“Roads, Railroads, and Decentralization of Chinese Cities”

“Roads, Railroads, and Decentralization of Chinese Cities”

Nathaniel Baum-Snow, Loren Brandt, Vernon Henderson, Matthew Turner

In: Review of Economics and Statistics Volume 99 | Issue 3 | July 2017 p.435-448

Baum-Snow et al. investigate the effects of the recently constructed Chines national highway system on local economic outcomes. They focus on the different consequences for regional primates and hinterland prefectures and offer, based on their results, policy implications.

“Policy Uncertainty, Trade and Welfare: Theory and Evidence for China and the United States”

“Policy Uncertainty, Trade and Welfare: Theory and Evidence for China and the United States”

Kyle Handley and Nuno Limão

In: American Economic Review, Vol. 107, No. 9, 2731–2783

One of the most important economic developments of the last 20 years is China’s integration into the global trading system. The world’s share of imports from China between 1990 and 2010 rose from 2 to 11 percent. Handley and Limão argue that China’s WTO accession significantly contributed to its export boom to the United States through a reduction in US trade policy uncertainty. To verify that argument they build a model that allows them to interpret, gauge and quantify the effects of trade policy uncertainty.

“US policy spillover(?) –China’s accession to the WTO and rising exports to the EU”

“US policy spillover(?) –China’s accession to the WTO and rising exports to the EU”

Karsten Mau

In: European Economic Review, Vol. 98, September 2017, 169-188

Mau analyzes in his paper the transmission of bilateral trade policies on multilateral exports, due to existence of a global component in fixed export entry costs. Therefore he provides formal intuition for a spillover from bilateral US tariffs policies to China’s multilateral export performance. With this analysis he shed some light on the understanding of the consequences of international trade policies.

“Does the Stock Market Boost Firm Innovation? Evidence from Chinese Firms”

“Does the Stock Market Boost Firm Innovation? Evidence from Chinese Firms”

Hui He, Hanya Li and Jinfan Zhang

IMF Working Paper 17/147

He et al. deal with the question whether the stock market affects a firm’s innovation activity or not. To do so they examine the innovation activities of Chinese firms by make use of the unique characteristics of the Chinese patent system. In their paper they are running an ordinary least squares regression as well as a difference-in-differences approach to mitigate the endogeneity concerns that come along with the OLS analysis.

“Trading with China: Productivity Gains, Job Losses”

“Trading with China: Productivity Gains, Job Losses”

JaeBin Ahn, Romain Duval

IMF Working Paper No. 17/122

In this paper Ahn and Duval discuss the benefits and costs of rising trade between China and advanced economies. They criticize the shift in the economic focus, away from the benefits toward the costs of a globalized world. Therefore the authors analyze the impact of productivity in advanced economies of fast-growing trade with China between the mid-1990s and late-2000s.

“WTO Accession and Performance of Chinese Manufacturing Firms”

“WTO Accession and Performance of Chinese Manufacturing Firms”

Loren Brandt, Johannes van Biesebroeck, Luhang Wang and Yifan Zhang

In: American Economic Review 2017, Vol. 107, No. 9, 2784-2820

Brandt et al. examine the effects that the trade liberalization in China during the last decades had on the evolution of markups and productivity of Chinese manufacturing firms. Therefore they use firm-level data that covers most of the manufacturing sector in China to investigate the role of domestic trade liberalization over a period that takes China’s WTO-entry 2001 into account.

“Downside Risk in the Chinese Stock Market – Has it Fundamentally Changed?”

“Downside Risk in the Chinese Stock Market – Has it Fundamentally Changed?”

Eric Ghysels, Hanwei Liu

CEPR Discussion Paper 12180

The purpose of the paper by Ghysels and Liu is to characterize fundamental changes in the downside risk of the Chinese stock market and discern what the causes of these changes are. Furthermore, they provide a synopsis of several key events that took place during the sample period (June 1995 – December 2016) and present an overview of the structure of the two stock exchanges in mainland China, namely the Shanghai and Shenzhen stock exchange.

“The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes”

“The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes”

Zhuo Chen, Zhiguo He, Chun Liu

NBER Working Paper No. 23598

This paper links China’s recent fast-growing shadow banking activities to the four trillion stimulus package in 2009. Chen et al. zoom in on the composition shift of the liability side of China’s local governments, and show that the rollover pressure of bank loans that were taken on by local government finance vehicles in 2009 pushed them toward non-bank debt financing after 2012.

“Sterilized Intervention and Optimal Chinese Monetary Policy”

“Sterilized Inteervention and Optimal Chinese Monetary Policy”

Wukuang Cun and Jie Li

USC-INET Research Paper No. 16-29R

In this paper Cun and Ji examine the extent to which monetary sterilization can neutralize the effects of currency intervention in China. In addition, they study the optimal choice of monetary policy instruments and the optimal policy rules given China’s current external policy regimes.

“Westward movement of new polluting firms in China: Pollution reduction mandates and location choice”

“Westward movement of new polluting firms in China: Pollution reduction mandates and location choice”

Haoyi Wu, Huanxiu Guo, Bing Zhang and Maoliang Bu

In: Journal of Comparative Economics, Vol. 45, No. 1, 119-138

In their paper Wu et al. question the efficiency of the environmental policy in China by providing a systematic study of new polluters’ location due to the 11th Five-Year-Plan (2006-2010) pollution reduction mandate. They investigate a self-enforcing process. On the one hand, to maximize their profits, polluting firms could migrate to the western provinces where mandates are less stringent. That would raise concerns about pollution transfer instead of pollution reduction. On the other hand western provinces with low mandates generally have weak institutional capacity and low levels of environmental management. That could give polluting firms an additional incentive to emit more pollution in these provinces. To investigate these questions they use a conditional logit model.

“China’s evolving monetary policy rule: from inflation accommodating to anti-inflation policy”

“China’s evolving monetary policy rule: from inflation accommodating to anti-inflation policy”

Eric Girardin, Sandrine Lunven and Guonan Ma

BIS Working Papers No. 641, May 2017

Since the early 90’s China has experienced massive liberalizations and transformations within its economy. Therefore, it is probable that China’s monetary policy has evolved as a byproduct of these effects. The aim of this paper is to construct a new discrete monetary policy index (MPI), which is able to assess the policy and its changes. Furthermore, they use this index to estimate a People’s Bank of China (PBC) monetary policy rule, to analyze whether the major transformations associated with the last two decades in China had an effect on the reaction function of the PBC.

“China’s Current Account: External Rebalancing or Capital Flight?”

“China’s Current Account: External Rebalancing or Capital Flight?”

Anna Wong

FRB International Finance Discussion Paper No. 1208, June 2017

With China’s current account surplus falling from about 10 percent of GDP in 2007 to below 1.5 % of GDP in 2013, the days of colossal current account surpluses appear to be a distant memory. In this paper Anna Wong provides evidence that suggests that China’s official current account balance in recent years has been distorted to some extent by large financial outflows disguised as service trade transactions. To do so she uses two empirical approaches. On the one hand the so called mirror approach and on the other hand one that relies on econometric models.

“Foreign Acquisitions and Target Firms’ Performance in China”

“Foreign Acquisitions and Target Firms’ Performance in China”

Qing Liu, Ruosi Lu, Larry D. Qiu

In: The World Economy (2017), Vol. 40, No. 1, 2-20

How foreign acquisitions affect the economy of the target country and the performance of the target firms is a question of particular interest, especially for developing countries. Lie et al. examine in their paper the effects of foreign acquisitions in China. They notice the special situation in China’s economy and answer the question whether the effects of foreign acquisitions in China are similar to those in developed countries or developing countries, or if they are unique.

“The impacts of political uncertainty on asset prices: Evidence from the Bo scandal in China”

“The impacts of political uncertainty on asset prices: Evidence from the Bo scandal in China”

Laura Xiaolei Liu, Haibing Shu and K.C. John Wei

in: Journal of Financial Economics (2017)

In this paper Liu et al. investigate the impact of political uncertainty on asset prices. They identify an unexpected political event that occurred in China as an exogenous shock to political stability – the Bo Xilai Scandal on March, 14, 2012. Because this shock was unforeseen and increased political uncertainty immediately following its occurrence, it serves as an ideal setting to test the causal link between political instability and asset prices. For a better understanding of the situation Bo’s political scandal is described briefly within the paper.

“How did China’s WTO entry benefit U.S. consumers?”

“How did China’s WTO entry benefit U.S. consumers?”

Mary Amiti, Mi Dai, Robert C. Feenstra and John Romalis

NBER Working Paper No. 23487

During the last 20 years China has emerged as the world’s largest exporter, especially due to its rapid export growth following its World Trade Organization (WTO) entry in 2001. Surprisingly little analysis has been made of the potential gains to consumers in the rest of the world, who could benefit from access to cheaper Chinese imports and more important varieties. In this paper Amiti et al. identify that China’s WTO entry reduced U.S. price indexes. Furthermore they quantify how much U.S. consumer welfare improved due to China’s WTO entry.