China & World Economy最新文献

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.

This article analyzed the influence of increasing wages on cropping patterns from theoretical and empirical perspectives. The results showed that the increasing labor cost provided a significant incentive to adjust the grain cropping pattern, which increased the production of the three major cereal grains but reduced the production of other grain crops. Increasing wages had a significant negative impact on cash crops. More labor-intensive cash crops experienced a larger negative impact in the context of increasing wages. The increase in labor costs also had a negative impact on the proportion of vegetables produced, which was more evident in northern China. A further mechanism test indicated that factor substitution was a significant reason for cropping pattern changes; this illustrated the substitution of labor by machinery not only between grain crops and cash crops but also among different cash crops.

Consumption inequality may impede economic development and hinder the achievement of common prosperity. Using three waves of the China Family Panel Studies from 2014 to 2018, this paper investigated the impact of e-commerce on consumption inequality, as measured by the Kakwani index. The results indicate that e-commerce can reduce household consumption inequality. A mechanism analysis shows that e-commerce can narrow household income inequality, increase the purchasing power of low-income households, and promote the consumption of households with limited access to offline markets, thereby reducing the consumption gap. A heterogeneity analysis suggests that the positive role of e-commerce in reducing consumption inequality can be more significant among vulnerable households, such as households with elderly members and less-educated households. E-commerce can have varying impacts on consumption inequality across different subcategories of household expenditure, with the greatest impact seen in entertainment and education expenditure. These findings provide new evidence for the role of e-commerce in reducing consumption inequality in the digital economy, and the implications of this are discussed.

This paper examines the causal effect of human capital expansion on the exit of foreign-owned firms using the difference-in-differences method together with a quasi-natural experiment involving the expansion of higher education in China in 1999. The expansion of human capital reduces the probability of the exit of foreign-owned firms significantly. This conclusion remains robust under a series of tests, including changing the sample range, adjusting the identification method, and considering the trade liberalization. Analysis of the mechanism indicates that human capital expansion reduces the exit probability of foreign-owned firms by stimulating innovation, improving production efficiency, and optimizing the quality of input and output goods. Industries with higher asset specificity are also more likely to restrain the exit of foreign-owned firms through human capital expansion. Overall, the findings of this study provide a good insight into the exit behavior of FDI in China from the perspective of human capital.