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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.
Innovation versus imitation: Where all that Chinese R&D is going
Michael König, Zheng (Michael) Song, Kjetil Storesletten, Fabrizio Zilibotti, Jan 26, 2022China is aiming to become a technological innovation powerhouse by 2050, with Premier Li Keqiang recently announcing an increase in R&D investments by 7% for the next five years. But greater R&D investment is no guarantee of success. This column examines the effects of R&D investments by Chinese firms on aggregate productivity and growth.
A Biological Clock Explanation for the Gender Gap in Earnings: Import Competition Increases Female Fertility
Wolfgang Keller, Hâle Utar, Apr 15, 2020Rising import competition from emerging countries such as China, which are increasingly integrated in the global economy, have led to lower labor market opportunities in many high-income countries, especially for middle-class manufacturing workers (see Keller and Utar, 2019). This article shows that the implications of rising import competition go beyond the labor market and also affect family size and structure.
Do Richer Households Exit Agriculture? Positive Income Shocks in Rural China
Jessica Leight, Jul 18, 2018Rural households in China have experienced a steadily increasing rise in their real income over the last twenty years as economic reforms have revitalized this sector. Analyzing an unusual natural experiment generated by an increase in prices paid for mandatory grain procurement in China post-1993, I seek to provide evidence around how an increase in permanent income affects households’ production portfolio. Evidence suggests that households experiencing positive income shocks substitute away from agricultural production and are more likely to migrate and to invest in non-agricultural production. They also increase their observed levels of borrowing and non-staple consumption.
Debt Management and Strategic Interactions in Top-down Bureaucracy: Evidence from China
Xi Qu, Zhiwei Xu, Jinxiang Yu, Apr 30, 2025The Chinese central government implemented a series of measures to establish a top-to-bottom debt ceiling management system starting in 2015. Under this regulatory framework, public debt issuance for a prefecture city is subject to a ceiling (quota) determined through a hierarchical procedure. Based on a comprehensive dataset, we investigate what factors determine the allocations of debt ceiling to prefectural cities in China after the debt management reform. We find that the distributional outcome of the debt ceilings relies on the bilateral interactions of local and their superior governments. We also estimate the effect of ceiling allocation on the real economy, as well as the potential risk associated with implicit debt accumulation.
