Are China's official GDP growth number exaggerated? Hunter Clark, Jeff Dawson and Maxim Pinkovskiy from the New York Fed and Xavier Sala-i-Martin from Columbia University use satellite measurements of the intensity of China’s nighttime light emissions to proxy for GDP growth. Their estimate of Chinese GDP growth, since 2012, was never appreciably lower, and was in many years higher, than the GDP growth rate reported in the official statistics.
China’s household savings rate has been persistently high since the early 1980s despite rapid economic growth and contrary to the predictions of the standard consumption theory. Since China has undergone large structural changes in its transition to a market economy, precautionary savings seem to be a plausible contributing factor to the high savings rate. We use China’s large-scale reform of State-owned Enterprises (SOEs) in the late 1990s as a natural experiment to identify exogenous changes in income uncertainty. We estimate that precautionary savings account for about 40 percent of SOE households’ wealth accumulation from 1995 to 2002.
The re-lending business is a particular activity of shadow banking in China, in which some non-financial firms borrow in order to lend, acting as de facto financial intermediaries. Julan Du and Chang Li from the Chinese University of Hong Kong and Yongqin Wang from Fudan University document this type of shadow banking in China using three different identification strategies. They also explore the factors that influence the firms' re-lending activities.
We find that the widely adopted daily price limit rules may induce large investors as a group to pursue a destructive trading strategy of pushing stock prices to the upper price limit and then profiting from selling these stocks on the next day. Their trading accelerates the price increase on the day that the upper price limit is reached, thus leading to the so-called Magnet Effect. This unintended effect renders the daily price limits — a market stabilization scheme — counterproductive.
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.