China & World Economy最新文献

The disparity in credit access between large firms and small and medium-sized enterprises contributes to the prevalence of shadow banking activities, where large, nonfinancial firms with high credit ratings have become new financial intermediaries. These activities vary geographically and are affected significantly by collateral monetary policy. This paper examines the effect of collateral monetary policy, its reform, and regional financial development characteristics on large firms' shadow banking activities, with a focus on the medium-term lending facility (MLF), the primary collateral monetary policy instrument in China. The results indicate that the MLF encouraged large firms' shadow banking activity. However, the MLF reform in 2018 mitigated this effect by broadening the range of acceptable collateral. Regional financial development, such as a higher number of bank branches around firms, facilitated large firms' shadow banking activities and amplified the MLF's stimulating effect. In contrast, regional advancements in digital finance and market development limited both shadow banking activities and MLF's impact.

Basic innovation, with universities as a key driver, is essential for advancing core technologies in the manufacturing industry. This study used a manufacturing technologies initiative as a natural experiment, combining funding and its outcomes data from the National Natural Science Foundation of China to construct a difference-in-differences model. It found that the Frontiers in Manufacturing Technologies Initiative had a positive effect on university innovation, particularly by increasing the number of university patents. Mechanism analysis showed that the policy mainly encouraged university innovation through university-industry collaboration. The effect was more salient in universities with stronger basic research capabilities and those whose research fields matched strategic emerging industries covered by the initiative. This study underscores the crucial role of the Frontiers in Manufacturing Technologies Initiative in enhancing university-led innovation. It highlights the effectiveness of industry-academia partnerships in advancing technology, particularly in emerging strategic industries.

This study examines the impact of e-commerce on the survival rate of small and medium enterprises (SMEs) during the COVID-19 pandemic using a combined dataset from the Enterprise Survey for Innovation and Entrepreneurship in China for the period from 2018 to 2020. We conducted a difference-in-differences analysis by exploiting the variation in the adoption of e-commerce across SMEs before and after the outbreak of COVID-19. The results show that e-commerce had a significantly positive effect on the survival rate of SMEs during the crisis. Specifically, it improved the survival rate of SMEs by 3.0 to 3.4 percentage points by expanding the scale of the enterprises' markets, mitigating declines in orders, shortening the repayment periods of accounts receivable, and improving cash flow during a pandemic. Heterogeneity analysis reveals that the impact of e-commerce was more pronounced for SMEs with a larger share of online sales and for labor-intensive SMEs, and third-party e-commerce platforms or Web sites played a bigger role than self-built Web sites and social media. This study offers novel evidence highlighting the value of digitalization for firms during the crisis.

The development of spatial interactions of land resources enhances virtual built-up land flow, which contributes to China's inter-regional trade inequality. Little is known about the degree of inequality among regions. This work seeks to estimate the degree of interregional trade inequality through environmental-economic benefits. We combined a multiregional input–output model at the city level with a new classification to calculate the virtual built-up land flow among cities and analyzed its implications for the regional economy and carbon balance. The results indicate that developed regions were the main beneficiaries of inter-regional trade, as reflected in land-use efficiency. China's economic hub has been progressively shifting southward, and the inter-regional trade inequality has continuously increased. The flow of virtual service industry land among developed regions rose, while underdeveloped regions remained suppliers of raw materials, further increasing inter-regional trade inequality.

Financial systems generally operate under two different models: one where capital markets play a primary role in financial transactions and resource allocation (market-oriented model), and another where banks are the central institutions for these activities (bank-oriented model). The degree of investor protection afforded by the legal system varies across these systems. What is the most efficient alignment between financial structure and investor protection? This paper attempts to quantify the structural matching relationship between the financial structure and investor protection in various countries, and examines empirically the impact of this relationship on economic development. Using a sample of cross-country panel data, it finds that the degree of structural matching was positively related to economic development. Both the combination of a securities market and strong investor protection and the combination of a banking system and weak investor protection can contribute to promoting economic development. It extends the law and finance theory framework, enhances the analysis of scenarios with weak alignment between financial structure and investor protection, explains the growth path of developing countries, and highlights the diversity and the dynamic nature of the optimal financial structure.

Economic globalization in the 21st century has been characterized by the rise and spread of global value chains (GVCs). It faces significant challenges due to increasing domestic and international policy uncertainty in the context of emerging mega risks like geopolitical tensions and climate change. This paper begins by constructing a theoretical model for an open economy to study how risk-averse firms make decisions regarding the sourcing of intermediate inputs in an uncertain environment. Our model solution proposes that firms will source fewer intermediate inputs from countries with more economic uncertainty. An increase in domestic and foreign uncertainty will have opposite impacts on a country's position in GVCs. In this sense, we argue that a country tends to move downstream along GVCs if its own economic policies become more uncertain, and it tends to move upstream with an increase in the uncertainty of its trading partner countries. Our regression analyses, based on data including the World Input–Output Database, World Development Indicators, the UN Comtrade database, and the Economic Policy Uncertainty Index, provide empirical support for this model-based conclusion. Our findings highlight that a nation must consider foreign economic policy uncertainty and maintain domestic policy stability to participate in GVCs.

Environment-related notifications play an important role in the coordinated development of trade and environment protection. In this paper, we examine how Chinese exporting enterprises responded to environment-related notifications implemented by the US through green innovation practices. These notifications significantly encouraged exporting firms to increase green innovation, as evidenced particularly by the number of green utility model patents granted. This effect was most pronounced in non-foreign-invested enterprises, high-total-factor-productivity firms, technology-intensive industries, and nongreen industries. These notifications also increased the probability of enterprises exiting the market while reducing the probability of new enterprises entering it. The innovation motivation of surviving firms was higher than that of the new entrants. Our analysis also suggests that environment-related notifications had a crowding-out effect on other innovation rather than a leverage effect. This study offers important empirical evidence that helps enterprises to respond to green non-tariff measures effectively, enrich the existing literature, and provide practical guidance for both policymaking and corporate development.

Greater participation in global value chains (GVCs) has highlighted the impact of exchange rate shocks on international trade. This paper examines how such participation influences firms' responses to exchange rate movements, focusing on the relationship between firms' pricing and value-added in exports. This study, using detailed Chinese firm-level data, demonstrates that firms with a high degree of GVC participation reacted to currency appreciation by lowering their export prices more substantially and reducing their export volumes less. This is mainly attributable to the “cost-hedging effect” within the marginal cost channel and the “pricing inhibition effect” within the markup channel. By categorizing export firms by trade models and product types, this study further demonstrates that processing trade firms at the low end of the value chain and those with low product differentiation were more inclined to absorb exchange rate shocks. This study adds to the existing theoretical framework and provides strong evidence for China in deepening GVC integration and supporting the development of high-quality export firms.

Policymakers in China have attempted to improve the quality of rural education by investing in teacher salaries through initiatives like the Rural Teachers Support Plan (RTSP). This study estimates the effects of teacher salary increase on students' educational outcomes in rural China by utilizing the exogenous variations of rural teacher salaries induced by the RTSP. It employs an intensity-based difference-in-differences strategy and panel data from 2010 to 2018 with 3,351 rural children. The findings reveal that an increase in teacher salaries had a significant positive impact on students' examination results. Moreover, the results of mechanism analysis indicate that salary increases could have both quality and quantity effects on students' outcomes by increasing the proportion of highly educated teachers and reducing the student–teacher ratio. Our findings contribute to the discussion on the importance of teacher salary incentives in education production functions and provide insights for other countries undertaking rural education reforms.