A Bridge on Economic Issues between China and the World
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Conceptual and Empirical Understanding of the Dynamics of Skill Formation
James J. Heckman, Haihan Tian, Zijian Zhang, Jin Zhou, Jul 31, 2026An analysis of high-frequency data from a large early childhood intervention in China documents the existence of dynamic complementarity and the emergence of new skills over the life-cycle. Dynamic complementarity is a central concept in human development. It characterizes how early learning experiences affect subsequent learning and achievement. Dynamic complementarity and its components do not operate uniformly across ages, skill levels, or ability groups. New skills emerge over the life-cycle explaining fadeout when a measuring instrument is used that does not recognize the emergence of new skills.
Why China’s Monetary Expansion Has Not Brought Back Inflation
Jeffrey (Jinfan) Chang, Wei Xiong, Aug 20, 2026China has repeatedly expanded credit to support growth, yet inflation has remained weak. We argue that the puzzle reflects China’s production-oriented monetary regime: credit flows mainly through banks, firms, local governments, and state-prioritized sectors, sustaining production capacity more directly than household demand.
Beyond the Heat: Power Rationing Matters More When Extreme Temperature Strikes
Xinya Hao, Yongying Huang, Lin Zhang, Aug 12, 2026As climate change intensifies, extreme heatwaves increasingly trigger severe power shortages in emerging economies like China. Governments are forced to implement power rationing, making difficult trade-offs between satisfying residential electricity demand and sustaining industrial production. Evidence shows that administrative power rationing during these crises inflicts greater economic damage on firm performance than the physical heat itself.
Air Pollution, Financial Mistakes, and Credit Allocation
Jianwen Li, Keyang Li, Yuan Ren, Aug 05, 2026We find that borrowers are significantly more likely to miss scheduled repayments on polluted days, with these missed payments being short-lived and cured once air quality improves. Because the lending platform penalizes such missed payments in the same way as other delinquencies, pollution-induced mistakes can lower borrowers’ credit ratings and reduce their future access to credit.
The Chinese Current Account Imbalances: Puzzles, Patterns, and Possible Causes
Chang Ma, Shang-Jin Wei, Sep 02, 2026The debate over China’s current account surplus has reemerged. We argue that its persistence is best explained by structural factors underlying high household and corporate savings, particularly demographics and financial underdevelopment. Industrial policy, housing weakness, the real exchange rate, and measurement concerns offer only partial explanations.
