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Special Deals from Special Investors: The Rise of State-Connected Private Owners in China
Chong-En Bai, Chang-Tai Hsieh, Michael Zheng Song, Xin Wang, Feb 10, 2021We document a hierarchy of private owners connected to the state through equity investment and a rapid expansion of this hierarchy over the past two decades. We build a model to show how the effects of a special deal from a state investor can be transmitted and amplified through the hierarchy. Our estimation suggests that the expansion in the span of state-connected private owners may have increased aggregate output of the private sector by 4.2% a year between 2000 and 2019.
Does Spatial Misallocation in China’s Housing and Land Markets Drive Up Housing Prices?
Yongheng Deng, Yang Tang, Ping Wang, Jing Wu, Mar 23, 2022We documented pervasive spatial misallocations in the housing and land markets in China. We find larger cities with more competitive land markets and strict land supply restrictions have fewer subsidies in housing sales, and consequently a higher housing price compared to its frictionless benchmark. Removing frictions brings welfare gain because more individuals live in larger cities.
Feedback Trading and the Chinese Put Warrants Bubble
Neil D. Pearson, Zhishu Yang, Qi Zhang, Jul 27, 2022There was a bubble in the prices of put warrants traded on the Shanghai and Shenzhen stock exchanges during the summer of 2007. We use investor trading records from a large securities firm to show that put warrant investors engaged in a particular form of feedback trading. This feedback trading exacerbated an initial run-up in put warrant prices caused by a change in the stock transaction tax, and created the bubble.
Did the US-China Tariff War Affect China’s Economy? Evidence from Night Lights
Davin Chor, Bingjing Li, Dec 08, 2021We infer the impact of the US-China tariff war on China’s economy, using high-frequency satellite data on nighttime luminosity. Through a grid-level panel analysis, we find evidence that the US tariffs levied between 2018–2019 on China’s exports had a negative impact on income per capita and manufacturing employment that was very skewed across locations within China. By contrast, China’s retaliatory tariffs on imports from the United States did not have a discernible impact on economic outcomes at the local level.
Developing Credit Markets in Provinces Improves Innovation among Firms in the People’s Republic of China
Hua Shang, Quanyun Song, Yu Wu, Mar 28, 2018Our recent research finds that provincial credit market development, through improving credit allocation, enhances firms’ product innovation incentives and outcomes in the People’s Republic of China. We further show that firms’ credit constraints and performance are two channels through which credit market development affects the innovative capacities of firms. We suggest that in order to further promote firms’ innovations, China should encourage financial institutions to actively screen those firms who have good performance but face credit constraints.
