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Mapping U.S.-China Technology Decoupling, Innovation, and Firm Performance
Pengfei Han, Wei Jiang, Danqing Mei, Dec 01, 2021We develop measures for technology decoupling and dependence between the U.S. and China based on combined patent data. The first two decades of the century witnessed a steady increase in technology integration (or less decoupling), but China’s dependence on the U.S. increased (decreased) during the first (second) decade. Decoupling in a technology field predicts China’s growing dependence on U.S. technology, which, in turn, predicts less decoupling further down the road...
Tax Policy and Lumpy Investment Behavior: Evidence from China’s VAT Reform
Zhao Chen, Xian Jiang, Zhikuo Liu, Juan Carlos Suárez Serrato, Daniel Yi Xu, Apr 01, 2020To stimulate investment and promote production efficiency, the Chinese government has undertaken a series of value-added tax (VAT) reforms. One of those reforms, in 2009, reduced not only the purchasing price of equipment, but also investment frictions, i.e., the price gap imposed by the pre-reform VAT system between new and used equipment. We find that this reform increased equipment investment by 36%...
The Burden of Education Costs in China: A Struggle for All, but Heavier for Lower-Income Families
Dezhuang Hu, Hongbin Li, Tang Li, Lingsheng Meng, Binh Thai Nguyen, Mar 27, 2024Household education expenditure in China accounts for a substantial portion of household income, averaging around 17.1%, and it is inversely related to household income. As a necessity, education expenditure imposes excessively high costs on lower-income families. China needs to formulate policies to alleviate the financial burden on families, reform the school system, and enhance educational equity.
Industrial Policy in China: Some Intended or Unintended Consequences?
Jing Cai, Ann E. Harrison, May 30, 2018We explore the consequences of a 2004 tax change in China that reduced the value-added tax (VAT) on equipment investment. While the goal was to encourage technology upgrades, we find little evidence that the reform achieved its intended results. Although firms shifted the composition of investment toward machinery, actual investment rates were unaffected. Firms replaced labor with machinery, leading employment to fall significantly in the treated provinces and sectors. Our results suggest that the primary impact of the policy was to induce labor-saving investment.
Taking Stock of Trade Policy Uncertainty: Evidence from China’s Pre-WTO Accession
George Alessandria, Shafaat Khan, Armen Khederlarian, Dec 04, 2019We propose a method to estimate the perceived likelihood of an uncertain increase in tariffs using the rise in trade flows in advance of the uncertainty resolution. We apply this framework to the uncertainty surrounding the U.S.’s annual renewal of China’s most-favored-nation (MFN) status in the 1990s. By matching the observed rise in imports in advance of U.S. Congress votes on the renewal, we find that the probability...
