A Bridge on Economic Issues between China and the World
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Outward FDI and Domestic Input Distortions: Evidence from Chinese Firms
Cheng Chen, Wei Tian, Miaojie Yu, Sep 08, 2021A recent study shows that domestic input distortions faced by private firms in China have generated extra incentives for those firms to invest and produce abroad. This finding helps explain an astonishing increase in China’s outward foreign direct investment (FDI) flows since the financial crisis.
Tournament-Style Political Competition and Local Protectionism: Theory and Evidence from China
Hanming Fang, Ming Li, Zenan Wu, Feb 22, 2023Inter-jurisdictional competition in a regionally decentralized authoritarian regime distorts local politicians’ incentives in resource allocation among firms from their own city and a competing city.
Empowered Young Women: Trade Liberalization and Women’s Family Decisions in China
Difei Ouyang, Weidi Yuan, Yuan Zi, Mar 08, 2023How do women’s marriage and fertility decisions respond to trade liberalization? This column finds that Chinese prefectures more exposed to the US granting of permanent normal trade relations to China have experienced a relative increase in the fraction of unmarried young women and young women without children.
Throwing Good Money after Bad: Zombie Lending and the Supply Chain Contagion of Firm Exit
Yun Dai, Xuchao Li, Dinghua Liu, Jiankun Lu, Jan 19, 2022Zombie lending to downstream firms does not reduce the exit likelihood of upstream firms. Worse, it distorts efficiency-based firm exit in upstream industries. The exit distortion effect works through the trade credit chain and is more profound in industries with stricter financial constraints and tighter supply chain connections
Employment Protection and Corporate Cash Holdings: Evidence from China’s Labor Contract Law
Chenyu Cui, Kose John, Jiaren Pang, Haibin Wu, Oct 13, 2021We examine whether and how employment protection influences corporate cash holdings using Chinese firm-level data. Our empirical results show that labor-intensive firms in China significantly increased their cash holdings following the enactment of China’s Labor Contract Law. Further analyses suggest that the results are generally consistent with a “labor adjustment costs” channel: employment protection...
