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Privatization and Productivity in China

Yuyu Chen, Mitsuru Igami, Masayuki Sawada, Mo Xiao, Jan 31, 2018

Privatization has boosted Chinese firms’ productivity, both in the short run and the long run. Consumer-oriented industries saw larger gains than “strategic” (heavily regulated) sectors. Chinese patents and “new product” surveys seem less reliable, because any statistics become useless once they become policy targets.

How did China Move Up the Global Value Chains?

Hiau Looi Kee, Heiwai Tang, Aug 30, 2017

The paper examines China's rising domestic content in exports using firm and customs transaction-level data. China's domestic content in exports increased from 65 percent in 2000 to 70 percent in 2007. The key reason for China’s ascent on global value chains is due to individual processing exporters substituting domestic products for imported materials, induced by the country’s trade and FDI liberalizations.

China’s Shadow Banking Sector: Wealth Management Products and Issuing Banks

Viral V. Acharya, Jun Qian, Zhishu Yang, Aug 09, 2017

The 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.

Evaluating Risk across Chinese Housing Markets

Yongheng Deng, Joseph Gyourko, Jing Wu, Aug 02, 2017

We 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

To 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.