Location determinant and MNE’s performance: A modeling test in the China’s automobile industry

This paper argues that the location strategy is an important successful condition for multinational enterprise’s investment in China. We conduct a location–performance model for multinationals in China, which is tested using a structural equation modeling approach on a sample of 216 joint ventures of automobile multinational enterprises in China. We find that the relationship between the location determinant and multinational performance is significant and positive, and which is supported by the local partner’s performance.     

The Time-varying Impact of China’s Economic Rebalancing on Korea’s Exports to China

While China seeks to shift from exports and investment to a consumption-oriented economy and to increase the self-sufficiency rate of exports, this study uses time-varying parameter vector autoregression (TVP-VAR) to examine the impact of economic structural changes in China on Korea’s exports to China over time. The study results suggest that the impact of China’s export shocks on Korea’s exports has weakened, which demonstrates the slowdown in regional production fragmentation, considering that Korea’s export goods are mainly intermediate goods. Instead, the influence of China’s domestic demand shock on Korea’s exports has expanded, which implies that China has increasingly become the final destination of intermediate goods made in Korea.     

The People’s bank of China’s response to the coronavirus pandemic: A quantitative assessment

The People’s Bank of China (PBoC) has implemented numerous measures to cushion the impacts of the COVID-19 health crisis on the Chinese economy. Since the current monetary policy framework features a multi-instrument mix of liquidity tools and pricing signals, we employ a dynamic-factor modelling approach to derive a composite indicator of China’s monetary policy stance. Our quantitative assessment shows that the PBoC’s policy response to the outbreak of the COVID-19 pandemic has been swift and decisive. Specifically, our estimates reveal that the PBoC has implemented novel policy measures to ensure that commercial banks maintain liquidity access and credit provision during the COVID-19 crisis.     

China’s value-added tax reform,firm behavior and performance

China reformed value-added tax (VAT) by removing investment from the tax base in northeastern provinces in 2004, which is a “natural experiment” of its tax system. Using difference-in-differences method, this paper for the first time investigates the impact of VAT reform on China firms’ fixed asset investment, employment behavior, innovative activities, and productivity, and furthermore discusses the impact of firm behavior on industrial structural upgrade and employment with a firm-level panel data of large and medium-sized manufacturing enterprises in China. We find that VAT reform significantly promotes firms’ fixed asset investment, and increases firms’ capital-labor ratio and productivity; while enhancement of firms’ productivity is mainly achieved by means of substituting labor with capital, rather than independent technology innovation; meanwhile, VAT reform distinctly decreases employment. Our findings have essential policy implications on the extension of VAT reform in the entire China.     

China’s efforts to contain Renminbi’s depreciation and the relating impacts

China began to face Renminbi (RMB) depreciation pressure since 2014Q2, and the 8/11 reform in 2015 exacerbated the RMB depreciation pressure against USD. To contain the depreciation pressure, the People’s Bank of China (PBC) adopted three methods. Firstly, PBC tried to stabilize the exchange rate by selling USD and purchasing RMB, which resulted in the fast shrinking of China’s foreign exchange reserve. Secondly, PBC strengthened the regulation of capital outflows, which caused the stagnation of RMB internationalization. Thirdly, PBC frequently changed the pricing mechanism of the daily fixing of RMB to USD, which led to the reverse of the liberalization of RMB exchange rate. Under the new environment of RMB depreciation pressure and much lower foreign exchange reserve, Chinese government changed its strategies and became more cautious and pragmatic in outward foreign direct investment, RMB internationalization, and Belt & Road Initiative construction.     

A sectoral approach to Okun’s Law

The study adds to the existing literature on the relationship between output and unemployment by using a sectoral specification of Okun’s Law to capture the differential sensitivity of the unemployment rate to output developments in the services and manufacturing sectors. Using quarterly data for the period between 2000 and 2012, we show that Malta’s unemployment rate has been more sensitive to output developments in the services sector than to those in the manufacturing sector. We use different equation specifications and the youth unemployment rate to show that the impact resulting from developments in the manufacturing sector occurs mainly via lay-offs while developments in the services sector affect the unemployment rate via the hiring of new entrants into the labour market.     

Understanding China’s Foreign Trade Policy: A Literature Review

China has continued to experience rapid growth in its foreign trade since the implementation of its reform and opening-up policies. In recent years, the country has become the world’s largest exporter and second largest importer of goods and commodities. China’s trade policy has also gradually been transforming from protectionism to open trade. This paper aims to provide a comprehensive survey on the literature of China’s trade policy. The review covers (1) export and import policies, (2) tariff and non-tariff barriers, and (3) policy effects and motivations behind the policy design. This paper also reports on important topics and issues that deserve more research attention.     

James Buchanan’s theory of federalism: from fiscal equity to the ideal political order

The distinct characteristic in James Buchanan’s thinking about federalism in contrast to the traditional theory of fiscal federalism is his view about fiscal competition. In this paper, it is demonstrated that this thinking went through three stages. From the 1950s to the beginning of the 1970s, his analyses were well embedded in the traditional fiscal federalism literature and concerned with equity and efficiency issues. In the Leviathan approach starting from the mid-seventies, he considered competition between jurisdictions as a means to restrict Leviathan governments. In his interpretation of federalism as an ideal political order, Buchanan binds these perspectives together and adds a procedural view: Federalism enables citizens to exert political control, it raises their interest in politics because one vote has more influence, and it facilitates to act morally within their moral capacity.     

A women’s boom in the boardroom: effects on performance?

This article analyses whether improving gender diversity in boardrooms improves firms’ economic performance. In the context of French CAC40-listed companies between 2008 and 2012, this research uses instrumental variable panel regressions, including production frontier estimates, to arrive at two key results. First, gender diversity in boards depends on firms’ attributes including their previous gender promotion strategies. Second, promoting women in boardrooms has a significant and positive effect on economic performance while accounting for the endogeneity boards’ gender diversity. Gender diversity even reduces corporate inefficiencies and enables firms to come closer to their optimal performance.     

The allocation of PhD enrolment quotas in China’s research-oriented universities based on equity and efficiency principles

PhD enrolment quota allocation proves the key concern for China’s universities to promote institutional reform and improve research level, and it is often characterized by the zero sum game among schools within a university. Therefore, this article develops a new indicator system for PhD enrolment quota allocation and efficiency evaluation in China, and then it reallocates the quotas considering the preferences of decision-makers and the efficiency based on the historical data during 2011–2015 in a research-oriented university in China. The results indicate that, first, the preferences of decision-makers in the university for article publications and research funds may significantly affect the allocation of PhD enrolment quotas among schools. Second, when the linear combination weighting method is used, the overall efficiency for PhD enrolment allocation proves the highest, among various weighting methods concerned. Finally, to improve the overall efficiency of the 19 schools, five social science schools and four engineering schools have to cut their PhD enrolment quotas; among them, three engineering schools should reduce the largest redundant quotas sharply. The methods and results in this article are conducive to the allocation of education resources which have the zero sum feature and are often accompanied with undesirable outputs.     

What leads to official corruption in China? A politico-economic analysis of economic opportunities and government corruption across China’s provinces

This paper investigates the relationship between economic opportunities and official corruption in China. We construct a cross-province sample of corrupted officials to analyse the effects on official corruption of mineral reserve, coal production, real estate and road construction, while including control variables such as population, GDP per capita, economic growth rate, private assets, provincial government capacity, fiscal transparency and distance of the province from Beijing. Spanning from December 2012 to November 2015, our sample contains 526 high-level government officials who worked in various provinces in China. We find through multivariate regression that economic opportunities represented by coal, minerals, real estate and road construction all have a positive and significant effect on official corruption in China at the levels of provincial department director or deputy director; meanwhile, capacity of political extraction, road construction and coal production are better indicators of official corruption at the level of governor or deputy governor.     

Contemporary China’s Rural Landownership with Reference to Antony M. Honoré’s Concept of Ownership

This article analyses the property rights that Chinese peasants have under the present Household Responsibility System (HRS) using Antony M. Honoré’s work on ownership, especially his analysis of eleven standard incidents of the full liberal concept of ownership. It confirms Honoré’s insight that these standard incidents can be divided among two or more persons, and thus there are different types of property rights which are variants and alternatives to the liberal type of property rights. This article also confirms that the Chinese land system is a real alternative to the full liberal concept of ownership. The current Chinese land system is alleged to be “unclear and insecure” because it is not the kind of private ownership that neoliberals champion. In the tradition of the “bundle of rights” theory, it is helpful to use Honoré’s concept of ownership, rather than Harold Demsetz’s type of property rights, to understand the current Chinese system.     

A subjectivist’s solution to the limits of public choice

In light of Wittman (1995) and Caplan (2007) this paper contends that the rational-choice approach to political science (“Public Choice theory”) has reached a dead end. By critiquing their treatment of rationality, knowledge assumptions, and views of the democratic process, an alternative is presented based on the core insight of the “Epistemic Primacy Thesis”. This subjectivist approach to political economy is introduced in light of an existing debate between the compatibility (or otherwise) of Austrian economics and Public Choice theory.     

Measuring universities’ R&D performance in China’s provinces: a multistage efficiency and effectiveness perspective

ABSTRACT

Evaluating universities’ R&D performance can serve as a tool for policymakers, enabling them to identify the best R&D practitioners for benchmarking and develop strategies for enhancing performance by highlighting areas of weakness. This study divides universities’ R&D performance into two dimensions: efficiency and effectiveness. We employ a network data envelopment analysis approach to measure universities’ R&D efficiency, and separately use a multi-index comprehensive evaluation method to assess their R&D effectiveness from a multistage perspective. We calculate the comprehensive R&D performance of universities in 30 provinces in China from 2004 to 2014. An analysis of temporal variation reveals that universities’ R&D performance in some provinces improved rapidly, increasing gaps in performance as a whole. The spatial pattern for the 30 provinces shows that universities in provinces with medium or strong R&D performance are mainly in coastal provinces and central areas in China. Finally, universities’ R&D activities are considered ‘efficient and effective’ only in a small number of provinces, while in most provinces, these activities can generally be considered ‘less efficient and effective.’ Hence, universities in provinces with different R&D performance modes should implement targeted improvement strategies according to their characteristics.     

The innovation and performance impacts of venture capital investment on China’s small- and medium-sized enterprises

This study examines the impacts of venture capital (VC) on performance and innovation of China’s small- and medium-sized enterprises (SME). Using unbalanced panel data of 2699 VC-backed and non-VC backed firms in China’s pilot over-the-counter equities market, namely the National Equity Exchange and Quotation (NEEQ) market, during 2005–2014, we find that venture capital financing not only spurs innovation in the Chinese market, but also exhibits significantly positive impact on financial performance. Empirical evidence reveals that syndication of venture capital investment as well as the reputation of venture capitalists helps to create value for VC-backed firms. However, no evidence is found that foreign VC-backed firms perform better than domestic VC-backed ones. The results are robust to a variety of specifications. Our findings imply that the VC financing is an effective channel to promote the development of SMEs at China’s multi-layer capital market and syndicated VC investments and venture capitalists with high reputation shall be encouraged to play a bigger role in nurturing innovation and entrepreneurship in the future.     

Impact of regional interactions on China’s trade performance: evidence from a spatial econometric approach

ABSTRACT

In this paper, we examine the impact of regional interactions on China’s trade performance as supported by infrastructure development, using exports and imports of Chinese-owned and foreign-owned firms disaggregated for 28 provinces. Taking into account the disparities in the regional economic activities, we use five spatial weight matrices in a spatial panel lag and spatial panel error frameworks in the period 1996–2016. The spherical distance and the gasoline usage weight matrices measure the impact of ground connections on China’s trade flows. The nautical miles and the river distance weight matrices measure the impact of maritime and river connections on trade flows for provinces along the sea coast, in the Yangtze valley, and along Zhu river, respectively. We find significant cross border effects on provincial trade flows. The effects vary between areas and firms. Overall, our findings show positive influence of regional interactions on China’s international trade performance.     

The intergenerational transmission of historical conflicts: An application to China’s trade

We study the legacy effect and transmission mechanisms of historical conflicts on contemporary trade. Using new data on the regional dispersion of civilian deaths due to massacres in the Sino-Japanese war (1931–1945), we find that local conflict intensity predicts international trade patterns of Chinese corporations three generations later. We further explore the transmission mechanism of collective war memory. Conflict intensity correlates with measures of anti-Japanese sentiments inferred from survey data and it appears to be transmitted both through war dramas in the mass media as well as official commemorations. We also find evidence that the trade-inhibiting effect increases with the time exposed to collective war memory.