In Shanghai, housing entitlements with enrollment access to a good public primary school is associated with a 0.1-0.35 percentage point lower annual rental yield. This rental yield gap is the opportunity cost of securing such housing, which is within the affordability range of most middle-income families in Shanghai. This implies that, should there be no credit constraint for homeownership, children from middle-income families should have a higher likelihood of accessing better public education. We find, however, that the enrollment rights between homeowners and renters, together with the credit constraint to own a home, actually lowers the chance of children from middle-income families of attending better public schools relative to those children from families with high initial wealth. This resulting reduced intergeneration mobility exacerbates the social inequality in China.
We predict and analyze provincial-level healthy life expectancy for 31 provinces of China in 2015. Using data from a wide range of countries, we construct a predictive regression model based on socioeconomic variables such as GDP per capita, health and education expenditures, and the number of hospital beds. We find substantial regional health disparities, with healthy life expectancy varying by up to 10 years between different provinces for both men and women.
Dr. Qing Ba from Hong Kong Exchanges and Professor Frank M. Song from the University of Hong Kong discuss the role of offshore debt issuance in the improvement of Chinese issuers’ creditability and transparency. China has the third largest bond market in the world. However, the absence of an accurate local rating and pricing system deepen the risks in domestic debt sectors. Our recent research finds that after Chinese corporates issue bonds in the offshore market, thus binding themselves to stricter market discipline and information disclosure requirements, the rating and disclosed information from offshore issuance may be of a greater reference value in the assessment of Chinese corporates’ credibility. This in turn leads to a signaling effect on their subsequent domestic debt financing. In addition to providing cheap funding, offshore debt issuance could bring about improvements in the creditability and transparency of Chinese issuers. This is of critical importance in pricing China’s credit risk and enhancing the soundness of China’s bond market.
We identify bank loans to China’s local government financing vehicles and find that 1.7% of the loans that matured during the sample period failed to make the due payments. The LGFV loan default rate is much higher for commercial banks than for the China Development Bank, which provides more comprehensive financing for local governments than typical commercial banks. This selective default pattern is weaker during the ¥4-trillion stimulus period but stronger after 2010 when commercial banks exited the LGFV market.
The Rural Land Contracting Law (RLCL), announced in 2003, is a landmark law for agricultural households in rural China. It provides new legal protections for leasing agricultural land. In theory, increasing free market exchanges of land should improve agricultural productivity by facilitating the movement of land towards the most productive users. We find that the property rights reform led to a 10 percent increase in land rental activity among rural households, a redistribution of land towards more productive farmers, and a 7 percent increase in the aggregate productivity of land. We also observe an increased responsiveness of land allocation across crops to changes in crop prices.