Measuring the competitiveness of China’s processed exports

Willem Thorbecke 06 November 2014

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Before the Global Financial Crisis (GFC) China ran large trade surpluses and faced pressure to let the renminbi (RMB) appreciate. Having abandoned the peg to the U.S. dollar in 2005, the RMB has appreciated by 36% on a real effective basis.

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Topics:  Exchange rates International trade

Tags:  foreign reserves, China, renminbi, undervaluation

Why China can afford (and benefit from) a generous unfunded pension system

Zheng Song, Kjetil Storesletten, Fabrizio Zilibotti, Yikai Wang 19 October 2014

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Sharing high growth between generations

China faces a sharp demographic transition. The total dependency ratio has fallen from 75% in 1975 to 37% in 2010. This change is due to the combination of high fertility in the 1960s and the family planning policies introduced in the 1970s. The expansion of the labour force implied by this transition has contributed to economic growth. However, China is now at a turning point – by 2040 the old-age dependency ratio will have increased from the current 13% to 39%.

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Topics:  Labour markets

Tags:  China, pensions

The cleansing effect of the minimum wage in China

Florian Mayneris, Sandra Poncet 13 October 2014

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Can higher minimum wages ensure that economic development benefits the poorest without hindering growth? The question is controversial in both academic and policy circles. The recent riots in Bangladesh and Cambodia show that the social demand for a more equal distribution of the benefits of growth is high in developing countries. In China, polls reveal that concerns about inequality have grown as "roughly eight-in-ten have the view that the rich just get richer while the poor get poorer'' (Pewresearch Center 2012). The debate is also heated in developed economies.

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Topics:  Industrial organisation Labour markets

Tags:  China, wages, firms, productivity

The rise of China and the future of US manufacturing

Daron Acemoglu, David Autor, David Dorn, Gordon H. Hanson, Brendan Price 28 September 2014

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The end of the Great Recession has rekindled optimism about the future of US manufacturing. In the second quarter of 2010 the number of US workers employed in manufacturing registered positive growth – its first increase since 2006 – and subsequently recorded ten consecutive quarters of job gains, the longest expansion since the 1970s.

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Topics:  International trade

Tags:  manufacturing, US, China, value added

The dragon soars: Micro evidence on Chinese outward direct investment

Heiwai Tang, Wenjie Chen 22 September 2014

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China’s active acquisition of foreign assets has raised anxiety and tension across the world. In 2010, it was the world’s fifth largest source of foreign direct investment after the United States, France, Germany, and Japan.1 He et al. (2012) predict that China’s cumulative outward direct investment (ODI) will exceed $5 trillion USD in 2020, compared to a mere $3 billion in 2010. Given the sheer size of China, the volume of its ODI may be expected; but considering its relatively early stage of development, its recent surge in ODI surprised many.

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Topics:  International trade

Tags:  China, FDI, outward FDI

Trade liberalisation, quality upgrading, and export prices

Haichao Fan, Yao Amber Li, Stephen Yeaple 06 September 2014

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Rapid trade liberalisation has transformed the economies of many developing countries. As these countries have scaled back tariffs, their firms have gained access to cheaper and higher quality intermediate inputs from abroad. A growing literature shows that trade liberalisation has led to a surge in imports of intermediate inputs and that the improved access to foreign-made inputs has had a large impact on firm productivity and product scope (e.g. Amiti and Konings 2007; Goldberg et al. 2010).

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Topics:  International trade Productivity and Innovation

Tags:  tariff reduction, Export prices, China, goods quality

Will Chinese household savings plummet with the end of the one-child policy? Maybe, maybe not….

Abhijit Banerjee, Xin Meng, Tommaso Porzio, Nancy Qian 04 September 2014

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As China relaxes its draconian fertility laws, a key question for policymakers is how the resulting increase in fertility will affect economic performance – in particular, whether it will lower household savings. This concern is motivated by the observation that China’s rapid rise in household savings rates coincided with a drastic reduction in fertility that began in the mid 1970s as a result of what came to be known as the one-child policy. During the 1990s, household savings rates reached highs of 34%.

Figure 1

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Topics:  Development Financial markets

Tags:  China, personal saving, one-child policy, fertility

Conflict between US-led and China-led economic architecture

Pradumna B. Rana 05 August 2014

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The Bretton Woods agreement – which is 70 years old this month – established three institutions to promote law and order in international economic relations:

  • The IMF to promote macroeconomic stability,
  • The GATT (and its successor, the WTO) to ensure an open trading environment, and
  • The World Bank to provide development finance for poverty reduction.

The smooth operation of this rules-based, US-led global economic architecture contributed to the unprecedented economic growth and worldwide prosperity of the post-WWII period.

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Topics:  Global governance

Tags:  US, China, IMF, global governance, World Bank, multilateralisation, troika

Agglomeration and product innovation in China

Hongyong Zhang 21 July 2014

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Spatial agglomeration of economic activities is generally assumed to improve productivity and spur firms’ innovation through localisation economies and urbanisation economies.1 There is an extensive empirical literature investigating the effects of localisation and urbanisation on firm-level productivity. Despite its economic importance, there are few empirical studies focusing on agglomeration and product innovation. Feldman and Audretsch (1999) and De Beule and Van Beveren (2010) are two of the few exceptions.

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Topics:  Productivity and Innovation

Tags:  R&D, productivity, China, spatial concentration, innovation, subsidies, clusters, agglomeration

The Chinese labour market: High unemployment coexisting with a labour shortage

Yang Liu 19 July 2014

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In China, both a labour shortage and unemployment have emerged as problems in recent years. The number of university students scheduled to graduate in June 2014 is 7.27 million, increasing with 280,000 from 2013 (MHRSS 2014). Following 2013 – at the time considered the most difficult year for job seekers in history – 2014 is expected to be even harsher. Problems in the labour market in China, which is a key region for Japanese companies advancing overseas, are also attracting attention in Japan.

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Topics:  Labour markets

Tags:  China, unemployment, labour shortage

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