The Long-Run Trend of Residential Investment in China
Ding Ding, Weicheng Lian, Oct 09, 2019
Residential investment has been a key growth engine for China in the last two decades. Total housing investment grew from about 4 percent of GDP in 1997 to a peak of 15 percent of GDP in 2014, with residential investment accounting for more than two-thirds of it. Our analysis indicates that structural changes in the Chinese economy that led to rebalancing toward consumption...
Internal Capital Markets in Business Groups and the Propagation of Credit Supply Shocks
Yu Shi, Robert Townsend, Wu Zhu, Sep 25, 2019
Using business registry data from China, we show that internal capital markets in business groups can propagate corporate shareholders' credit supply shocks to their subsidiaries. An average of 16.7% local bank credit growth where corporate shareholders are located would increase subsidiaries investment by 1% of their tangible fixed asset value, which accounts for 71% (7%) of the median (average) investment rate among these firms...
Industrial Policy: Lessons from China
Panle Jia Barwick, Myrto Kalouptsidi, Nahim Bin Zahur, Sep 18, 2019
This paper examines an important industrial policy in China in the 2000s that aims to propel the country's shipbuilding industry to the largest globally. Using comprehensive data on shipyards worldwide and a dynamic model of firm entry, exit, investment, and production, we find that the scale of the policy was massive and boosted China's domestic investment, entry, and world market share dramatically. On the other hand, it created sizable distortions and led to increased industry fragmentation and idleness.