The tariff-jumping theory posits that, when confronted with rising tariff barriers, firms increase their investment in the tariff-imposing country in order to circumvent the tariffs. We integrate data on Chinese firms’ cross-border mergers and acquisitions (M&A), export, and monthly product-level tariff data from 2018 to 2019. By constructing a shift-share instrumental variable (SSIV), we find that trade protectionism suppresses Chinese firms’ cross-border M&A—a finding that contradicts the traditional tariff-jumping hypothesis. This research identifies three potential mechanisms: (1) the Trump tariffs directly reduce firms’ operating performance; (2) the U.S. foreign investment security review process generates a demonstration effect; and (3) uncertainty arising from U.S.-China trade tensions weakens the bargaining power of Chinese firms.
The participation of foreign-invested enterprises in the formulation of national standards is taken as an opportunity to identify standards opening-up, and the impact of standards opening-up on local firms' innovation is examined. It is found that standards opening-up promotes local firms' innovation, works through collaboration between Chinese and foreign firms, market competition, and information transmission mechanism, and influences upstream and downstream innovation along the industrial chain. In addition, standards opening-up promotes firms’ product upgrading and exporting, standards harmonization, and foreign investment stabilization. These findings explain the significance of steady expansion of institutional opening-up.
Using comprehensive firm-level databases, we study the micro-basis of different trends in aggregate and individual labor shares in China's manufacturing sector during 1998-2016. We find that (1) redistributing value added towards the bottom of labor share distribution causes the decline of aggregate labor share; (2) the redistribution effect is driven by firms gradually increasing market share and reducing labor share; and (3) state-owned enterprises contribute significantly to the changes in aggregate labor share. The analysis of this paper enhances the understanding of the changes in China's labor share from the perspective of dynamic change of micro-firms.
Liking it or not, ready or not, we are likely to enter a new phase of human history in which artificial intelligence (AI) will dominate economic production and social life—the AI revolution. Before the actual arrival of the AI revolution, it is time for us to speculate on how AI will impact the social world. In this article, we focus on the social impact of generative LLM-based AI, discussing societal factors that contribute to its technological development and its potential roles in enhancing both between-country and within-country social inequality. There are good indications that the US and China will lead the field and will be the main competitors for domination of AI in the world. We conjecture that the AI revolution will likely give rise to a post-knowledge society in which knowledge per se will become less important than in today's world. Instead, individual relationships and social identity will become more important. So will soft skills, including the ability to utilize AI.
The gross domestic product(GDP)at current prices by the production-based accounting method reflects the scale and structure of the economy and is essential for understanding economic performance,designing economic policies,and promoting sustainable and healthy economic development.To improve data quality,the National Bureau of Statistics has continuously refined China's GDP by production-based accounting methods,enhancing their scientific rigor,standardization,and international comparability.This paper reviews the major changes in these methods and proposes suggestions for further improvement,with the aim of helping users better understand these changes and accurately use the relevant data in research.
We examine the causal impact of air pollution during pregnancy on the early health of newborns using daily data from environmental monitoring stations in Wuhan and data from the Wuhan Birth Cohort Studies (WBCS). Results show that air pollution during pregnancy significantly damages the early health of newborns, and this effect intensifies continuously with the increase in air pollution levels. Compared with late pregnancy, air pollution has a greater impact on the newborn in early and mid-pregnancy. The air pollution during pregnancy has a greater impact on children born to women with low socioeconomic status and advanced age. Mechanism analysis suggests that air pollution increases the probability of perinatal complications and reduces the number of prenatal visits.
The overall adaptation level and mechanisms of grain production to climate change are estimated using national rural fixed observation points data. Adaptive behaviors have alleviated 52.5 %–63.5 % of the adverse impacts of high temperatures, with rice and maize more adaptable than wheat. However, adaptive behavior has not effectively mitigated excessive precipitation impacts. Technological progress, adaptation technology adoption, and input adjustments are key adaptation mechanisms. Future efforts should enhance agricultural technological contributions to comprehensively strengthen the adaptation capacity of grain production to climate change.
We empirically investigate whether employment is affected by foreign direct investment (FDI). Empirical results show that the FDI deregulations promote employment by increasing the job creation rate. In addition to the employment expansion of incumbent firms, the FDI deregulations facilitate the entry of new firms, which also contributes to employment. Furthermore, FDI in upstream industries can promote employment in this industry, and FDI from other regions can promote local employment. Finally, a simple estimate shows that about USD 56,900 is required for each job created.
Surnames with a higher presence of overseas Chinese in the same region exhibit the following characteristics: (1) better housing conditions, but no significant improvement in educational attainment or labor income; (2) a higher likelihood of economic dependency on other family members; (3) lower labor participation rates, shorter working hours, and a higher propensity for entrepreneurship. On the one hand, the economic support from overseas relatives improves the living conditions of local members but crowds out some of their investment in human capital and labor participation. On the other hand, the transnational clan networks provide access to overseas market information and financial support, facilitating engagement in export-oriented businesses and promoting entrepreneurial activities.
Drawing on the case of the the National Natural Science Foundation of China (NSFC), we examine the impact of fundamental research funding on college graduates’ employment. Our findings indicate that an increase in total funding is positively associated with higher monthly salaries and lower unemployment rate among graduates. The NSFC funding enhances scientific research output, improves teaching and experimental facilities, and provides more research opportunities for students. This paper provides policy implications on how China can cultivate talent and promote the employment of college graduates.
Using China Family Panel Studies (CFPS) data from 2010 to 2018, this paper employs a staggered difference-in-differences (DID) approach to unveil that the entry of bike-sharing significantly boosts per capita household expenditure by 3.9%–6.8%, along with an increase of 3.8%–4.9% in dining-out expenses. The analysis of mechanisms indicates that bike-sharing reduces the time cost per unit of consumption by alleviating traffic congestion, increases leisure time by reducing commute duration, and enhances net income by lowering rental expenses without affecting wage. Our findings provide evidence for the impact of the sharing economy on consumption and its mechanisms.
We investigate the welfare impacts of price discrimination using a two-dimensional product differentiation model with best-response asymmetry. Among our findings: (i) Price discrimination has a reduced demand elasticity effect in two-dimensional models but not in one-dimensional models. (ii) Price discrimination on one and the same dimension can raise profits and uniform price lies in between the discriminatory prices. These results are similar to those in one-dimensional models of price discrimination but with best-response symmetry. (iii) Price discrimination on one but different dimensions and price discrimination on both dimensions are likely to lower profits, mimicking the standard results in one-dimensional models with best-response asymmetry. Overall our results suggest that regulators need to be more cautious with the practice of oligopolistic price discrimination under best-response asymmetry.
We construct an instrumental variable for the Internet penetration rate using China's “8-horizontal-8-longitudinal” optical cable network to identify the impact of the Internet on the agglomeration of producer services in cities. We find that, (i) the Internet promotes the agglomeration of producer services to cities with larger population sizes due to the higher knowledge intensity of large cities; (ii) the Internet can strengthen the role of the expansion of the manufacturing industry in a city or its surrounding areas in promoting producer services agglomeration in large cities, which in turn promotes the agglomeration of producer services to large cities.
Employing the exogenous scenario of the “New Rules on Asset Management” in April 2018, this paper tries to explore the impact of the contraction of Chinese shadow banking on corporate investment behavior. This paper finds that the regulation leads to a 18.3% decrease in capital expenditure for firms relying on shadow banking system prior to the shock. Then, this paper tests three underlying mechanisms, which include the decrease of corporate borrowing, the increase of corporate financing constraints and the reduction of debt maturity. This paper also provides the empirical evidence that the implementation of the “New Rules on Asset Management” optimizes the allocation of capital across firms.
The Chinese government implemented the universal two-child policy on January 1 2016 to arrest the decline in the nation's birthrate and address the challenge of a rapidly aging population. We find that this policy significantly increased the possibility of having children and this effect was not attenuated from 2016 to 2018. This policy can explain 14.8% of the average number of newborns in 2016–2018. Our back-of-the-envelope calculation suggests that the three-child policy implemented in 2021 will bring additional 283.2 thousand newborns each year.
We use the strengthening of China's emission target control regime during the Eleventh Five-Year Plan period as a quasi-natural experiment to study the impact of strengthened environmental regulation on firm's emissions and other economic performances, and find that more rigorous environmental regulations induce firms to cut down their emissions, mainly through the “technology effect.” The structural decomposition shows that this emission reduction effect varies across industries with different levels of pollution intensity, and the power sector plays an important role in the “structural adjustment effect” among industries.
Using the data of listed companies and the DID method, this paper reveals three ways in which green credit policy (GCP) affects corporate debt financing. By controlling credit input, GCP can effectively restrain corporate debt financing in the “two-high” industries. However, the policy also leads to the environmental performance effect and bank credit discrimination effect, as it strengthens the impact of environmental performance on corporate debt financing and weakens banks’ credit discrimination. Under the combined effect of the three ways, GCP has restrained the borrowing growth of state-owned enterprises, but has no significant impact on private firms.
Based on the resource-based view, this paper attempts to analyze the impact of international related-party trade on the performance of foreign-funded enterprises in China from the perspective of value creation. The findings of this paper are as follows. (1) the greater the proportion of parent company to foreign-funded enterprises’ international related-party transactions, the better the performance of foreign-funded enterprises. (2) As the differences in legal systems increase, the role of international related-party trade in promoting performance is weakening. (3) As cultural differences increase, the role of international related-party trade in promoting performance is increasing. After considering the impact of transfer pricing, the conclusions of this paper remain unchanged.
Recently, China's Ministry of Education has established a new department to regulate extracurricular tutoring for the purpose of reducing students' excessive academic burden. In this paper, we provide empirical evidence that academic competitiveness among students is a key driver of the extracurricular tutoring fever. Using the China Education Panel Survey (CEPS) data, we show that when their competitors attend extracurricular tutoring, students keep up with the actions of competitors, generating the peer effect of extracurricular tutoring. This effect is more pronounced for students with stronger competitive preferences. However, this irrational imitation behavior does not improve students' academic performance.
We construct a global financial inclusion index using data from the World Bank, IMF, and V-Lab and propose an inverted U-shaped relationship between financial inclusion and financial stability. The empirical evidence supports our hypotheses, and the impact of financial inclusion on financial stability is less prominent under strong regulation and supervision. In addition, we use our constructed financial inclusion index, capital adequacy ratio, market power, and macroeconomic variables to simulate and predict the financial crisis. Our research has important policy implications and provides valuable insights to financial regulatory authorities in making decisions related to financial inclusion and financial stability.
