A Bridge on Economic Issues between China and the World
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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.
Lucky Dragons
Chih Ming Tan, Xiao Wang, Xiaobo Zhang, Feb 21, 2024This article explores the intriguing connection between Chinese zodiac signs and parental investment in children’s development. Particularly, parents invest more in children born under the “lucky” sign of the dragon, potentially impacting their cognitive and noncognitive skills alike.
Does External Monitoring from the Government Improve the Performance of State-Owned Enterprises?
Shengyu Li, Hongsong Zhang, Nov 03, 2021We investigate the impact of external monitoring from the government on state-owned enterprise performance, using the variation in monitoring strength arising from a nationwide policy change and firms’ geographic location in China. We utilize a structural approach to estimate input prices and productivity separately at the firm level using commonly available production data. We show that...
Implicit Guarantees and the Rise of Shadow Banking: the Case of Trust Products
Franklin Allen, Xian Gu, C. Wei Li, Jun Qian, Yiming Qian, Sep 06, 2023The prevalent implicit guarantees provided by financial intermediaries have been a central feature of shadow banking products in China. Our theoretical investigation shows that providing implicit guarantees can be the second-best arrangement and mitigate capital misallocation.
Trade Policy Uncertainty and Firm Innovation
Qing Liu, Hong Ma, May 12, 2021This study proposes a novel channel through which trade liberalization may induce innovation through the reduction of trade policy uncertainties (TPU) in destination markets. To verify this link, we utilize the significant reduction of TPU engendered by China's accession to the World Trade Organization (WTO) in 2001 as a quasi-natural experiment. We find that reduction in TPU significantly encourages firms' patent applications and that firms' innovation responses to TPU reduction vary by productivity, ownership, exporting status, and the irreversibility of investment.
