China & World Economy最新文献

This paper investigates the causal relationship between the Urban and Rural Resident Basic Medical Insurance (URRBMI) reform and household consumption in urban China using data from the Chinese Household Income Project survey and employing combination of the propensity score matching and difference-in-differences methods. The results yield three conclusions. First, the reform affected both the amount and share of household consumption. Specifically, the reform led to an increase in total household consumption, encompassing both medical and nonmedical expenditures. Among these, the proportion of medical consumption increased, while the proportion of nonmedical consumption reduced. Second, the impact of the URRBMI reform varied across consumption categories within nonmedical expenditure. Specifically, consumption for education and entertainment industries are positively impacted by the URRBMI reform in terms of both quantity and proportion. Third, low-income households benefit more from the URRBMI reform compared to middle- and high-income households. The main channels through which the URRBMI reform affects household consumption were the price effect and the crowding out effect on precautionary savings.

Media inclinations, whether favorable or biased, play a pivotal role in shaping public opinion. Sometimes, media coverage may unintentionally foster skepticism towards foreign firms, which could create challenges for those companies when they enter new markets. Based on a panel dataset from 2005 to 2020, this is one of the first studies to investigate empirically the impact of media opinion on outward foreign direct investment (OFDI) behaviors at the firm level. The media inclination index was constructed according to the varying inclinations of media from different countries in their reporting on each event. We examined the impact of media inclination on the investment value, frequency, and number of industries. This study has revealed the following insights: (i) Positive media coverage can stimulate the investment behavior of Chinese firms. (ii) The heterogeneity analysis indicates that the promotional effect of media reporting inclination on OFDI is more significant for state-owned firms from the investor's perspective and especially pronounced for firms in developing countries from the investee's perspective. (iii) Diplomatic visits and scientific research cooperation can amplify the positive impact of media opinions on the OFDI behaviors of Chinese firms.

This article investigates the macroeconomic consequences of foreign asset-freezing sanctions, a tool utilized by several Western nations amid recent geopolitical tensions. Specifically, it examines the repercussions of such sanctions on open economies, finding that they may experience a sharp recession and currency crisis. To quantify the impact, we develop a new Keynesian dynamic stochastic general equilibrium model with financial frictions and an asset-freezing channel for an open economy. We also calibrate our model to capture the unique structures of the Russian economy. The quantitative analysis of the model demonstrates that an abrupt asset-freezing sanction would lead to large output losses and high inflation increases. Our counterfactual examination reveals that higher elasticity of import substitution and lower elasticity of export substitution could alleviate the impact of foreign sanctions, whereas more aggressive monetary policy may have positive but limited stabilization effects. Notably, the monetary authority must navigate a trade-off between stabilizing output and managing inflation resulting from the cash-in-advance channel.

This paper examines the role of collateral in sudden stop models that feature occasionally binding constraints and endogenous growth. It shows how different assumptions regarding the nature and valuation of collateral alter the dynamics of crisis episodes and the welfare costs of pecuniary externalities. For example, in a model with land as collateral, valuing collateral at the “expected future price” leads to substantially weaker Fisherian deflation effects than the case with collateral valued at the “current price.” However, the average size of sudden stops in the two economies are similar because households endogenously avoid the region where large sudden stops would occur. The differences between different collateral valuations and the size of sudden stops are amplified when we abstract from endogenous growth. In another case, assuming collateral is income rather than land leads to smaller sudden stops as income is less volatile than asset prices. Finally, we show that some choices lead to constrained or conditionally efficient allocations whereas others generate inefficiencies, but these inefficiencies are small.

This paper provides transaction-level evidence about the impact of capital account liberalization on firms' bond issuance in the international financial market. Using bond issuance data for firms headquartered in China between 2014 and 2018, we showed that domestic private firms issued more bonds abroad than foreign-invested enterprises after restrictions were largely relaxed, controlling for possible confounding shocks such as monetary policy, local credit market shocks, US interest rate, carry trade, and global uncertainty shocks measured by the Chicago Board Option Exchange's Volatility Index. We found that domestic firms did not increase the overall volume of bond issuance but just had a higher portion of international bond issuance. We also found that domestic firms with higher tangible asset ratios tended to issue more bonds abroad. Our results suggest that targeted liberalization policy could effectively stimulate firms to issue bonds abroad. Policymakers need to monitor closely firms that issue more bonds abroad and thus have greater exposure to global shocks, incorporate these financial risks into policy design, and safeguard financial stability more effectively.

This study evaluates the quality of accounting information provided by Chinese multinational corporations (MNCs) in relation to the issue of earnings management. Using a combined dataset of outward foreign direct investment and financial statements by Chinese firms publicly listed on A-share markets between 2012 and 2017, we investigate whether Chinese MNCs are more inclined to manage earnings. We discover that these firms exhibited significant earnings management behavior and typically adjusted their earnings downward. We demonstrate that these effects were more pronounced among private MNCs than state-owned firms, and in host countries with weaker institutional quality. Further research reveals that after delaying the confirmation of current earnings, Chinese MNCs received higher government subsidies, and this pattern was particularly prevalent among private MNCs. We find no evidence that Chinese MNCs manipulated earnings to avoid paying taxes.

Employing an event study approach to the US–China trade conflict, we found that this conflict had an overall negative effect on the stock market performance of Chinese listed firms, but firms with institutional investor holdings (IIH) exhibited smaller losses than their counterparts in response to a US presidential memo announcing a trade conflict. We also examined the heterogeneous effects of this conflict on firms. The positive effect of IIH was larger for firms with foreign exposure and firms located in provinces with a higher degree of marketization. Institutional investor holdings helped to reduce firms' cost of refinancing and improved their long-run performance given the same short-term loss in response to the US presidential announcement during the trade conflict. These findings explain the role of institutional investors in alleviating the effects of the US–China trade conflict and achieving financial stability from a micro-perspective. The results have policy implications for corporate governance and financial market stabilization in response to trade policy uncertainty.

The super-deduction of research and development (R&D) expenses is at the core of the policy to stimulate enterprise innovation in China. This paper identifies whether firms are supported by the super-deduction policies for R&D expenses and uses the difference-in-differences method to investigate the impact of the policies on R&D investment. The results show that changes in policy in 2013 significantly increased the R&D investment of firms engaging in key state-supported technologies. Policy changes in 2016 significantly increased the R&D investment of firms engaging in non-key-state-supported technologies. Enterprises not only invested all their tax incentives in R&D activities but also increased their investment in self-raised funds. The super-deduction policy had different impacts on different industries, firms with different boards, and firms with different ownership. The policy significantly affected the manufacturing and construction industries, the Small and Medium Enterprise Board, and non-state-owned enterprises. Through a mechanism analysis, we found that the policy significantly reduced the user cost of R&D and increased the net cash flow of enterprises, which could raise a firm's R&D investment. It is necessary to increase policy support, expand the scope of super-deductible expenses, and increase the super-deduction rate based on industry classification according to the sensitivity of different industries to the policy.

This paper studies the connection between the stock market and real output in China and compares it with benchmark countries, employing a novel vector autoregression with asymmetric leads (VARwAL) model. It makes two contributions. First, it finds that the time profile of the Chinese stock market's response to real output shocks suggests no evidence of a distorted relationship due to manipulation of Chinese real output data or domination of the Chinese stock market by individual investors. Rather, the Chinese stock market is relatively more responsive to real output, in line with the larger share of manufacturing in the Chinese economy. Electricity output and industrial profits, two different, less-manipulable time series, yield similar results. Second, it presents the first use of VARwAL impulse responses to detect stock market bubbles: VARwAL captures the 2015 bubble in China successfully. Over the full sample period, China's stock market appears to have been less prone to bubbles than the US stock market.