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on China |
| By: | JINJI Naoto; OZAWA Shunya |
| Abstract: | We quantify the impact of trade and technology transfer restrictions between the United States (US) and China, technology protection policies in China, and export control laws in both countries through the US-China technological decoupling. To achieve this, we develop a dynamic quantitative general equilibrium trade model that considers foreign direct investment involving technology transfer. Our model comprises the final and intermediate goods sectors and assumes that only the latter utilizes technology capital. Our counterfactual analysis is based on data from 89 countries in 2016. We find that the US, China, and the world as a whole experience welfare losses owing to the US-China decoupling. We further observe that China’s technology protection policy affects not only countries with significant technology transfers from China but also those that rely heavily on technology capital. Countries with larger import shares from the US and China experience more substantial declines in the import of intermediate goods owing to the US and Chinese export control laws. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:24041&r=cna |
| By: | Ozge Akinci; Hunter L. Clark; Jeffrey B. Dawson; Matthew Higgins; Silvia Miranda-Agrippino; Ramya Nallamotu; Ethan Nourbash |
| Abstract: | While the slump in China’s property sector has been steep, Chinese policymakers have responded to the falloff in property activity with policies designed to spur activity in the manufacturing sector. The apparent hope is that a pivot toward production-intensive growth can help lift the Chinese economy out of its current doldrums, which include weak household demand, high levels of debt, and demographic and political headwinds to growth. In a series of posts, we consider the implications of two alternative Chinese policy scenarios for the risks to the U.S. outlook for real activity and inflation over the next two years. Here, we consider the impact of a scenario in which a credit-fueled boom in manufacturing activity produces higher-than-expected economic growth in China. A key finding is that such a boom would put meaningful upward pressure on U.S. inflation. |
| Keywords: | globalization; trade; international; China |
| JEL: | F0 |
| Date: | 2024–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:97960&r=cna |
| By: | Ozge Akinci; Hunter L. Clark; Jeffrey B. Dawson; Matthew Higgins; Silvia Miranda-Agrippino; Ramya Nallamotu; Ethan Nourbash |
| Abstract: | A previous post explored the potential implications for U.S. growth and inflation of a manufacturing-led boom in China. This post considers spillovers to the U.S. from a downside scenario, one in which China’s ongoing property sector slump takes another leg down and precipitates an economic hard landing and financial crisis. |
| Keywords: | China; international; global trade; trade; financial crises |
| JEL: | F0 |
| Date: | 2024–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:97966&r=cna |
| By: | Panle Jia Barwick; Hyuk-Soo Kwon; Shanjun Li |
| Abstract: | Attribute-based subsidies (ABS) are commonly used to promote the diffusion of energy-efficient products, whose manufacturers often wield significant market power. We develop a theoretical framework for the optimal design of ABS to account for endogenous product attributes, environmental externalities, and market power. We then estimate an equilibrium model of China's vehicle market under ABS and conduct counterfactual simulations to evaluate the welfare impacts of various subsidy designs. Compared to the uniform subsidies, ABS lead to higher product quality and are more effective in mitigating quantity distortions, albeit with a modest environmental cost. Between 42% to 62% of welfare gains under ABS relative to uniform subsidies are attributed to more desirable product attributes, with the remainder explained by reductions in market power distortions. Allowing subsidy redistribution through product-level subsidies, as suggested by our theoretical model, further enhances welfare gains by an additional 34% to 62%. Among the ABS designs, China's notched subsidy design based on driving range leads to vehicle downsizing that undermines welfare benefits. Subsidies based on battery capacity, as implemented in the U.S., achieve the highest welfare gains by effectively balancing market power and environmental impacts. |
| JEL: | L13 L52 L62 Q58 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32264&r=cna |
| By: | Yuan, Mingqing |
| Abstract: | This study examines the relationship between economic policy uncertainty (EPU) and corporate investment by employing the two-step system generalized method of moments approach and panel data from 4619 listed firms in China spanning 2003–2022. We comprehensively analyze EPU’s impact on various timelines of investment and show non-linear dynamics within the EPU–investment nexus. Our findings suggest that EPU negatively affects total and short-term investments, but positively influences long-term investment. Total and short-term investments demonstrate a U-shaped association with EPU, while long-term investment follows an inverted U-shaped pattern. Additionally, we explore the effects of ownership and capital structures. Ownership concentration and institutional ownership amplify the negative impact of EPU on total and short-term investment but alleviate it for long-term investment. State ownership exacerbates the adverse effects on total and short-term investments, with no significant impact on long-term investment. We find that increased debt financing and equity financing intensify the adverse impact of EPU on total and short-term investments, while not significantly affecting long-term investment. This study offers policy implications based on investment horizon, ownership structure, and financial leverage, guiding policymakers and corporate decision-makers. |
| Keywords: | Economic policy uncertainty, Corporate investment, Ownership structure, Capital structure |
| JEL: | C23 D81 E22 G32 P34 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119992&r=cna |
| By: | JEONG, Hyung-gon (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | U.S. sanctions on China's semiconductor industry are causing major shifts in the global supply chain, affecting South Korea's industry due to its reliance on Chinese manufacturing. The Biden administration's increased sanctions, combined with global trends towards semiconductor self-sufficiency, are putting South Korea's semiconductor position at risk. Countries such as the U.S., China, and Japan are building up their domestic semiconductor industries, potentially affecting South Korea's position in the global market. Deeply integrated with China, Korean companies, face the challenge of reducing this dependence and adapting to the evolving supply chain landscape. This paper examines the import and export trends of the South Korean semiconductor industry over the last five years to assess its global standing, identify challenges, and suggest strategic directions. Using data from the Korea Customs Service from 2019 to 2023, the study analyzes trade patterns and supply chain configurations within South Korea's semiconductor industry. The industry is divided into six main categories and 33 subcategories, based on the analysis of 381 semiconductor-related items categorized under the Harmonized System at the 10-digit level. This detailed classification allows for an in-depth examination of trade trends, supply chain structures, and associated risks within the South Korean semiconductor industry. Moreover, this research uses the classification method described and UN Comtrade statistics to create a dataset on global semiconductor trade. This dataset is used to analyze the international presence of the South Korean semiconductor industry and its market shares in China across different segments. |
| Keywords: | Global Supply Chain; Semiconductor Industry; US-China Hegemony Competition |
| Date: | 2024–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwe:2024_008&r=cna |