Developing countries gained significant market shares in both industrial and developing countries throughout the 1990s and 2000s. This column highlights that China accounts for more than 70% of market share gains by developing countries in both industrial and developing countries during the 2000s. Recent increases in the industrial capabilities and competitiveness of developing countries can thus be considered predominantly a Chinese affair.
M. Ataman Aksoy, Francis Ng, Saturday, May 3, 2014
John Whalley, Chunding Li, Wednesday, March 5, 2014
After joining the WTO in 2001, China has entered into a number of trade agreements. Those currently in consideration are substantially larger than the initial ones. China, more than any other large economy, needs to attempt to enhance its export growth, which has turned negative in 2013. This column discusses some of China’s trade agreements and summarizes the implemented negotiation strategy. The impact of these trade agreements on China’s economic growth also deserves attention.
Taha Choukhmane, Nicolas Coeurdacier , Keyu Jin, Wednesday, January 22, 2014
Since China is growing rapidly, one might expect Chinese households to borrow against their future income. In fact, Chinese households save 30.5% of their income – compared to about 5% in OECD countries. This column discusses recent research linking the Chinese saving puzzle to China’s one-child policy. The savings rate of households with twins is about 6–7 percentage points lower than that of households with an only child. Demographic factors can explain an estimated 35–45% of the 20 percentage-point rise in China’s household saving rate between 1983 and 2011.
Joshua Aizenman, Yothin Jinjarak, Nancy P. Marion, Sunday, January 5, 2014
Before the financial crisis, the world economy was characterised by large and growing current account imbalances. Since the onset of the crisis, the current account imbalances of the US and China have decreased to half their pre-crisis levels. This column highlights the implications of the reduction in the current account surplus for China, and gives policy recommendations. A restructuring of the economy is needed, and reversing of policies that depress consumption and prevent real appreciation.
Richard B. Freeman, Xiaoying Li, Sunday, December 22, 2013
Formal contracts are key to enforcing workers’ rights. This column presents evidence that the Labour Contract Law improved worker outcomes in China, especially among migrant and low-wage workers. The proportion of workers with social insurance increased without any significant negative effect on the employment rate.
Fabrizio Zilibotti, Monday, December 23, 2013
Fabrizio Zilibotti talks to Viv Davies about his award-winning paper ‘Growing Like China’ (co-authored with Zheng Song, Kjetil Storesletten and Yikai Wang) that addresses the puzzle of the combination of high growth and high return to capital in China with a growing foreign surplus. They also discuss pensions and demographic transition in China, factors that are driving the country’s growth and the country’s future role in the global economy. The interview was recorded on 17 September 2013.
John Gibson, Chao Li, Wednesday, November 27, 2013
Many studies find evidence of a growing income inequality in China. However, the majority of these studies may be constructing biased measures of inequality. This column presents evidence from a new study on how inequality in China is overstated if one ignores the spatial differences in the cost of living. With a booming urban housing market that displays a high degree of heterogeneity, accounting for spatial price differences is essential.
Kyle Handley, Nuno Limão, Saturday, November 23, 2013
The impact of policy uncertainty on economic activity is potentially important, but controversial because it is hard to identify and quantify. Recent research provides a framework to identify the impacts of policy uncertainty on firm decisions, and finds it has strong effects in the context of international trade. China’s WTO accession secured its most-favoured nation status in the US, and the evidence shows this reduction in uncertainty can explain a significant fraction of its export boom to the US.
Mario Mariniello, Saturday, November 9, 2013
Since the adoption of the Anti-Monopoly law in 2007, the Chinese competition authorities have stepped up enforcement of mergers and anti-competitive practices. The Chinese Ministry of Commerce has relied heavily on behavioural remedies in merger cases (as opposed to the more efficient structural remedies favoured by the European Commission). Furthermore, merger policy has been used to protect domestic industries from competition. In contrast, Chinese fines for cartels have shown no foreign bias, and if anything have been too low.
Thomas Holmes, Ellen McGrattan, Edward C. Prescott, Friday, November 8, 2013
Why are FDI flows between China and technologically-advanced countries surprisingly small? This column analyses the issue in light of China's quid pro quo policy that makes technology transfer a precondition of foreign firms selling in China. We find that the policy provides significant gains for China, but losses to its FDI partners.
Anders Åslund, Wednesday, September 4, 2013
Emerging markets are under pressure. This column argues that this is not a mere headwind but that the BRICs’ party is over. Their ability to get going again rests on their ability to carry through reforms in grim times for which they lacked the courage in a boom.
Hans Degryse, Liping Lu, Steven Ongena, Wednesday, August 21, 2013
Non-bank financing originating in the shadow banking system has increasingly become an issue for policymakers. This column argues that informal financing has, in fact, been an essential element of corporate performance in China. Through reviewing the interaction between informal and formal financing, evidence suggests that informal financing simultaneously granted with formal financing (co-funding) is helpful for growth, especially for small firms.
Ruixue Jia, Masa Kudamatsu, David Seim, Tuesday, August 20, 2013
Despite its economic and political power, details of how China’s leaders are selected are opaque. This column presents new research on how Chinese leaders are selected, suggesting that the Communist Party has avoided selecting loyal and incompetent leaders – typical of autocratic regimes – through a system of job rotation and promotion within the Party. This system has helped pairs of officials build trust by working together, allowing top politicians to choose the most competent among a pool of trustworthy subordinates.
Jeffrey Frankel, Wednesday, August 7, 2013
Can international trade be good for the environment? This column assesses the EU-Chinese anti-dumping dispute in detail, and argues that trade could well be the saviour of solar power. Trade was good for protecting against things like sulphur dioxide, in the case of automobiles, 30 years ago. The same is true of trade in solar equipment today. Westerners should celebrate the contribution of trade to reducing the cost of solar power, not block it with protectionist anti-dumping measures.
Pierre-Philippe Combes, Sylvie Démurger, Li Shi, Sunday, February 17, 2013
This paper evaluates the role that cities play on individual productivity in China. The authors' results strongly support the productivity gains that can be expected from further migration and urbanisation in China.
Pierre-Philippe Combes, Sylvie Démurger, Li Shi, Tuesday, July 9, 2013
Economic geography typically predicts positive returns to urban scale. This column argues that China faces unprecedented challenges in the face of a new wave of urban migration. Accelerating urbanisation has been and will continue to be – if managed correctly – an opportunity for sustaining economic growth by capturing the benefits from urban agglomeration.
Shang-Jin Wei, Tuesday, June 25, 2013
The Chinese central bank has recently dropped hints that it will quicken the pace of interest-rate reforms, moving towards a more market-determined regime. Will this reduce China’s ‘excessive’ savings and current-account surplus? This column argues that it won’t. While the interest-rate reform may carry many benefits, reducing the country’s current-account surplus is not one of them.
Kalina Manova, Zhihong Yu , Monday, May 13, 2013
What can we learn from China’s experience as a linchpin in the global value chain? This column presents new research showing that financial frictions influence the organisation of production across firm and country boundaries. If you’re credit-constrained, you might be stuck in the low value-added stage of the supply chain. Strengthening capital markets might thus be an important prerequisite for moving into higher value-added, more profitable activity. China’s experience tells us that liquidity-constrained manufacturers might therefore benefit more from import liberalisation and from the fragmentation of production across borders.
Tatiana Didier, Sergio Schmukler, Monday, May 6, 2013
The growth of China and India’s financial sectors is hard to ignore. This column presents a new dataset on domestic and international capital raising activity and performance of the publicly listed firms in China and India. The data suggest that expanding capital markets might tend to directly benefit the largest firms – those able to reach some minimum threshold size for issuance. More widespread direct and indirect effects are more difficult to elucidate.
Willem Thorbecke, Tuesday, February 26, 2013
Policymakers everywhere are concerned about currency wars. Are quantitative easing and managed exchange rates bad for the global economy? This column looks at the hard empirical evidence, arguing that, in fact, Japan is behaving rather responsibly and that other strong economies have themselves benefited from undervalued currencies. That said, it is true that politicians’ short time horizons often lead to stealthy policy and large swings in exchange rates. Economists should therefore aim to promote longer-run cosmopolitan interests rather than shorter-run nationalistic agendas where possible.