“Value-added exports and U.S. local labor markets: Does China really matter?”

“Value-added exports and U.S. local labor markets: Does China really matter?”

Leilei Shen and Peri Silva

In: European Economic Review, Vol. 101, January 2018, Pages 479-504

In this paper, the main focus is the direct contribution of the Chinese economy to changes in U.S. labor market outcomes. Their strategy follows the insights provided by a model of international trade with G regions, where N of these regions represent commuting zones in the U.S. economy, and where firms in a particular sector and country are assumed to have access to the same technology displaying increasing returns to scale.

“Unified China and Divided Europe”

“Unified China and Divided Europe”

Chiu Yu Ko, Mark Koyama and Tuan-Hwee Sng

In: International Economic Review, January 2018, Vol. 59, No. 1, forthcoming

Throughout much of history,the most economically developed region of the world wasn’t Europe but China, which was typically a unified empire. This paper proposes a unified framework based on Eurasian geography to (a) help explain the different political equilibria in China and Europe, and (b) explore the economic consequences of political centralization and fragmentation.

“Post-disaster aid and development of the manufacturing sector: Lessons from a natural experiment in China”

“Post-disaster aid and development of the manufacturing sector: Lessons from a natural experiment in China”

Erwin Bult, Lih Xu and Xiaobo Zhang

In: European Economic Review, Vol. 101, January 2018, Pages 441-458

Bult et al. adopt a disaggregate approach to study the link between aid and Dutch Disease dynamics, using a natural experiment in China. Specifically, they examine whether post- disaster aid provided to a subsample of Chinese counties, devastated by an earthquake in 2008, affects the sectoral composition of local economies. Using different methods, they consistently find that counties receiving (more) aid —even “nearby counties” not directly damaged by the earthquake —tend to suffer from a contraction of the manufacturing sector.

“Population policies, demographic structural changes, and the Chinese household saving puzzle”

“Population policies, demographic structural changes, and the Chinese household saving puzzle”

Suqin Ge, Dennis Tao Yang, Junsen Zhang

In: European Economic Review, Vol. 101, January 2018, Pages 181 – 209

Household saving rates have increased dramatically over the past two decades in China, in addition to the rise in average saving rate; the age-saving profile has also evolved into an unusual pattern. In this paper, Ge et al. propose and test a new hypothesis that demographic structural changes caused by a series of population control policies since the 1970s have contributed to changes in China’s household saving patterns. Therefor they develop a simple overlapping generation (OLG) model to illustrate the effects of population control policies and demographic structural changes on saving decisions of individuals at different life stages.

“Credit ratings of domestic and global agencies: What drives the differences in China and how are they priced?”

“Credit ratings of domestic and global agencies: What drives the differences in China and how are they priced?”

Xianfeng Jiang and Frank Packer

BIS Working Papers No. 648

In contrast to the the domestic rating agencies the top global agencies, headquartered outside of China, rate bonds, that are issued overseas by Chinese corporations, usually with much lower grades. In this paper, Jiang and Packer examine the risk assessments of Chinese (non-financial) companies published by the major Chinese rating agencies and the two largest global rating agencies. Further, they investigate the degree to which rating scales are comparable between domestic rating agencies, as well as between domestic and global rating agencies.

“The Rise and Fall of Local Elections in China: Theory and Empirical Evidence on the Autocrat’s Trade-Off”

“The Rise and Fall of Local Elections in China: Theory and Empirical Evidence on the Autocrat’s Trade-Off”

Monica Martinez-Bravo, Gerard Padró I Miquel, Nancy Qian and Yang Yao

NBER Working Paper No. 24032

In the late 80’s and early 90’s China has introduced elections at the local level. The functions of these locally elected bodies are typically managerial or administrative, with little political consequence. Hence, existing theories that explain the presence of elections at the elite level do not provide a good framework for understanding the presence of local elections. Thus, the main goal of the paper by Martinez-Bravo et al. is to address this gap in the literature and provide a theory and empirical evidence on the conditions under which an autocratic regime would allow local elections.

“Assessing China’s Residential Real Estate Market”

“Assessing China’s Residential Real Estate Market”

Ding Ding, Xiaoyu Huang, Tao Jin and W. Raphael Lam

IMF Working Paper WP/17/248

In this paper Ding et al. use city-level real estate data to estimate the range of overvaluation of real estate markets across city-tiers in China. Further, they assesse the main risks of a real estate slowdown and its impact on economic growth and financial stability. They assume, if house prices rise further beyond “fundamental” levels and the bubble expands to smaller cities, it would increase the likelihood and costs of a sharp correction. That could weaken growth, undermine financial stability, reduce local government spending room, and spur capital outflows

Paper by Linda Glawe and Prof. Wagner published on VoxChina

The paper “China Caught in the ‘Middle-Income Trap’?” was recently published on VoxChina. You can find a PDF version of the article here: PDF

VoxChina (accesible under: http://voxchina.org/)  is an independent, non-partisan and non-profit platform initiated by a group of experienced and accomplished economists. The mission of VoxChina is to be the bridge on economic issues between China and the rest of the world by providing informed analysis on the state of the Chinese economy and insights for reform challenges facing China today, and by analyzing the impact of the development in the rest of the world economies on China.

The founding institutional sponsors of VoxChina include the Bendheim Center of Finance (Princeton University), the Department of Economics (University of Pennsylvania), the School of Economics and Management (Tsinghua University), the Shenzhen Finance Institute (The Chinese University of Hong Kong, Shenzhen) and the Guanghua School of Management (Peking University).

CEAMeS team member Linda Glawe attended two international conferences

Linda Glawe, team member of the Center for East Asia Macroeconomic Studies, attended the 11th International Conference on the Chinese Economy: “The ‘new normal growth’ and the future of the China’s economy” in Clermont-Ferrand (France) from the 19th to 20th October 2017 where she presented her Asian Development Bank Institute Working Paper “The People’s Republic of China in the Middle-Income Trap?”, jointly written with Prof. Helmut Wagner. She also attended the Third International Forum on the “New Silk Road” and Sino-European Cooperation in Duisburg (Germany) from the 8th to 9th November 2017.

Press Review – The 19th Party Congress of the Chinese Communist Party

It was the event that cached the most attention around the globe in the last days. The 19th Congress of the Communist Party has come to an end and the current President of the People’s Republic Xi Jinping has laid the foundation for a long reign. In the following section you can find press articles that summarize the results of the congress in China.

Time

The Economist

The Economist II

The New York Times

The Washington Post

The Wallstreet Journal

The Guardian I

The Guardian II

The Independent I

The Independent II

 

China’s 19th Communist Party Congress began

Today the 19th Congress of the Chinese Communist Party has begun in Beijing. With just one meeting in five years the encounter of the leaders of the world’s biggest economy is not just import for China but for the whole world. It is the first time that Xi Jinping, the current General Secretary of the Communist Party and President of the People’s Republic of China, is the chairman of the one week long congress. In his over three hour long opening-speech he heralded a new era in the history of China. He proclaimed that China has “[…] taken a driver seat in international cooperation […]” and emphasized that no country alone can face the challenges of mankind and can afford to “retreat into self-isolation”. Further, he addressed to the problems of corruption, that he called the greatest threat to the party’s survival, and the global challenge of climate change.

This year’s congress, as it goes on, is kind of unusual because a huge number of party officials are going to retire and therefor need to be replaced. All new and important information according to the 19th congress will be presented at the CEAMeS homepage during the next week.

“Financial Development, Financial Structure and Income Inequality in China”

“Financial Development, Financial Structure and Income Inequality in China”

Guanchu Li, Yuanyuan Liu, Chengsi Zhang

In: The World Economy, Vol. 40, No. 9, 1890-1917

The rapid growth that China has experienced throughout the past few decades was accompanied by a remarkable increase in income inequality. Li et al. investigate the linear and non-linear impacts of financial development and structure on income inequality, by using panel data for 23 Chinese provinces over the period from 1996 to 2012. Further they pay attention to the dual structure (rural and urban regions) of the Chinese economy.

“The Relationship between Political Tensions, Trade and Capital Flow in ASEAN Plus Three”

“The Relationship between Political Tensions, Trade and Capital Flow in ASEAN Plus Three”

Thomas Gawarkiewicz and Yao Tang

In: The World Economy, Vol. 40, No. 9, 1958-1988

In this paper Gawarkiewicz and Tang aime to estimate the relationship between tensions, trade and capital flows in East and South-East Asia specifically. They identify three possible channels through which tensions can affect trade and/or capital flows: 1.) at the governmental level, 2.) at the firm level, and 3.) at the individual level due to consumer choices. Because a multitude of factors influence trade and capital flows, they estimate the determination of international trade and investment in a gravity model of trade augmented by political factors.