A Bridge on Economic Issues between China and the World
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China’s Import Demand for Agricultural Products: The Impact of the Phase One Trade Agreement
Robert Feenstra, Chang Hong, Aug 19, 2020This paper shows that the most efficient way for China to fulfill its committed import purchases from the United States under the Phase One trade agreement is to mimic the effect of an import subsidy. The effective subsidies would divert China’s agricultural imports from other countries. We find that this trade diversion is especially strong for Australia and Canada, followed by Brazil, Indonesia, Malaysia, Thailand, and Vietnam.
Currency Carry Trade by Trucks: The Curious Case of China’s Massive Imports from Itself
Xuepeng Liu, Heiwai Tang, Zhi Wang, Shang-Jin Wei, Apr 13, 2022Capital controls are common in many developing countries. With capital controls, the standard financial market transactions needed for currency carry trade are hard to implement. Yet, as long as there is a big difference between domestic and foreign interest rates, the incentive to engage in currency carry trade is present.
Market Expanding or Market Stealing? Competition with Network Effects in Bike-Sharing
Guangyu Cao, Ginger Zhe Jin, Xi Weng, Li-An Zhou, Jan 16, 2019Positive network effects may lead to winner-takes-all in some markets. The column analyses dockless bike-sharing in China to show instead how an incumbent can benefit from positive spillovers from a competitor’s entry. In the case of bike-sharing, consumers multi-home, the market exhibits positive network effects, and investment by two firms is more cost-efficient than investment by one.
The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms
Haichao Fan, Yu Liu, Nancy Qian, Jaya Wen, Aug 08, 2018This investigation uses a balanced panel of large manufacturing firms to provide novel evidence on the dynamic effects of computerizing VAT invoices on tax revenues and firm behavior in China, 1998-2007. We find that computerization increases cumulative VAT revenues and increases the effective average tax rate. Furthermore, the evidence suggests that the effects of computerization change over time: tax revenue gains are likely to be smaller in the long run. Meanwhile, firms reduce output and input, and increase productivity monotonically over time.
Panda Games: Corporate Disclosure in the Eclipse of Search
Kemin Wang, Xiaoyun Yu, Bohui Zhang, Sep 26, 2018We conduct a textual analysis and exploit an exogenous event — Google’s 2010 surprising withdrawal from the Chinese mainland — which significantly hampered domestic investors’ ability to access foreign information. Following Google’s exit, Chinese firms’ announcements concerning their foreign transactions become more bullish in comparison to similar announcements prior to the exit and to those that involve only domestic transactions. This finding suggests that firms strategically alter their disclosure behaviors when the channel to transmit information is severed.
