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A New Perspective on China’s Credit Boom
Kinda Hachem, Michael Zheng Song, Jun 20, 2017, 1800 readsWhat caused the enormous credit boom in China? This column by Kinda Hachem and Michael Song offers an unexpected explanation of stricter liquidity regulations on banks leading to a credit boom through competition between small and big banks and their heavy use of shadow banking investment instruments.
China’s “Great Leap Forward” in Science and Engineering
Richard B. Freeman, Jun 20, 2017, 1792 readsFrom "Made in China" to "Innovated in China" can occur only if China produces a large number of scientists and engineers. Richard B. Freeman of Harvard University documents China's "Great Leap Forward" in science and engineering in the past decades in the number of engineers and scientists, the number of scientific papers, patents and innovations.
Evaluating Risk across Chinese Housing Markets
Yongheng Deng, Joseph Gyourko, Jing Wu, Aug 02, 2017, 1632 readsWe bring new Chinese housing market data and analysis to the study of supply and demand conditions. There is substantial variation in supply–demand balances across markets. Bigger inventory overhangs predict lower house price growth the next year.
Notching R&D Investment with Corporate Income Tax Cuts in China
Zhao Chen, Zhikuo Liu, Juan Carlos Suárez Serrato, Daniel Yi Xu, Aug 16, 2017, 1501 readsTo encourage innovation, the Chinese government gave tax incentives to firms whose R&D intensity (as measured by the ratio of R&D expenditures over total sales) exceeds a threshold that varies by their total sales. Using a major corporate tax reform in 2008, Professor Daniel Yi Xu from Duke University and his coauthors provide empirical evidence for some "strategic" behavior — including some relabeling of administrative expenditures as R&D — by the firms to take advantage of the tax incentives.
China’s Shadow Banking Sector: Wealth Management Products and Issuing Banks
Viral V. Acharya, Jun Qian, Zhishu Yang, Aug 09, 2017, 1416 readsThe issuance of Wealth Management Products (WMPs) is an important form of shadow banking activities in China, especially after 2011. Viral Acharya, Deputy Governor of the Reserve Bank of India, Prof. Jun “QJ” Qian of Fanhai International School of Finance, Fudan University and Prof. Zhishu Yang of Tsinghua University examine the causes, main players and impacts on the banking system of China’s rising WMPs. They also compare the differences between the U.S. shadow banking sector and its counterpart in China.
