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Industry/Policy View China’s High Savings: Drivers, Prospects, and Policies

Longmei Zhang, Ding Ding, Hui He, Rui C. Mano, Apr 17, 2019

China’s high national savings rate—one of the highest in the world—is at the heart of its external/internal imbalances. High savings finance elevated investment when held domestically, and lead to external imbalances when they flow abroad. Today, China’s higher savings, compared to the global average, mostly emanate from the household sector, due to demographic...

In Rural China, Gift-Giving Is an Increasingly Costly Competition

Erwin Bulte, Ruixin Wang, Xiaobo Zhang, May 01, 2019

Gift expenditures grow swiftly in rural China and may adversely affect people's welfare. While gift-giving helps to maintain social status and connections, gift competition may create a predicament: people must spend more and more to "keep up with the Joneses." As a result, the escalating gift expenses crowd out spending on other important consumption and become increasingly burdensome to people in rural areas, particularly to the poor.

How Do Zombie Firms Affect Innovation? Evidence from China’s Industrial Firms

Yun Dai, Wei Li, Yongqin Wang, May 08, 2019

Zombie firms are insolvent firms that continue to operate due to continued access to financing at extremely low costs. Nie et al. (2016) find that in the year 2013 about 14 percent of Chinese-listed firms and 7.5 percent of Chinese manufacturing firms are defined as zombie firms. The large amount of financing subsidies distributed to insolvent zombie firms...

The Demand for Reverse Mortgages in China

Katja Hanewald, Hazel Bateman, Hanming Fang, Shang Wu, May 15, 2019

Reverse mortgages are financial products that allow older homeowners to live in their property and receive income for as long as they live; repayment is made from the proceeds of the property sales upon the homeowners’ death. A recent pilot program in China by Happy Life Insurance found almost no takeup of such products. We investigate whether, if reverse...

The Effect of Pollution and Heat on the Productivity of High-Skill Public Sector Workers in China

Matthew E. Kahn, Pei Li, May 22, 2019

The quality of governance depends on public sector worker productivity. We use micro data from China to document that judges are less productive on polluted days. We find that public sector productivity elasticities are larger than the published estimates of private sector productivity elasticities with respect to pollution.