China & World Economy最新文献

This study examines the impact of outward foreign direct investment (OFDI) on Chinese manufacturing firms' financialization and servitization. Using a difference-in-differences approach with propensity score matching, we found that OFDI encouraged firms' financial and service activities. The effects of OFDI on financialization were stronger for firms specializing in short-term financial assets, operating in labor and technology-intensive sectors, investing overseas to pursue production, resources and markets there, and investing in non-OECD and Belt and Road Initiative (BRI) countries. Meanwhile, firms investing overseas were more likely to provide services at the sale or postsale stages. Outward foreign direct investment has also boosted the service activities of firms operating in the technology-intensive sector by investing overseas to seek resources and markets, as well as investing in non-OECD and BRI countries. Finally, OFDI partially influenced the extent of financialization and servitization of firms by affecting their profit-making ability.

To stimulate economic growth, the Chinese government implemented three consecutive policies between 2016 and 2019 to reduce the corporate endowment insurance contribution ratio (CEICR), the highest payment item for Chinese companies. Using China's CEICR reduction policies as a quasi-natural experiment, this paper evaluates the impact of corporate payment burden reduction on employee wages. Generally, reducing CEICR appears to prompt companies to increase employee wages. Corporate cash flow is a possible channel of influence. Moreover, the positive effect is found to be more pronounced in companies that are more labor intensive, performing better in labor payment compliance, and located in regions with higher pressure for elderly care. This paper offers evidence in favor of implementing CEICR reduction policies from the perspective of improving the well-being of employees.

Anti-dumping policies, as one of the most important nontariff measures to protect a country's economic interests, can have an impact not only on a country's trade and social welfare, but also on capital flows. Anti-dumping measures can result in increased trade costs and alterations to exchange rate risk. This study investigates the impact of anti-dumping sanctions on the international portfolio allocations of global funds. Antidumping policies can decrease the proportion of a fund's investment portfolio allocated to recently-sanctioned countries. Closer trade ties between the sanctioned country and the country where a fund is domiciled exacerbate the divestiture, but stronger foreign direct investment links weaken the negative association. Some country and fund heterogeneities are also discussed. We find that more developed countries are less affected by the impact of anti-dumping measures on equity fund allocations; liberalization of the economy and stable government could also mitigate the negative impact of anti-dumping sanctions. High-risk funds, such as growth funds or funds that invest in leveraged buyouts, showed the greatest response to changes in anti-dumping regulations.

We examined changes in personal life insurance purchase decisions after a public health event by incorporating perceived health risk and regret into the expected utility function. The model predicts that the epidemic will create incremental insurance demand. Based on the 2003 severe acute respiratory syndrome outbreak in China, we used a panel dataset of 30 provinces from 2000 to 2007 and applied the difference-in-differences method to confirm the prediction empirically. The results showed that the epidemic did not significantly impact the demand for life insurance in the short term but played a role in the long term. People increased their health-care expenditure and premiums for new policies after the severe acute respiratory syndrome event, suggesting that the epidemic changed people's perceived risk and triggered anticipated regret, which increased life insurance demand. Some robustness checks also supported our findings.

Rural industrialization provides nonfarm employment opportunities and financial support for farmers and may be a non-negligible cause of agricultural mechanization in China. However, there is a lack of empirical studies on this topic due to challenges in obtaining data and identifying causal relationships. In this paper, we use multiple data sources and construct an instrumental variable based on the number of handicraft production cooperatives in 1957 to test empirically the causal effect of rural industrialization on agricultural mechanization. The results show that rural industrialization contributes significantly and robustly to agricultural mechanization. A 10 percent increase in the average number of industrial enterprises per township was associated with a 1.05 percent increase in the agricultural machinery power per unit area of arable land. Both the demand effect and income effect played crucial roles in the interaction between these two phenomena.

We build a simple overlapping generation model to investigate the effect of life expectancy on the real exchange rate where fertility is chosen endogenously. The model reveals that, although the overall effect of life expectancy on the real exchange rate is not certain, longer life expectancy tends to cause the real exchange rate to depreciate by reducing fertility. Fertility thus serves as a mediator in the effect of life expectancy on the real exchange rate. Evidence from 148 economies (1980–2018) shows a statistically significant and robust negative relationship between life expectancy and the real exchange rate. It is estimated that a 1 year increase in life expectancy is associated with a 1.5 percent depreciation in the real exchange rate. The evidence also confirms the mediated effect of fertility. The mediated effect that fertility exerts accounts for 30 percent to 50 percent of the total effect, depending on the real exchange rate index used.

The structural changes that the Chinese economy has been experiencing since its working-age population began to decline pose challenges for its further growth. First, as it loses its comparative advantage in labor-intensive activities, the share of manufacturing in its GDP has shrunk. Second, unproductive enterprises that are reluctant to exit the market tend to seek policy protection, which leads to the immobility of resource allocation. Third, the reallocation of the labor force from the highly productive manufacturing sector to the low-productivity service sector leads to the degradation of resource allocation. The inadequate exploitation of the potential of resource reallocation implies that the decline in manufacturing is premature. It is therefore important to combine market competition policy, industrial policy, and social protection policy to stabilize the development of manufacturing.

This essay focuses on three broad sets of issues that may not slow China's GDP growth to under 3 percent a year, but they will almost certainly create major social and physical problems that will be difficult to deal with. The first is the demographic and education challenges featured by a rapidly aging population combined with a large share of the population being under-educated. The second is the environmental challenges China faces in achieving the state goal of carbon neutrality by 2060. The third challenge is low consumption and unprecedentedly high investment, a strategy that has driven China's high growth rates in the past decades but is no longer sustainable. These three challenges are intertwined, making China's adjustment path even more uncertain. What would a sustainable development strategy involve? The clearest need is to shift investment away from energy-intensive housing and infrastructure and toward investment in people.

The Belt and Road Initiative (BRI) offers investment opportunities for several Eurasian countries but not all of them attract investments in the same way. This paper investigates the geographical distribution of BRI projects completed between 2013 and 2020. The analysis shows that pre-existing trade patterns are related to the likelihood of a country receiving completed BRI projects. We single out and provide evidence in support of five stylized facts. First, BRI countries with completed projects tend to be poorer and larger. Second, projects are more likely to occur in countries with intense intermediate trade with China. Third, the countries that received projects have more diversified export structures and their sectoral specialization overlaps with that of China. Fourth, among middle-high-income countries, the allocation of projects tends to favor those with high levels of intra-industry trade. Fifth, among BRI countries with projects, the complexity or sophistication of the goods traded increases faster with income. These findings suggest that fostering trade integration has direct benefits and may also contribute to further BRI investments.