Reallocating wealth? Insecure property rights and agricultural investment in rural China

This paper evaluates the impact of village-level land reallocations in China on household economic outcomes. The primary objective is to analyze the effect of short-term differences in tenure security in the year of a reallocation, employing the past history of land shifts as a source of exogenous variation in current tenure security. The results show that a decrease in the probability of losing the current plot yields an increase in agricultural inputs and production with no change in non-agricultural investments, conditional on household fixed effects that control for any unobserved and time-invariant characteristics of the household. This suggests that even small increases in the security of tenure enjoyed by households could yield benefits in terms of greater agricultural output.     

Rural Informal Taxation in China： Historical Evolution and an Analytic Framework

The present paper examines the historical evolution of China's rural taxation system from the pre-reform period to the late 1990s. We propose that because of information asymmetry between the upper-level and the lower-level governments, local governments had to be granted some informal tax autonomy to fulfill the upper-level policy mandates. This easily led to excessive local informal taxation on farmers. As market liberalization of the grain sector progressed, the low-cost tax instruments implemented through the traditional approach of implicit taxation gradually eroded. Local governments in agricultural regions had to resort to informal fees collected directly from individual rural households while the more industrialized regions shifted to non-agricultural taxes that are less costly in terms of tax collection. Hence, political tension between farmers and local governments in agriculture- based regions emerged and rural tax reform became necessary.     

Bank lending and the business cycle: Does ownership matter in ASEAN countries?

We analyze the lending cyclicality of 213 ASEAN commercial banks over the period 2001–2015. The findings indicate that lending by private banks is procyclical while lending by state banks is countercyclical. Long-term liabilities also move countercyclically for state banks whereas funding for non-state banks in the form of deposit and long-term liabilities is procyclical. Greater lending cyclicality is observed for both private and state banks in Cambodia, Myanmar, Laos, and Vietnam (CMLV) compared to Indonesia, Malaysia, the Philippines, Thailand, and Singapore (ASEAN-5). Lending of non-ASEAN based foreign banks shows greater procyclicality than that of domestic banks for the ASEAN-5 countries, although not for the CMLV countries. During the global financial crisis, lending by non-ASEAN based foreign banks contracted sharply even as lending by ASEAN based foreign banks was unaffected. Overall, our results confirm that bank ownership influences lending and funding sensitivity to economic fluctuations.     

Income inequality and happiness: Which inequalities matter in China?

The effect of inequality on happiness should intrigue social scientists. Of the many dimensions of income inequality, we explore four, analysing a rich data set for China. Does actual or perceived inequality have a greater effect on happiness? We find that perceptions of inequality are the more important. How broad is the reference group with which people compare themselves? They report that it is narrow; and indeed narrowly defined inequality has the greater effect on happiness. Do perceptions of the degree of fairness of inequality matter? They do, as they ameliorate the adverse effect of inequality on happiness, especially for the poorest. Is it self-centred or community-based inequality which affects happiness? Both measures have significant effects, but in opposite directions. The research and policy implications are discussed.     

Solution or isolation: Is boarding school a good solution for left-behind children in rural China?

In recent decades, rural China has experienced a rapid increase in boarding school enrollment rates and in the population of left-behind children (LBC) (i.e., rural children whose parents migrate to urban areas for work). LBC tend to be worse off in numerous dimensions. At 61 million, China has the world's largest population of LBC. As it provides a different residential environment, boarding school can potentially exacerbate or mitigate the negative effects of parental migration. Using nationally representative data on Chinese families, we estimate the impact of parental migration and boarding school on child outcomes in cognition and physical and mental health. We find that while boarding school has no effect on LBC physical and mental health, it substantially improves performance on achievement tests for both LBC and non-LBC. Policies aimed at improving boarding school conditions in China, may improve not only cognitive outcomes, but also child physical and mental well-being.     

Banking and the Macroeconomy in China: A Banking Crisis Deferred?

The downturn in the world economy following the global banking crisis has left the Chinese economy relatively unscathed. This paper develops a model of the Chinese economy using a DSGE framework with a banking sector to shed light on this episode. It differs from other applications in the use of indirect inference procedure to test the fitted model. The model finds that the main shocks hitting China in the crisis were international and that domestic banking shocks were unimportant. However, directed bank lending and direct government spending was used to supplement monetary policy to aggressively offset shocks to demand. The model finds that government expenditure feedback reduces the frequency of a business cycle crisis but that any feedback effect on investment creates excess capacity and instability in output.     

Institutional dynamics and access to non-farm employment in rural China, 1950–1996

This article examines non-farm employment in the context of Chinese rural institutional change, based on evidence from discrete-time logistic models for event history analysis using the Life History and Social Change survey. We find the transition to non-farm sector rose rapidly during the Great Leap Forward and market reform, while the Cultural Revolution saw it reach the lowest ebb. While male advantage prevailed exclusively during the Cultural Revolution and early marketization, education possessed a stable positive effect in all historical periods. Although the returns to different kinds of political capital vary along with institutional dynamics, intergenerational reproduction was greatly reduced after the Cultural Revolution.     

What Factors Can Explain the Rising Spatial Disparity in Economic Activities in China?

This paper explores the impact of spatial externalities in shaping China's economic geography by establishing a theoretical framework that contains regional productivity, trade barriers and local amenities to capture spatial externalities between different regions over time. Combining provincial data on bilateral trade flows with observed information about economic geography during the period 1998–2013, we estimate the distribution and marginal contribution of each explanatory factor. Empirical results suggest that regional labor density and wage are positively related to exogenous productivity and amenities, and negatively related to trade barriers. Meanwhile, variation in the marginal contribution of exogenous productivity and amenities and trade barriers reflects the regional temporal–spatial features in China's recent marketization process. Therefore, the Chinese government should place more emphasis on absorbing advanced technologies and reducing inter‐regional market barriers to promote balanced regional development and improve the efficiency of China's spatial resource allocation.     

Balance sheet expansion and economic growth in China: Crowd in or crowd out?

Balance sheet expansion is crucial to understand the historic path, current slowdown and future trend of economic growth in China. As the financial system transforms national savings into investment, balance sheet expands simultaneously. According to changing impacts of balance sheet expansion on real economy, economic growth in China from 1998 to 2016 can be divided into the crowd-in stage and the crowd-out stage. In the first stage (1998–2007), balance sheet expansion crowded China's real economy in, raised TFP dramatically and accelerated economic growth. In the second stage (2008–2016), balance sheet expansion crowded China's real economy out, with stagnant TFP and decelerated economic growth. Balance sheet expansion has slowed down since 2014, but it continues to exert crowding out effects on China's real economy. We argue that balance sheet expansion is crucial for China's future economic growth. In the long term, structural reforms, especially reforms in the financial system, could increase growth potential significantly. In the short term, financial system reforms should focus on generating sufficient cash flows to boost aggregate demand.     

Belt and road: The China dream?

This paper explores the impact of the Belt and Road Initiative (BRI), in terms of changes in trade costs on trade and consumer welfare in China, the EU, and the rest of the World. We employ a general equilibrium structural gravity approach and conduct a counterfactual analysis. Our key findings are as follows: (i) China and the EU are expected to make substantial gains from the BRI due to reductions in transport costs; (ii) signing and implementing a deep FTA between China and the EU is equivalent to transport cost reductions of 15–20%; (iii) the joint policy of the BRI and FTA is super-additive, magnifying the gains from the separate policies; and (iv) where transport cost reductions are 20% or more, the potential negative effect of the China-US trade war on China is more than compensated for by the BRI initiative. Our results provide evidence that the BRI has the potential to deliver significant welfare gains, particularly if combined with other trade integration schemes, and to counterbalance aggressive trade policies.     

Has the compulsory school merger program reduced the welfare of rural residents in China?

The compulsory school merger program in rural regions of China imposed higher education costs on rural residents, decreased their consumption and reduced their welfare. In this study, we employ household-level data and the difference-in-differences method to analyze the policy effect on residents' consumption and education costs. Our results show that the compulsory school merger program had a negative effect on the consumption of rural residents and inflicted multiple education costs on them. We also find that the increase in the distance between school and home is an important explanation for the effect of this policy on rural residents' education costs.     

Financing and monitoring in an emerging economy: Can investment efficiency be increased?

This study investigates the influence of the financial system on firms' investment efficiency in China. For this purpose, we employ country level data of capital markets and financial institutions along with financial data from 2797 Chinese firms in the period from 1998 to 2015. The firms are priori classified into four groups, by high and low values of financial constraints and agency problems. Results show that financial development influences firms' investments positively either directly or by reducing cash flow sensitivity. The impact remains the same for all types of firms. Moreover, the financial structure has an impact on investment efficiency of firms; this result also remains the same even after controlling levels of financial development. Study contributes that capital market based financial structure impacts investment decisions by reducing financing constraints and agency issue due to its strong monitoring ability.     

Looking back: Government politics and trust in rural developments in Tanzania and Zimbabwe 1980–1990

Trust is assigning the right to act to others. Trust is therefore building community. But trust can increase and wane with complex consequences. Community was built differently in Tanzania and Zimbabwe. Tanzania reached independence already in 1961; Zimbabwe in 1980. Both were subjected to British colonialism. Both experienced liberation movements more harshly suppressed in Zimbabwe than in Tanzania. Both had large rural populations. It can be argued that some level of generalised trust among people within the state’s formal boundaries is a condition for a functioning democracy. Distrust that makes a citizen, a group or a whole category of people exit from the state’s basic institutions fragments the state. The question here is how government politics in rural affairs, both policy-making and the organisation of implementation, affected trust relations between rulers and rural citizens in the two countries. The assumption is the less positive meaning policy has, the less trust, a reduced willingness to assign authority to policy maker and implementers.     

2013年:外企不再Made in China?

对于众多行业来说,中国已不再是一个"新兴市场",外资企业维持高利润率的日子已一去不复返。     

Are poor able to access the informal credit market? Evidence from rural households in China

The poor are often excluded from formal credit markets, but few empirical studies in literature have investigated whether the poor are constrained in the informal credit market. This paper uses recent micro data of rural China to answer this question. An instrumental variable model is estimated to account for potential endogeneity issues. Results show that poorer households have lower probability of entering the informal credit market. Further examination shows that the poor are limited by social network and that they have no financial means to invest in their social capital to expand their social network. Our findings shed light on potential solutions of reducing poverty in rural areas.     

Measuring rural welfare in colonial Africa: did Uganda's smallholders thrive?

Recent scholarship on historical welfare development in Sub‐Saharan Africa has uncovered long‐term trends in standards of living. How the majority of rural dwellers fared, however, remains largely elusive. This study develops a new approach to reconstruct rural living standards in a historical context. It builds upon a well‐established real wage literature, but moves beyond it to capture rural realities, employing sub‐national rural survey, census, and price data. The approach is applied to a case study of colonial and early post‐colonial Uganda (1915–70). The case study yields a number of findings. While the expanding smallholder‐based cash crop sector established itself as the backbone of Uganda's colonial economy, farm characteristics remained largely stagnant after the initial adoption of cash crops. Smallholders maintained living standards well above subsistence level, and while the profitability of cash crops was low, their cultivation provided a reliable source of cash income. Around the time of decolonization, unskilled wages rose rapidly while farm incomes lagged behind. As a result, an urban–rural income reversal took place. The study also reveals considerable differences within Uganda. Smallholders in Uganda's banana regions required fewer labour inputs to maintain a farm income than their grain‐farming counterparts, creating opportunities for additional income generation and livelihood diversification.     

Informal potato seed systems in the Andes: Why are they important and what should we do with them?

In Bolivia, Peru and Ecuador informal potato seed systems are much more important than formal systems. National seed projects recognize complementarities between the two systems and are seeking to link them. Arguments used to underpin linkages are assessed in the light of available evidence and accepted with some reservations. Project strategies have ranged from seed injection with minimum intervention to extensive reform ofthe informal system. All of the projects have met with some success. A number of general lessons are drawn for trapping the potential of informal seed systems.     

Do peer effects influence the academic performance of rural students at private migrant schools in China?

This paper examines peer effects on the academic performance of rural migrant students at both the class level and the individual level. The dataset is from a survey of more than 3000 students from all of the 87 migrant schools in Shanghai and Suzhou, China. The two-stage least squares method with an instrumental variable is employed to control for the endogeneity of peer performance variables. We found that peer effects exist among the migrant students at both class and individual levels. A one-point increase in the average of standardized math grade (SMG) of his/her classmates is associated with an increase of 0.5 points in the SMG of an individual (1.01 standard deviation). A one-point increase in a learning companion's SMG can result in an increase of 0.046 points in the student's SMG. The findings reveal that private migrant schools can improve rural migrant students' academic performance by optimizing students' class allocation and building study groups, providing an additional boost to the input-output efficiency of the human-capital education of the children of migrant workers in China, but the effects of these measures are limited.     

Will remittances suppress or increase household income in the migrant-sending areas? Modeling the effects of remittances in rural China

There are ongoing debates about whether remittances suppress or increase household income in the migrant-sending areas. The literature has not explained the heterogeneous results in a unified framework. This paper proposes a new concept, remittance capitalization potential (RCP), to conceptualise the possible switch between suppression effect and incentivization effect of remittances in the migrant-sending areas. The theoretical model reveals that remittances suppress household income in the migrant-sending areas when the RCP level is below a certain threshold, while remittances help increase household income in the migrant-sending areas when the RCP level is above a certain threshold. Moreover, the factors that affect the RCP level, such as the level of household human capital, ultimately determine whether remittances exert suppression or incentivization effect in the migrant-sending areas. Using China Family Panel Studies (CFPS) data, this paper adopts the method of instrumental variables to estimate how the level of household human capital alters the effect of remittances on household income from agricultural production in rural China. The models show that in the households with the head agricultural producers who are illiterate or semi-literate, the remittances suppress the agricultural income significantly. In the households with the head agricultural producers who are literate, however, the impact of remittances on the agricultural income switch to be positive significantly. The robustness tests not only support the results from the base models, but also confirm that the level of household human capital works as an influencing factor of RCP and determines whether remittances suppress or increase household income in the migrant-sending areas.     

Self-employment in Urban China:Entrepreneurship or Disguised Unemployment?

To explore the mechanism of entry to the self-employed sector in urban China,this study tested two hypotheses:the entrepreneurship hypothesis and the disguised unemployment hypothesis,investigating the impact of mass entrepreneurship and innovation policies on business start-ups.Three main findings emerged.First,the entrepreneurship hypothesis was rejected for both local urban residents and migrants in 2013 but was supported for both groups in 2018.Second,the causality relationship between mass entrepreneurship and innovation policies and business starts-ups was not significant.Third,the results differed by group.The entrepreneurship hypothesis was supported for the younger generation of migrants in 2018 but was clearly rejected for the less educated,both in the local urban resident and migrant groups in 2013 and 2018.Robustness checks confirmed these conclusions.