additionally, the study analyzes the evolution of the system's total energy, revealing how power and corruption interact to drive cycles of expansion, instability, and collapse. Simulations further show how cor ruption feedback intensity influences the length and stability of dynastic cycles, explaining why some dynasties, like the Han and Tang, endured longer than others, such as the Song and Ming. This research offers a quantitative framework to understand the repetitive nature of dynastic cycles driven by power and corruption. |
| Date: | 2025–03–13 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:747 |
| By: | Alessia Matano (AQR-IREA, University of Barcelona and Università di Roma “La Sapienza”); Paolo Naticchioni (Roma Tre University and IZA) |
| Abstract: | This paper investigates the relationship between China’s import competition and the innovation strategies of domestic firms. Using firm level data from Italy spanning 2005-2010 and employing IV fixed effects estimation techniques, we find that the impact of China’s import competition on innovation varies depending on the type of goods imported (intermediate vs. final). Specifically, imports of final goods boost both product and process innovation, while imports of intermediate goods reduce both. Additionally, we extend the analysis to consider the role of unions in moderating these responses. We find that, in unionized firms, imports' impact on innovation is mitigated, specifically to protect workers' employment prospects |
| Keywords: | China’s Import Competition, Final and Intermediate Goods, Product and Process Innovation, Unions, IV Fixed effects estimations. JEL classification: C33, L25, F14, F60, O30, J50 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:aqr:wpaper:202501 |