“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”
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
“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”
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.
“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
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”
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”
In: European Economic Review, Vol. 98, September 2017, 169-188
Mau analyzes 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”
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”
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”
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 includes China’s WTO-entry 2001.
“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.
Antonia Reinecke & Hans-Jörg Schmerer
Forthcoming in: Journal of Chinese Economic and Business Studies 15 (2017)
This paper investigates the role of local governments’ efficiency on exports in China. We argue that firms located in provinces characterized by high governmental efficiency export more due to a positive productivity effect that lowers transaction costs. The analysis builds on NBS firm-level data that covers a representative sample of Chinese establishments. We find a positive correlation between provincial governments efficiency and Chinese firm’s exports. Moreover, we are able to show that the positive link between firm size and exports is magnified by governmental efficiency. Larger firms export more and this relationship is much stronger in provinces with more efficient provincial governments.
Linda Glawe & Helmut Wagner
ADBI Working Paper No. 749, 2017
Over the last decade, a growing body of literature dealing with the phenomenon of the “middle-income trap” (MIT) has emerged. The term MIT usually refers to countries that have experienced rapid growth and thus reached the status of a middle-income country in a very short period, but have not been able to further catch up with the group of high-income economies. In particular, since the beginning of the growth slowdown of the economy of the People’s Republic of China (PRC) in 2011, there has been rising concern that the PRC is, or will also be, confronted with such a trap. We analyze the PRC’s MIT situation, considering both the (absolute and relative) empirical MIT definitions and MIT triggering factors identified in the literature. We survey the recent literature, make our own MIT forecasts, and analyze under which conditions the PRC could be caught in an MIT.
Michael Murach & Helmut Wagner
in: Journal of Chinese Economic and Business Studies, Vol. 15 (3), July 2017, pp. 269-287
China’s economy has been growing at a high rate for the past three decades. However, the current process of rebalancing from an investment- and manufacturing-led growth model toward a consumption- and service-led model is associated with decreasing growth rates. We show that China’s current state of structural change in terms of sectoral employment share is similar to the historical developments in Japan and South Korea. We derive plausible scenarios for future growth rates in China and (by isolating the allocation effect, i.e. the pure effect of structural change) look at the effects of tertiarization on economic growth in China for the period 2014−2030 by applying a simple simulation study.
“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.