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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.

Shadow Banking Activities of Non-Financial Firms in China

Julan Du, Chang Li, Yongqin Wang, Jul 19, 2017

The re-lending business is a particular activity of shadow banking in China, in which some non-financial firms borrow in order to lend, acting as de facto financial intermediaries. Julan Du and Chang Li from the Chinese University of Hong Kong and Yongqin Wang from Fudan University document this type of shadow banking in China using three different identification strategies. They also explore the factors that influence the firms' re-lending activities.

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.

Forecasting China’s Economic Growth

Patrick Higgins, Tao Zha, Karen Zhong, Jun 20, 2017

As the second largest economy, China intrigues heated debates among policymakers and researchers alike on how fast its economy will grow in the future and how truthfully the official data reflect its actual economic growth. Patrick Higgins and Tao Zha from the Atlanta Fed and Karen Zhong from Shanghai Advanced Institute of Finance develop a replicable econometric model to shed light on these issues.

A New Perspective on China’s Credit Boom

Kinda Hachem, Michael Zheng Song, Jun 20, 2017

What 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.