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on China |
| By: | Copestake, Alexander; Firat, Melih; Furceri, Davide; Redl, Chris |
| Abstract: | We estimate the spillovers of demand- and supply-driven shocks in China to foreign countries and firms. We combine a Structural Vector Autoregression (SVAR) framework with a broad-based measure of domestic economic activity in China and narrative evidence on domestic shocks to distinguish supply versus demand components of Chinese growth. We then assess the responses to such shocks of GDP (revenue) in other countries (firms). The results suggest that: (i) global GDP responds more to Chinese supply shocks than to Chinese demand shocks; (ii) both supply and demand slowdowns in China are followed by declines in partner country GDP and firm revenue, especially in countries and firms with stronger trade linkages to China; and (iii) Chinese supply shocks have larger impacts on countries and firms with relatively stronger input linkages to China, while Chinese demand shocks have larger impacts on countries and firms with relatively stronger output linkages to China. |
| Keywords: | Network spillovers |
| JEL: | F14 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21111 |
| By: | Xiang, Shuhui; Yin, Xinran; Zi, Yuan |
| Abstract: | This paper constructs a new database based on China's WTO subsidy notifications (2001–2022) and provides the first systematic overview of China's industrial subsidies over the past two decades. Five findings emerge. First, subsidies expanded rapidly, but direct fiscal support stabilized around 0.8% of GDP after 2008. Second, China has employed more subsidies than its income level would suggest, with striking policy persistence. Third, subsidies and tax incentives for FDI have declined, while those targeting specific industries and promoting innovation have grown. Fourth, wealthier and more trade-oriented provinces provide more local subsidies. Finally, subsidies are concentrated in a few sectors, and measures based on counts versus values reveal different patterns. These patterns reveal how China’s subsidy strategy has evolved, offering insights to state-led development in the 21st century. |
| Keywords: | Industrial policy; Chinese economy |
| JEL: | F13 O25 H2 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20878 |
| By: | Maria Aristizabal-Ramirez; Chris A. Avalos; Emma Rosenbaum; Eva Van Leemput |
| Abstract: | In the wake of the 2018–19 U.S.-China tariff hikes, there has been a significant shift in U.S. supply chains, with Mexico emerging as the largest supplier of U.S. imports, surpassing China. This shift has been attributed in part to Mexico gaining a cost advantage over China following the U.S tariffs on China. |
| Date: | 2026–06–05 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfn:103397 |
| By: | Alfaro, Laura; Chor, Davin |
| Abstract: | his paper documents stylized facts about the ``Great Reallocation'' in US supply chain trade following the 2018–2019 tariff shocks and the April 2025 Liberation Day announcements. We find that: (i) The US has decoupled from China but not from the world overall. (ii) US imports diversified mainly among its top-20 partners, rather than expanding to new source countries. (iii) Local linear projections confirm ongoing declines in China's import shares, with compensating increases from Vietnam, Mexico, and Taiwan. (iv) Most of this shift occurred along the product-level intensive margin, though extensive margin adjustments became more pronounced for Vietnam and India from 2021-2024. (v) After a period of ``wait and see'', the decline in import shares from China spread to contract-intensive and relationship-sticky goods by 2021-2024. (vi) Early 2025 data suggest that trade reallocation has already accelerated after Liberation Day, in favor of trade partners facing lower additional tariffs and with geographically proximate supply networks. Together, these findings show that the US-China tariff shocks have unwound the US' sourcing from China back to where it stood at the time of China's WTO accession. |
| Keywords: | Tariffs |
| JEL: | D8 F1 F6 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20844 |
| By: | Aguilar, Pablo; Darracq Pariès, Matthieu; Dieppe, Alistair; Domínguez-Díaz, Rubén; Gallegos, José-Elías; Quintana, Javier; Eugenelo, Antonio |
| 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-priced 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 EA 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 US, reinforces own-sector losses in China, and leaves the EA 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. JEL Classification: E31, E32, E52, F13, F41, F42 |
| Keywords: | dominant currency pricing, DSGE, multicountry, networks, tariffs, trade |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263254 |
| By: | Miranda-Agrippino, Silvia; Nenova, Tsvetelina; Rey, Hélène |
| Abstract: | Using a novel indicator for the People’s Bank of China monetary policy stance, we estimate a policy rule that accounts for the dual nature of its price stability mandate—encompassing domestic inflation and the exchange rate—and for the evolution of its operational framework. The Ins: The domestic transmission follows textbook patterns, with exceptions due to the active management of the renminbi and the financial account. The Outs: International spillovers are powerful and affect commodity markets, global production and trade. The pass-through to foreign (US) prices is substantial. Financial spillovers are second-order, and mostly derivative from trade spillovers. |
| Keywords: | Monetary policy; International spillovers; China |
| JEL: | E44 E52 F33 F42 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20958 |
| By: | Fang, Tony (Memorial University of Newfoundland, NL, Canada); Lin, Carl (Bucknell University Lewisburg, PA, USA); Liu, Qing (Hefei University of Technology, Anhui, China) |
| Abstract: | We construct city–year measures of AI labor demand from 1.6 million online job postings between 2016 and 2024, and merge them with nationally representative microdata from the China Family Panel Studies (2016–2022). Fixed-effects estimates show that local AI labor demand has positive impacts on individual wages: a one-unit increase in AI demand (1, 000 postings, firms, or job titles) raises wages by about 0.2–0.3 percent. Women experience stronger gains—about 0.5–0.7 percent per unit increase—while men show no measurable effect. Wage effects are largest in Western provinces, and in China’s major AI-cluster cities where complementary production factors and digital infrastructure are most developed. Occupational analyses further show that women’s gains are concentrated in service-oriented, less skill-intensive jobs where AI complements interpersonal and coordination tasks rather than substituting them. Overall, AI diffusion generates meaningful but unequal labor market spillovers, with wage gains concentrated among women, dynamic regions, and human–AI complementary occupations, underscoring both the opportunities of technological transformation and the challenges of achieving inclusive growth. |
| Keywords: | artificial intelligence (AI), labor market, wages, productivity, China |
| JEL: | I23 J24 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18740 |
| By: | Huang, Yujing; Ma, Chicheng; Valencia Caicedo, Felipe |
| Abstract: | This paper examines the economic origins and consequences of anti-missionary violence during the late Qing China (1860–1911). Using newly digitized data, we find that conflicts were attenuated by economic complementarities — such as access to Treaty Ports and public goods — rather than triggered by religious competition with Confucian elites. On the consequences part, we document negative economic spillovers of anti-missionary conflicts, through reduced foreign and domestic investments in modern firms and banks. These negative outcomes were reinforced by Western media coverage and persist today through lower FDI flows and increased autarkic attitudes among residents. |
| Keywords: | Religion; Conflict; Media; Culture |
| JEL: | Z12 D74 N35 O43 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21266 |
| By: | Kai A. Konrad |
| Abstract: | An industrial economics analysis of China’s quasi-monopoly on refined rare earth materials shows: even if China strictly maximizes national prosperity and abstains from geopolitical power play, a significant price differential emerges between the export price and the price for domestic users. The price differential itself is not evidence of geopolitical intentions. However, this equilibrium price gap widens if we assume that China views itself as contesting in a geopolitical, tournament-like situation against the United States. These two results are derived within the framework of a tournament model that imbeds the characteristics of a dominant supplier with a fringe - market, but adds geopolitical goals to the dominant supplier’s objective. |
| Keywords: | Rare earth, monopoly power, China, geopolitics, strategic autonomy, political vulnerability |
| JEL: | F13 F51 L72 Q34 |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:mpi:wpaper:tax-mpg-rps-2026-06 |
| By: | Defever, Fabrice; Ornelas, Emanuel |
| Abstract: | We study how the end of the quota system for textiles and clothing products in the American and European markets on January 1, 2005, affected China’s exports to third countries, where policy was unchanged. Using a difference-in-differences approach, we find that the number of Chinese firms exporting previously restricted products to third countries increased sharply after quota removal. The expansion involved many private firms that exported to neither US-EU markets before nor after 2005. This indicates that the policy shock enhanced China’s role as an export base. Conversely, protectionist shifts in large economies would likely generate sizeable negative third-market effects. |
| Keywords: | Import quotas; China |
| JEL: | F13 F14 D22 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21231 |
| By: | Sébastien Houde; Wenjun Wang |
| Abstract: | This paper investigates the relationship between AI adoption and carbon emission intensity. Using micro-level data from Chinese firms, we find that carbon intensity decreases following the adoption of AI. The effect is particularly pronounced among large firms, those headquartered in AI hubs, and those in high-carbon intensity sectors. We investigate several mechanisms and find that AI adoption is also associated with increases in energy management processes, green innovation, inventory efficiency, overall productivity, and the share of specialized labor. We find that AI-induced carbon reductions are subject to a large rebound effect of approximately 70%. |
| Keywords: | artificial intelligence, carbon emissions, energy intensity, green innovation |
| JEL: | D22 L11 O33 Q54 Q55 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12803 |
| By: | Ma, Debin; Rubin, Jared; Weiwen, Yin |
| Abstract: | This paper revisits the old thesis of the contrasting paths of modernization between Japan and China. It develops a new analytical framework regarding the role of knowledge acquisition (propositional vs. prescriptive) and political centralization as the key drivers behind these contrasting paths. Our model and historical data highlight how the introduction of these elements contributed to Meiji Japan’s decisive turn towards the West and Qing China’s lethargic response to Western imperialism. Our analytical framework, developed from a comparative historical narrative and quantitative data, sheds new insights onto the importance of knowledge acquisition for enabling developing countries to reach the world’s economic frontier. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21273 |
| By: | Bergeaud, Antonin; Nur Gozen, Ruveyda; Van Reenen, John |
| Abstract: | We introduce a methodology to measure cross-country trends in innovation capability- “technological trajectories†and implement this on a new rich dataset covering patents between 1836 and 2016 across multiple countries. Intuitively, trajectories are revealed by a country’s sustained increases in patenting across multiple patent offices. We first describe the data patterns, showing the relative decline of the UK, and the rise first of the US and Germany, and then later of Japan and China. We then econometrically estimate trajectories on (i) the post-1902 period for France, Germany, Japan, the UK and US, and (ii) the post-1960 period for a wider sample of 40 countries. Our trajectories are strongly positively correlated with Total Factor Productivity growth, and also (but less strongly) associated with the growth of labour productivity and capital intensity. We show that future trajectories are predicted by a country’s initial levels of R&D, education and defence spending, classic drivers of innovation in modern growth theory. |
| Keywords: | Patents; Technical progress; Economic history; Innovation |
| JEL: | O31 O33 O34 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21066 |
| By: | Ossa, Ralph; Redding, Stephen |
| 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 U.S. tariffs suggest that most of the incidence of these tariffs has been borne by U.S. importers, wholesalers, retailers and consumers rather than by foreign exporters. These tariffs have led to a large-scale reorganization of U.S. supply chains away from China to third countries. Although this reorganization has substantially reduced China’s share of U.S. imports, the U.S. remains indirectly exposed to China through the imports of these third countries. |
| JEL: | F13 F14 F15 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21221 |
| By: | Kehrig, Matthias; Fu, Shipeng |
| Abstract: | We study how internal hierarchies affect productivity, wages, and labor shares in Chinese manufacturing firms. Using detailed information on professional titles from the 2004 Annual Survey of Industrial Production, we construct firm-level measures of hierarchical structure and compare private firms with state-owned enterprises (SOEs). Private firms operate leaner hierarchies and exhibit rising labor productivity as organizational layers expand. In contrast, SOEs adopt prematurely deep and top-heavy hierarchies associated with declining labor productivity but higher wages. As a result, labor shares are substantially higher in SOEs. Counterfactual exercises show that distortions in hiring and organizational design account for a large fraction of the labor share gap between SOEs and private firms, pointing to inefficient internal organization as an important source of aggregate misallocation. |
| Keywords: | Organizational structure; State-owned enterprises; Misallocation; Labor productivity; Labor share; China |
| JEL: | D24 L22 L25 O47 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21150 |
| By: | Xue, Melanie Meng |
| Abstract: | This paper evaluates the usefulness of crowd-sourced Chinese genealogical data for quantitative research in demography and economic history. I first examine whether genealogies — despite well-known selection biases — produce demographic patterns consistent with established historical knowledge of China. Comparisons with existing studies show that aggregate population-growth trends and sex ratios over time align reasonably well with established demographic and historical findings, suggesting that genealogies, though selective, capture coherent and interpretable patterns. Building on these plausibility checks, the paper argues that the main value of genealogical data lies in their scalability and temporal depth, particularly as crowd-sourced digitization vastly expands the number of available records. These features make genealogies well suited to analyses that leverage variation across regions and over time, an approach that is central in modern economic history. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20815 |
| By: | Clayton, Christopher; Maggiori, Matteo; Schreger, Jesse |
| Abstract: | We discuss the conditions under which global imbalances, such as China being a large foreign creditor and the United States being a large foreign debtor, might also generate power imbalances. We highlight possible theoretical channels and empirical measures that the future literature could investigate in a full treatment of this topic. |
| Keywords: | Geoeconomics |
| JEL: | F1 F3 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21070 |
| By: | Jia, Ruixue; Khanna, Gaurav; Li, Hongbin; Xu, Yuli |
| Abstract: | China’s unprecedented expansion of higher education in 1999, increased annual college enrollment from 1 million to 9.6 million by 2020. We trace the global ripple effects of that expansion by examining its impact on US graduate education and local economies surrounding college towns. Combining administrative data from China’s college admissions system and US visa data, we leverage the centralized quota system governing Chinese college admissions for identification and present three key findings. First, the expansion of Chinese undergraduate education drove graduate student flows to the US: every additional 100 college graduates in China led to 3.6 Chinese graduate students in the US. Second, Chinese master’s students generated positive spillovers, driving the birth of new master’s programs, and increasing the number of other international and American master's students, particularly in STEM fields. And third, the influx of international students supported local economies around college towns, raising job creation rates outside the universities, as well. Our findings highlight how domestic education policy in one country can reshape the academic and economic landscape of another through student migration and its broader spillovers. |
| JEL: | J61 I23 J24 F22 O15 O38 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20772 |
| By: | Wolfgang Keller; Carol H. Shiue; Karen Eggleston |
| Abstract: | We study the relationship between health and social status in China using genealogical data from the 14th to 19th centuries. The data covers broad segments of the population linking husbands, wives, and sons, allowing us to examine whether status was associated with survival not only for adult men but also across households and generations. In a sample centered on the early 1700s, the typical lifespan of married men is 52, but varies widely. High-status men have a 22 percent higher probability of living past 50 than low-status men, resulting in a lifespan advantage of seven years. High status is also associated with significant survival advantages for wives and children. The lifespan premium of the wife of a high-status man over the wife of a commoner exceeds 10 years, and the chance that the son of a high-status man dies before reaching 10 years is less than half that of a low-status man’s son. Up to the 17th century the lifespan advantage is largely confined to those with top status, while the health-status gradient across all status levels emerges during the 18th century. The findings provide new evidence on health-status inequality in a less-studied setting, and suggest that health-status inequality is usefully analyzed from a family and intergenerational perspective. |
| JEL: | I14 J1 N35 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35396 |
| By: | Emmanuel Caiazzo (Parthenope University of Naples and MoFiR.); Pietro Panizza (University of Calabria); Alberto Zazzaro (University of Naples Federico II, CSEF and MoFiR.) |
| Abstract: | Competition between the United States and China is likely to shape the course of history in the coming years. Does foreign aid constitute an arena of confrontation? Using the OECD Creditor Reporting System and the Global Chinese Development Finance Dataset, we study the relationship between the aid-commitment strategies of Beijing and Washington. Employing an instrumental variables approach, we find that the United States increases its aid commitments in recipient countries where China commits more funds. The effect is stronger when the United States has close political or commercial ties with the recipient country and is larger in years of heightened US–China political disagreement. These findings are consistent with a framework in which the two countries compete to acquire influence over the recipient countries. |
| Keywords: | International aid, Donor coordination, US-Sino competition. |
| JEL: | F35 O19 |
| Date: | 2026–07–08 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:788 |
| By: | ZIyu Chen; Christopher Esposito |
| Abstract: | U.S. policy increasingly seeks to slow China's technological rise by restricting its access to American science, on the assumption that Chinese innovation depends on U.S. science. Linking the full corpus of Chinese invention patents to the global scientific literature, we show that this dependence has fallen in recent years: the share of the China-produced science behind Chinese patents rose from 1% in 2000 to 26% in 2025, overtaking the U.S. share in 2021. As China's reliance on U.S.-produced science fades, policies restricting access fall out of alignment with the U.S.' actual strategic position. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.26470 |
| By: | Wu, Jie; Canales, J. Ignacio; Zhou, Peng (Cardiff Business School, Cardiff University, Cardiff, UK); Yan, Haifeng |
| Abstract: | This study examines how soft skills education performatively shapes business realities across cultural boundaries. While prior research has treated soft skills as static capabilities, we demonstrate their role as performative forces actively reshaping organizational practices. Through in-depth interviews with Chinese graduates of UK universities working in China, our findings reveal an inverted U-shaped relationship between structural performativity and organizational transformation, moderated by collective orientation (weakening effect) and absorptive capacity (strengthening effect) and pinpoint six key domains through which soft skills education acts as a performative mechanism. Our findings suggest that successful organizational transformation through soft skills education requires balancing international connections, cultural values, and knowledge integration capabilities. The study advances performativity theory in management education by demonstrating how educational practices actively construct organizational realities rather than merely describing them and provides insights for business schools on effectively harnessing performativity to create desirable organizational outcomes in cross-cultural contexts. |
| Keywords: | Performativity; Management Education; Soft Skills; Cross-Cultural Learning; Chinese Business; Business Schools |
| JEL: | A2 I2 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdf:wpaper:2026/1 |
| By: | Brad Setser |
| Abstract: | Bipartisan doubts about the value of liberal trade in the US are shared by many populist European parties, who also question the value of deeper international economic integration. Yet for all the skeptical rhetoric—and real steps from the US and other advanced economies—globalization is not in retreat. Global trade continues to rise alongside global economic growth. If anything, trade has picked up since the pandemic. Widespread expectations that the global economy would fragment into rival blocks have not yet come to pass. Global flows related to corporate tax avoidance remain significant, cutting into US fiscal revenues. China’s increasingly troubled domestic economy and its large-scale industrial policies risk leaving the US and its allies more, not less, reliant on Chinese supply in key sectors. The recent surge in China’s trade surplus is evidence of ongoing globalization, and China’s continued reliance on the world’s big democracies for demand runs counter to any coherent definition of fragmentation. But increased global reliance on China for supply emerges more from China’s own economic imbalances than from a healthy global division of labor. There is thus scope for policy reforms that support a healthier form of integration: notably, ending the perverse incentives in the US tax codes that undermine US production and revenues and harmonizing clean industrial policies to deepen trade among allies. |
| Keywords: | trade, international economics |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:cxx:wpaper:the-surprising-resilience-of-globalization |