China & World Economy最新文献

In this study, we expanded upon the current benchmark model of external adjustment and dissected the concept of international financial adjustment into two distinct components: valuation effect and investment income. Our enhanced model, which we refer to as “tri-channel model,” incorporates three key elements: trade balance, valuation effect, and investment income. Using a consolidated quarterly dataset that encompassed China's balance of payments and international investment positions from 1998 to 2020, we estimated the relative importance of the three newly introduced adjustment channels to China's cyclical external imbalance. We found that the trade balance channel played a major role, accounting for approximately 76 percent of cyclical external adjustment. The contribution of the investment income channel to cyclical external adjustment (21 percent) was much greater than that of the valuation effect channel (3 percent). These findings imply that policy responses to the cyclical external imbalance in China should focus more on the trade balance and investment incomes channels rather than exploiting the valuation effects.

Using panel data from 2012 to 2020 for publicly traded Chinese companies, we explored the efficacy in mitigation of tax information asymmetry to combat profit shifting and transnational tax avoidance. Our empirical analysis revealed that, after the implementation of the inaugural multilateral automatic information exchange system known as the Common Reporting Standard, there was a statistically significantly increase in the effective tax rate by 1.4 percentage points, accompanied by an increase in instances of tax compliance. These trends were discernibly associated with a reduction in profit shifting and notable changes in reported profit margins, particularly influenced by actions related to debt shifting and strategic management of intellectual property assets. These findings underscore the strong connection between these effects and various factors such as investment destinations, asset portfolios, and industry classifications. The results imply a prospective decline in the incidence of cross-border tax avoidance by Chinese multinational entities and demonstrate the potential of emerging international tax cooperation frameworks for curbing the global tax avoidance practices of multinational corporations.

This paper explores how learning from neighboring firms affects new exporters' product quality. It builds a Bayesian learning model to study how new exporters revise their prior beliefs about foreign customers' preferences for product quality from neighboring pioneering exporters. The model shows that a new exporter improves its product quality when it receives a positive quality-preference signal from its neighbors. The learning process of a firm depends on the number of neighbors, the level and heterogeneity of their export quality, and its own prior knowledge of the market. Highly disaggregated firm–product–country level transaction data provide robust evidence for this. The results also suggest that the impact of neighboring signals on a new exporter's quality can be channeled through the importation of high-quality intermediate inputs and more fixed investment. Learning effects are heterogeneous across firms and learning can influence other aspects of export performance.

In the context of China's efforts to establish a global network of free trade areas and diversify its export products, this study explores the impact of trade agreement depth on China's export diversification. Building upon a trade model with multiproduct firms, we discover that the effect of trade agreement depth on export diversification is multifaceted, depending on the relative magnitude of the “market expansion effect” and the “competition intensification effect.” Through empirical analysis of China's exports to 132 countries (or regions) from 2000 to 2015, we find that the deepening of trade agreements affected China's export diversification negatively. This negative correlation was predominantly due to the similarity in comparative advantages between China and its trade partners, leading to the “competition intensification effect” overshadowing the “market expansion effect.” We also note that “natural” agreements, when deepened, were more likely to affect China's export diversification adversely than their “non-natural” counterparts. Moreover, as export diversification increased, the marginal impact of deepening trade agreements exhibited an inverted U-shaped trajectory.

Decentralization can alter the incentive structure of local governments and one outcome of this is debt accumulation. Based on the “Province-Managing-County” pilot policy, a fiscal decentralization reform devolving fiscal power from the prefecture-level city to the county level, we assess the impact of fiscal decentralization on local government debt using a difference-in-differences model with a unique county-level dataset from 2011 to 2019. According to the study findings, the “Province-Managing-County” reform resulted in an average increase of 5.758 percent in the local government debt ratio across the pilot counties. Mechanism analyses suggest that this may have arisen from changes in the incentive structure, including external pressures from government assessments and internal developmental needs for promotion, leading to a rise in expenditure pressures on local governments. The role of supervision in mitigating the impact of fiscal decentralization on debt growth was also demonstrated, indicating that an appropriate supervision mechanism must be in place in conjunction with a decentralization policy.

This study examines the impact of the digital revolution on the job quality of workers with a specific focus on those at the lowest end of the spectrum in China's domestic labor market. Leveraging exogenous timing variations that result from the implementation of the Broadband China Program across different cities, it provides quasi-experimental evidence concerning the effects of the digital revolution on the job quality of lower class workers, particularly rural–urban migrant workers. Using data from China Migrants Dynamic Survey, this study reveals that migrants' comprehensive job quality index increased by 0.0138 (5.33 percent), and its component indices experienced positive effects after the Broadband China Program was implemented. This study also investigates heterogeneous policy treatment effects among workers with diverse demographic and occupational characteristics. Underlying mechanisms are considered, including positive macroeconomic shocks, increased social interactions, and Internet use. In particular, migrants' attitudes toward local settlement became more positive, suggesting that the positive effects of the digital revolution on livelihood lasted for some time. Taking China as an example, this study contributes valuable empirical evidence of how the digital revolution can affect lower class workers' employment or living conditions in a developing country. Related policy implications are also considered.

China's exports experienced a rapid recovery after the outbreak of the 2019 COVID-19 pandemic. A primary engine was cross-border e-commerce (CBEC) trade, which bucked the downward export trend during the pandemic. By exploring the variation in the number of CBEC comprehensive pilot zones across provinces, we identified the causal impact of CBEC on exports using monthly province–product–destination data for 2019 and 2020. We found strong and robust evidence that CBEC contributed to exports during the pandemic by promoting the expansion of incumbent exports (intensive margin) rather than through the expansion of product categories and exporting partners (extensive margin). Specifically, higher pandemic risk suppressed the role of CBEC at the intensive margin while enhancing it at the extensive margin. Exports to developed countries benefited more from CBEC, both intensively and extensively. Compared with final products, a larger number of intermediate products were exported through CBEC after the outbreak of the pandemic.

This study explores the effects of bureaucratic culture on innovation. We define bureaucratic culture as a culture in which power and officials are held in the highest regard. Using panel data of publicly listed Chinese manufacturing firms from 2007 to 2015, we found that bureaucratic culture negatively correlated with firms' patent output. A mechanism analysis shows that bureaucratic culture hindered corporate innovation by reducing firms' research and development inputs and decreasing innovation efficiency. Furthermore, we provided evidence that anti-corruption campaigns and the development of formal institutions could neutralize the negative impact of bureaucratic culture on corporate innovation. This study is the first to investigate quantitatively the causal effect of bureaucratic culture on corporate innovation and it can deepen the understanding of the relationship between culture and innovation in China. We speculate that promoting a creative culture, particularly one that fosters entrepreneurial spirit, is of utmost importance.

In this research we investigate the association between local state capacity (LSC) and effective tax burdens (ETBs) on industrial firms within counties between 1998 and 2013. The LSC measures a state's capacity for policy implementation and specifically its ability to acquire low-cost agricultural land for nonagricultural (industrial or commercial) purposes. Based on China's government-led development experience since the 1990s, we draw on two unique household survey datasets to capture LSC at county level. We find robust evidence that greater LSC was associated with much lower ETBs on large industrial firms. This taxation pattern implies local government's primary reliance on larger manufacturing firms, while the ETBs for small-and-medium enterprises are not as prominently addressed. This research highlights that LSC can affect both the amount of revenue a local government can generate and the methods it uses to collect these revenues.