A Bridge on Economic Issues between China and the World
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Mortgage Prepayment in China
Zhenyu Gao, Wenxi Jiang, Haohan Ren, Kemin Wang, Yuezhi Wu, Sep 10, 2025During the 2019–2024 monetary easing cycle, Chinese households used their savings to prepay unprecedented amounts of mortgage loans. Because refinancing was restricted, mortgage rates remained rigid, while savings returns quickly adjusted to rate cuts. The widening gap between borrowing costs and savings returns encouraged prepayment (deleveraging) and reduced consumption. Our findings suggest that the rigid mortgage rates have rendered China’s monetary easing counterproductive.
Peer Effects, Political Competition, and Ecological Efficiency
Xudong Chen, Bihong Huang, Yantuan Yu, Jul 29, 2020This study examines the impacts of political competition on eco-efficiency. We first develop a theoretical model in which local government officials compete against each other to maximize their own political score. We find that after an initial stage of decline, eco-efficiency eventually increases once environmental performance becomes a meaningful component of local government officials’ annual assessment. These theoretical predictions are corroborated...
The Fertility Consequences of Air Pollution in China
Xuwen Gao, Ran Song, Christopher Timmins, Sep 07, 2022We incorporate pollution exposure into Becker’s Quantity-Quality (Q-Q) model of fertility and evaluate how air pollution distorts individuals’ fertility behaviors in China. We find that increased pollution over time negatively affects the fertility of ethnic Han people, but does not affect the fertility of ethnic minorities. China’s One-Child Policy increased Han people’s demand for child quality (e.g., health status and education achievement), which can explain the negative association between pollution and fertility for Han people.
The Anatomy of Chinese Innovation: Insights on Patent Quality and Ownership
Philipp Boeing, Loren Brandt, Ruochen Dai, Kevin Lim, Bettina Peters, May 07, 2025Chinese patenting has become narrower and less innovative over time. The role of overseas knowledge has also declined sharply. These findings are salient in the context of a marked slowdown in economic growth in China and rising concerns of technological decoupling with the US.
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...
