An Empirical Overview of Chinese Capital Market Grace Xing Hu, Jun Pan, Jiang Wang, Jun 29, 2022
An Empirical Overview of Chinese Capital Market Grace Xing Hu, Jun Pan, Jiang Wang, Jun 29, 2022 We provide an empirical review of the Chinese capital market, focusing on the basic return and risk characteristics of its major asset classes, as well as a comparison to the US market. All major asset classes in China have significant higher volatilities than their counterparts in the US market, but they do not always yield larger returns. Small-company stocks, short-, medium-, and long-term treasury bonds outperform their US counterparts, while large stocks underperform and long-term enterprise bonds yield similar returns.
Local Government Implicit Debt and the Pricing of LGFV Bonds Laura Xiaolei Liu, Yuanzhen Lyu, Fan Yu, Jun 22, 2022 To examine the implicit guarantee provided by Chinese local governments to local government financing vehicles (LGFV), we create a proxy for local governments’ implicit debt ratio and find it correlated with the credit spread of LGFV bonds.
Is There an Industrial Land Discount in China? A Public Finance Perspective Zhiguo He, Scott Nelson, Yang Su, Anthony Lee Zhang, Fudong Zhang, Jun 08, 2022 China’s land market, a key driver of the country’s extraordinary economic growth over the past 40 years, does not provide revenues to local governments via property taxes, unlike land markets in most developed economies.
Growing Apart: Declining Within- and Across-Village Risk Sharing in Rural China Orazio Attanasio, Costas Meghir, Corina Mommaerts, and Yu Zheng , May 25, 2022 China has embarked on an ambitious campaign to close income gaps, address regional inequality and unfair social welfare provision, and make solid progress toward common prosperity by 2035. This marks a shift in focus from overall growth to promoting equitable and balanced growth.
Trade-Policy Dynamics: Evidence from 60 Years of US-China Trade George Alessandria, Shafaat Khan, Armen Khederlarian, Kim Ruhl, Joseph Steinberg, May 04, 2022 International trade depends on the effects of past trade policy and expectations of future trade policy. Disentangling these two forces is difficult, but the US-China trade relationship is ideally suited for study. A large, and largely unexpected, trade liberalization in 1980 kicked off a long, gradual expansion of Chinese exports to the United States. Until China’s accession to the World Trade Organization (WTO) in 2001, these low tariff rates were relatively easy to revoke, generating time-varying uncertainty over their future values.
Currency Carry Trade by Trucks: The Curious Case of China’s Massive Imports from Itself Xuepeng Liu, Heiwai Tang, Zhi Wang, Shang-Jin Wei, Apr 13, 2022 Capital controls are common in many developing countries. With capital controls, the standard financial market transactions needed for currency carry trade are hard to implement. Yet, as long as there is a big difference between domestic and foreign interest rates, the incentive to engage in currency carry trade is present.
Does Spatial Misallocation in China’s Housing and Land Markets Drive Up Housing Prices? Yongheng Deng, Yang Tang, Ping Wang, Jing Wu, Mar 23, 2022 We documented pervasive spatial misallocations in the housing and land markets in China. We find larger cities with more competitive land markets and strict land supply restrictions have fewer subsidies in housing sales, and consequently a higher housing price compared to its frictionless benchmark. Removing frictions brings welfare gain because more individuals live in larger cities.
China’s New Goal for Income Distribution: What Does it Mean and are There Tradeoffs? Martin Ravallion, Shaohua Chen, Mar 16, 2022 China’s political leadership recently committed to expanding the proportion of middle-income groups to create a less polarised, and more ‘olive-shaped’, distribution of wealth. This column considers the potential trade-offs between reducing income polarisation and other goals, including poverty reduction.
Superstition Everywhere Jinfan Zhang, Huancheng Du, Mar 09, 2022 In Chinese culture, digit 8 (4) is taken as lucky (unlucky). We find that the numerological superstition has a profound impact across China’s stock, bond and foreign exchange markets, affecting asset prices in both the primary and secondary markets. The superstition effect, i.e., the probability of asset price ending with a lucky (unlucky) digit far exceeds (falls short of) what would be expected by chance, is everywhere.
Innovation versus imitation: Where all that Chinese R&D is going Michael König, Zheng (Michael) Song, Kjetil Storesletten, Fabrizio Zilibotti, Jan 26, 2022 China is aiming to become a technological innovation powerhouse by 2050, with Premier Li Keqiang recently announcing an increase in R&D investments by 7% for the next five years. But greater R&D investment is no guarantee of success. This column examines the effects of R&D investments by Chinese firms on aggregate productivity and growth.