When comparing the credit ratings of domestic and global agencies on Chinese corporations, because of the differences in ratings scales, it is best to focus on the domestic and global agency orderings of relative credit risk. Testing for differences in the determinants of ratings, we find that asset size is weighed more heavily as a positive factor by domestic agencies, while profitability and state-ownership are weighed more positively by global rating agencies, which also weigh leverage more heavily as a negative factor. In spite of these differences, both domestic and global ratings appear to be priced into the market values of rated bonds.
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.
The Chinese economy had spectacular growth in the past three decades, however the Chinese stock market had the worst performance among the major stock markets. Professor Franklin Allen from Imperial College, Professor Jun Qian from Fanhai International School of Finance, Fudan University, and coauthors offer their explanation of this puzzling divergence.
In our recent work (Chen and Fang, 2018), we evaluate the long-term consequences of China’s family planning policies on the quality of life of the Chinese elderly. We identify the causal impact by exploiting the provincial heterogeneity in implementing the “Later, Longer, Fewer” policies in the early 1970s. We estimate the causal effect on a set of outcomes, including support from children, consumption, and physical and mental health. We find that family planning has either no effect or a slightly positive effect on elderly parents’ physical health status; however, parents who are more exposed to family planning policies report significantly worse mental health.
Since 2010–2011, China’s economy has slowed considerably, raising concerns that the country could fall into the so-called “middle-income trap” (MIT). Obviously, an MIT in China would have serious negative consequences not only for the Chinese population but also for the world economy as a whole. We examine whether China is or will be in an MIT by focusing on the empirical MIT definitions and the MIT triggering factors identified in the literature. We show that dependent on the choice of MIT definition, different MIT statements can be derived. Our triggering factor analysis reveals that while China performs quite well regarding its export structure, it must improve human capital accumulation and total factor productivity to avoid falling into an MIT.