Whether to Abolish or Introduce Dual Regulation as Trade and Environmental Policy?

China,which has already introduced an environmental tax in an effort to decarbonize,has recently begun emissions trading and is using two environmental policies in tandem,but there are concerns about the impact on growth and trade.Trade and environmental policies affect firms'entry and exit,resulting in changes in aggregate productivity and pollution emissions.This study compares the impacts of single regulation and dual regulation on welfare,using a research-and-development based growth model with heterogeneous firms.Under single regulation,the cleansing effect of trade liberalization could be undermined.Under dual regulation,trade liberalization decreases pollution and improves average productivity whereas decreasing total permits reduces pollution.From the perspective of improving welfare it is desirable to choose dual regulation because trade liberalization can reduce total pollution emissions via the cleansing effect of trade liberalization.

Global Spillovers of China's Monetary Policy

Spillovers from China's monetary policy have become increasingly obvious with China's growing importance in the global economy and its close economic and trade ties with the world.This study establishes a proxy structure vector autoregression model to investigate the magnitude and transmission channel of spillovers from China to global and regional economies,taking advantage of high-frequency changes in asset prices in the financial markets to identify monetary policy shocks.The analysis reveals that China's monetary policy can affect the global economy by influencing international trade and commodity prices but there is no evidence of China's monetary policy affecting global financial variables.Tightness in China's monetary policy can cause a decline in world output whereas expansion in monetary policy can support global trade and output.This study also finds that the response of emerging Asian economies to China's monetary policy shock was nearly twice that of developed economies,while the transmission path did not change.The results of this study are consistent with the stylized fact that China's monetary policy plays an important role in the global trade and commodity cycle,although it does not drive the global financial cycle.

Spatial Structure of Peer Networks and Academic Achievement Based on a Random Control Trial Experiment

This paper investigates whether changing the seating arrangement in a classroom can facilitate positive spillovers from top-performing students to others,using a field experiment conducted in a Chinese high school.Among study groups with balanced abilities,the treatment altered the spatial distribution by assigning the two top students to seats in the spatial center of each group.In the reference groups where students were allowed to choose their own seating arrangements,the lowest performing were significantly less likely to sit next to a top student than they would be under a random assignment.The results suggest that,in the treated groups,there could be enhanced academic spillovers from the top students.The treatment especially benefited the two lowest performing students in science subjects.In contrast,the treatment exerted negative effects on the test scores of the two middle-performing students,due to a disruption mechanism.The results suggest that the spatial layout of a peer network can have a significant impact on learning outcomes.

Local State Capacity and Uneven Taxation across Industrial Firms

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.

Does Chinese Environmental Policy Affect Income Inequality? Evidence from the Central Environmental Protection Inspection

This paper investigates the effect of environmental policy on income inequality.It focuses on the central environmental protection inspection led by the central government in China.Using a diference-in-diferences approach,it finds evidence that environmental regulation decreased the per capita income and enlarged the gap between urban and rural income while showing an insignificant effect on employment.Although the policy can reduce pollution levels and bring environmental benefits in aggregate,the findings of this study suggest that the regulations appear to have reduced the proportion of manufacturing industry and hindered general innovation and investment from entrepreneurs,which resulted in greater inequality.Rural residents suffered more from environmental regulation due to relatively high migration costs and their disadvantaged human resources on the aspects of health,education level,and skills.The local government's execution incentive can also play a key role in the effectiveness of environmental policy.Regions with lower GDP growth targets and younger government leaders were affected significantly with regard to the income growth of local residents and the urban-rural income gap.

Cross-border E-commerce and China's Exports during the COVID-19 Pandemic

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.

Evolution of China's Role in the Structure of Global Carbon Emission Transfers:An Empirical Analysis Based on Network Governance

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.

Industrial Policy,Product Switching,and Export Performance

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.

Economic Development and Social Integration of Migrants in China

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.

Sister-city Ties and Chinese Outward Foreign Direct Investment:A Spatial Econometric Analysis

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).

Import Policy Uncertainty and Innovation

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.

Does City Shape Affect China's Economic Development?

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.

Climbing the Export Quality Ladder:Role of Human Capital

This study assesses the effect of human capital expansion on China's export product quality.It employs the difference-in-differences(DID)framework based on a quasi-natural experiment investigating the 1999 higher education enrollment expansion as the exogenous policy shock.The empirical results confirm that human capital expansion appreciably improved the quality of China's export products.Human capital expansion promoted the transformation and upgrading of old products and the development of new products in term of intensive margin;it strengthened the endowment advantages of incumbent high-quality export enterprises while preventing low-quality enterprises from entering the market through price competition on the extensive margin.This prevented quality decline.Further,the study reveals that the improvement effect driven by human capital came from both innovation-induced and managerial efficiency improvement channels and was more prominent for large or foreign-funded enterprises in the eastern region.Our findings highlight the role of human capital in China's remarkable export performance from an endogenous growth perspective.

Whose Aid is Beneficial to Firms'Exports?Evidence from a Post-disaster Aid Experiment in China

Post-disaster aid is widely regarded as important in helping local recovery and development.This paper examines the effectiveness of post-disaster aid on exports,which are a driving factor of economic development.It reports a natural experiment in China–the case of post-disaster aid following the Wenchuan earthquake in 2008–to examine how donors'experiences affected the exports of manufacturing firms in disaster-stricken counties.The export experience of the donor was important.Aid coming from donors with more export experience was more beneficial to the exports of firms in recipient counties than aid from less experienced donors.“Learning from the donor”is a potential channel through which this effect occurred.That is,firms in recipient counties learned from donors'export experience by exporting more products similar to those of donors,exporting more to the destination countries of donors,and participating in the donors'supply-chain networks by exporting more of the donors'exports.Such“learning from the donor”effects show that knowledge spillover can occur between spatially distant parties,which complements the literature.

A Structural Measurement of the Valuation Effect of China's External Assets:Method and Application

Existing research on the measurement of the valuation effect mainly follows the residual method proposed by Lane and Milesi-Ferretti(2001).This cannot be used to perform structural decomposition.We propose an aggregation approach rather than the residual method to measure structurally the investment flow and valuation effect of China's external assets.The results indicate that the valuation effect of China's external assets has been highly volatile and it was negative during the pandemic period.The structural decomposition shows that portfolio investment and direct investment made the main contributions to the valuation effect.The impact of exchange rates on the valuation effect has generally been higher than that of asset price in terms of direct investment and total external assets but the opposite has been true for portfolio investment.China's outward investments are currently more inclined to Asian countries and a few European countries but inflows to China still mainly come from developed countries.

Value-added Tax and Leverage:Evidence from China's Value-added Tax Rate Reform

This paper uses China's value-added tax(VAT)rate reform as a quasi-natural experiment to identify the impacts of VAT rate shocks on corporate financial leverage.The results indicate that the reform reduced corporate total leverage significantly.There was a decrease in short-term leverage,but long-term leverage showed no significant change.These results remained robust across a series of robustness checks.Mechanism analysis shows that increasing profitability and improving cash flows acted as intermediary channels for the reform's impact on leverage.The reform also contributed to the mitigation of the asset–liability mismatch problem and the reduction of debt risk,while having no apparent impact on corporate investments.Finally,enterprises with more elastic demand and those with lower intermediate input ratios were affected most by the deleveraging effect of the VAT rate reform.This study suggests how the VAT rate cut shaped corporate capital structure.It thus helps to explain the economic consequences of VAT rate shocks.

Catalysts or Barriers?The Impacts of Natural Disasters on Internal Labor Migration in China

This paper discusses ways in which negative economic shocks captured by natural disasters can shape internal labor migration in China.The impact of negative economic shocks on migration depends on the combination of two opposite driving forces:(i)negative economic shocks can make staying in the affected area less profitable,thus enhancing returns to migration;(ii)the shocks can make it more difficult to migrate out,thus inducing a higher fixed cost of migration.Based on a nationwide dataset of China,this paper shows that when natural disasters were not severe,they caused migration out of rural areas.With sufficiently severe damage,however,the negative effect of natural disasters could be mitigated by villages'prior migrant networks.Specifically,with a severe shock,only clan members were able to migrate in response to natural disasters and enjoyed the complementary effects of prior migrant networks,as they could receive more help from social capital.

Bureaucratic Culture and Innovation

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.

Measures of Relative and Absolute Convergence and Pro-poor Growth with an Illustration based on China(2010–2018)

Income mobility is a key issue for understanding the process of economic growth and distributional change.Some economists have used the concept of“pro-poor growth”to examine,with individual-level panel data,whether the poor benefit more than the rich from economic growth by tracking the extent of income mobility among different population subgroups.There is also literature in macroeconomics on the measurement of convergence.This paper introduces population-weighted relative and absolute indices of mobility,convergence,and pro-poor growth;it also distinguishes between anonymous and nonanonymous approaches to these issues.The empirical analysis is based on Chinese panel data for the period 2010–2018.In both absolute and relative terms,income growth in China was greater for individuals with an initially lower income but only for lower income deciles in relative terms.There was also an overall increase in individual welfare from anonymous and nonanonymous perspectives,which was higher among younger individuals.The welfare of the poor did not increase more than that of the nonpoor.These results shed light on the evolution of income distribution in China during the past decade's rapid economic growth.

Foreign Ownership and International Trade Performance in China

We investigate the causal relationship between foreign ownership and international trade performance by comparing foreign-acquired firms with similar domestic-acquired firms in China with regard to changes in their post-acquisition international trade performance.Our findings indicate that foreign ownership significantly enhanced the probability of both exporting and importing,and strongly increased trade value.Foreign ownership took effect from the year of the acquisition and persisted for at least 2 years.It stimulated both processing trade and ordinary trade,and expanded products and trading partners.Post-acquisition trade performance also exhibited heterogeneity based on the different pre-acquisition and post-acquisition ownership.As for the underlying mechanisms,we show that firms experienced significant output expansion,increased export dependence,and eased financial constraints after foreign acquisition.