China & World Economy最新文献

This paper reconsiders the roles of China and some developed countries in the network of carbon emission transfers via international trade in value added from a new perspective of network governance. Network search intensity (NSI) and the extended gravity model are used with cross-country panel data to analyze the mechanism of China's engagement in network governance of carbon emission transfers. The results show that from 2000 to 2009, China was a net exporter of carbon emissions, even though it shifted from the semi-periphery to the core in the network of carbon emissions embodied in imports. Meanwhile, NSI had a significant positive impact on carbon emissions embodied in exports. Given China's important role in the global production network and division of labor, NSI may also affect industrial structure and the quality of the ecological environment to a large extent. This study analyses the network governance mechanism of China's participation in global carbon transfers. The results suggest that the technical complexity of export products and product heterogeneity do not change the positive impact of NSI on carbon emissions.

This paper constructs a general equilibrium spatial urban model and measures city geometric compactness using the patch-shape index based on evidence from satellite imagery and basic vector maps of China. It adopts the ordinary least squares and instrumental variable approaches to examine the effect of city shape on the urban development of 279 Chinese cities at or above the prefecture level. The empirical results show that there was a significant negative correlation between city shape and economic outcomes. Specifically, every 1 percentage point increase in the patch-shape index led to a decrease in city-scale GDP by 0.009 percent, housing prices by 0.044 percent, and wages by 0.024 percent. More compact urban layouts attracted an inflow of households and firms, stimulated city economic growth, and were associated with increased housing prices and wage rates. The paper considers the cities' initial conditions, trends in population changes (expanding, shrinking, and stagnant cities), and geographic factors, and finds that the results are robust. An array of policy implications can be drawn from the research.

Industrial policy can promote economic growth and industrial upgrading by encouraging enterprises to adopt product switching. By utilizing comprehensive industrial policies and customs trade databases from 2000 to 2015, this paper found that firms with product ranges within policy-supported areas were more active in product switching. Among all the enterprises that adopted the product switching, those with nonmain products in policy-supported areas were more inclined to adjust their main product. They tended to transform nonmain product to main product as opposed to introducing new main product in order to effectively leverage their export experience and established technology. Whereas, for enterprises whose main product was within the policy-supported areas, their tendency to switch products significantly decreased. Mechanism analysis suggested that policy support, by alleviating industry distress and mitigating excessive market competition, encouraged firms to switch products to areas with policy backing. Moreover, we estimated trade performance after product switching from the perspective of product unit price and export product quality. We found that for firms whose main product was in policy-supported areas, such switching was more likely to result in “low price, high quality” exports, whereas for firms with nonmain products in supported areas, such switching was more likely to lead to “high price, low quality” exports, which indicates that firms switching to policy-supported areas need to continuously develop their core competencies and operate effectively to improve their production performance.

This paper employs dynamic spatial econometric methods to analyze the impact of the sister-city relationship on Chinese outward foreign direct investment (OFDI) using a linked country-level dataset from 2003 to 2016. The results show strong and robust evidence that the sister-city relationship has been a crucial OFDI location determinant in host countries and their neighbors. Specifically, the sister-city tie between China and the host country has stimulated Chinese OFDI in host countries. Moreover, Chinese OFDI in host countries would be reduced if China concluded sister-city ties with their neighbors to which we refer as the neighboring effect. Further mechanism tests show that sister cities have promoted OFDI in host countries via four channels: reducing political risk, decreasing information asymmetry, narrowing institutional distance, and mitigating cultural differences. This tendency for sister-city links to promote OFDI has varied substantially depending on OFDI entry modes (i.e., greenfield or cross-border mergers and acquisitions), motivation (i.e., resource-, market-, technology-, or efficiency-oriented OFDI), and Sino–foreign geographical relationships (i.e., Belt and Road Initiative countries or other countries).

Migrants often face challenges in social integration. Using a nationally representative sample of migrant workers and employing the epidemiological approach, this paper examines the determinants of social integration. It finds that, conditional on a set of individual features, the migrants from less-developed provinces have greater difficulty in integrating into local communities. These results still demonstrate robustness across alternative variables, samples, and various specifications. Mechanism analysis shows that educational and employment factors account for over 40 percent of the variance in social integration levels, suggesting their significant influence. Additionally, the analysis suggests that native bias against migrants, along with misunderstandings between them, may account for part of the remaining variation in social integration levels. Importantly, the ability to speak local dialects has been identified as a crucial factor that can significantly improve migrants' subjective experience of integrating into a new city. By identifying one specific cause of social integration, this paper provides information to individuals and governments and assists them to improve social integration.

The Chinese government has emphasized innovation as the primary driving force for economic development in the new era. This paper studies the effect of import policy uncertainty (IPU) on the innovation activity of Chinese manufacturing firms. It establishes a simple model to show that the presence of IPU encourages innovation and that a reduction in IPU discourages innovation. It distinguishes the almost unnoticed IPU reduction from tariff reduction on China's WTO accession and develops a novel difference-in-differences specification that identifies the negative effect of IPU reduction on innovation using updated data for Chinese manufacturing and patent filings. The result holds after a battery of identification assumptions and robustness checks are considered. The import channel explains about two thirds of the effect of IPU on innovation, but not all of the effect. Finally, this paper examines the effect across firms of different levels of productivity and ownership types and patents of different categories.

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.