Results for “china”
2932 found

Censorship of U.S. Movies in China

We introduce a structural econometric model to estimate the extent to which the Chinese government bans U.S. movies. According to our estimates, if a movie has characteristics similar to the median movie in our sample, then the probability is approximately 0.91 that the Chinese government will ban it. During our sample period, 1994-2019, U.S. movies comprised about 28 percent of the Chinese market and sales were about $22.6 billion. However, according to our estimates, if the Chinese government had not banned any U.S. movies, then the latter numbers would have risen to 68 percent and $45.1 billion.

As for what gets banned:

…, two factors that have very high statistical significance are: (i) whether the movie contains occult content, and (ii) whether the movie
receives an R rating from the Motion Picture Association of America (MPAA). The factors also have very high substantive significance. For instance, suppose two movies, A and B, are identical except that movie A contains occult content, while B does not. Suppose movie B’s probability of being banned is 50%. Then, according to our results, the occult content in movie A causes its probability of being banned to rise to 67%. A similar thought experiment implies that, if a movie has an R rating, then this raises its probability of being banned from 50% to 70%.

Three other factors seem to be important but come just short of reaching statistical significance. These are whether the movie contains themes related to (i) anti-communism, (ii) individualism, or (iii) Tibet. A fourth factor is similar. This is whether the actor Richard Gere
appears in the movie.

That is a new paper by XUHAO PAN, Tim Groseclose, and yours truly, forthcoming in the Journal of Cultural Economics.

Reassessing China’s Rural Reforms: The View from Outer Space

We study one of the central reforms in China’s economic miracle, the Household Responsibility System (HRS), which decollectivized agriculture starting in 1978. The HRS is commonly seen as having significantly boosted agricultural productivity—but this conclusion rests on unreliable official data. We use historical satellite imagery to generate new measurements of grain yield, independent of official Chinese statistics. Using two separate empirical designs that exploit the staggered rollout of the HRS across provinces and counties, we find no causal evidence that areas that adopted the HRS sooner experienced faster grain yield growth. These results challenge our conventional understanding of decollectivization, land reform, and the origins of the Chinese miracle.

That is a new paper by Joel Ferguson and Oliver Kim, with Kim being on the job market from Berkeley this year.  Here is Kim’s thread on Twitter.  Intriguing results, which have won praise from Pseudoerasmus…

China estimate of the day

According to a report by the All-China Federation of Industry and Commerce, more than 80% of China’s 1 billion private enterprises are family-owned, with about 29% of these businesses in traditional manufacturing. From 2017 to 2022, around three-quarters of China’s family businesses are in the midst of a leadership transition, marking the largest succession wave in Chinese history.

Here is the full story, via Rich Dewey.

*China’s World View: Demystifying China to Prevent Global Conflict*

That is a forthcoming book by David Daokiu Li.  Perhaps it is the very best book explaining “how China works today?”

“What should I read on China?  Which single book?” — those are two of the most common questions I receive.  There are plenty of perfectly fine history books, but I am never sure what I should recommend.  Now I have an answer to that question.  Here is one short excerpt from the text:

Many people in China are concerned with the side effects of the massive anticorruption campaign.  The first side effect is that government officials, especially those dealing with economic affairs, have now become inert.  The reason is that active officials almost surely create enemies or grumbling groups, such as through the demolition of an old building to make room for new investments.  These groups would bring their cases, and perhaps even historical cases, to the party discipline committee.  On their path to promotion and their current positions, most officials have either intentionally or unintentionally engaged in practices that are not in compliance with today’s tighter government rules.  In the Chinese reform process, laws and regulations are gradually implemented and then tightened.  The anticorruption campaign is using today’s tighter regulations to judge the past conduct of officials, which occurred when the rules were either looser or entirely unclear.  As a result, officials today are extremely hesitant to take any action that would make them stand out or draw extra attention, even if those actions are in the best interests of the locale or department they serve.

The author covers much more, including the importance of history, how the CCP works, local governments, SOEs, education, media and the internet, the environment, population, and much more.

There should be a book like this about every country.

I should note that the author lives in Beijing, so he soft pedals some of the more negative interpretations of the data, but ultimately I think this is much more fruitful than the books by journalist outsiders.  The analysis is here, and you can do the moralizing on your own, if that is how you want it.

Definitely recommended, a very real contribution.

Korea Japan (China) fact of the day

…the most significant destruction on the Korean Peninsula was wrought by the Japanese invasions of the late sixteenth century.  Nearly two million Koreans, a staggering 20 percent of the population, perished during the Imjin Wars, Toyotomi Hideyoshi’s campaigns of 1592-1598 to subjugate the Korean Peninsula.  Hideyoshi’s object was the conquest of Ming China (1368-1644) but the result was to turn Korea into a ruined land.

That is from the new and interesting The Other Great Game: The Opening of Korea and the Birth of Modern East Asia, by Sheila Miyoshi Jager.

Disputes over China and structural imbalances

There has been some pushback on my recent China consumption post, so let me review my initial points:

There exists a view, found most commonly in Michael Pettit (and also Matthew Klein), that suggests economies can have structural shortfalls of consumption in the long run and outside of liquidity traps.

My argument was that this view makes no sense, it is some mix of wrong and “not even wrong,” and it is not supported by a coherent model.  If need be, relative prices will adjust to restore an equilibrium.  If relative prices are prevented from adjusting, the actual problem is not best understood as a shortfall of consumption, and will not be fixed by a mere expansion of consumption.

Note that people who promote this view love the word “absorb,” and generally they are reluctant to talk much about relative price adjustments, or even why those price adjustments might not take place.

You will note Pettis claims Germany suffers from a similar problem, America too though of course the inverse version of it.  So whatever observations you might make about China, the question remains whether this model makes sense more generally.  (And Australia, which ran durable trade deficits from the 1970s to 2017, while putting in a strong performance, is a less popular topic.)

Pettis even has claimed that “US business investment is constrained by weak demand rather than costly capital”, and that is from April 4, 2023 (!).

It would take me a different blog post to explain how someone might arrive at such a point, with historic stops at Hobson, Foster, and Catchings along the way, but for now just realize we’re dealing with a very weird (and incorrect) theory here.  I will note in passing that the afore-cited Pettis thread has other major problems, not to mention a vagueness about monetary policy responses, and that rather simply the main argument for current industrial policy is straightforward externalities, not convoluted claims about how foreign and domestic investment interact.

Pettis also implicates labor exploitation as a (the?) major factor behind trade surpluses, and furthermore he considers this to be a form of “protectionism.”  Now you can play around with scholar.google.com, or ChatGPT, all you want, and you just won’t find this to be the dominant theory of trade surpluses or even close to that.  As a claim, it is far stronger than what a complex literature will support, noting there is a general agreement that lower real wages (ceteris paribus) are one factor — among many — that can help exports.  This point isn’t wrong as a matter of theory, it is simply a considerable overreach on empirical grounds.  Of course, if Pettis has a piece showing statistically that a) there is a meaningful definition of labor exploitation here, and b) it is a much larger determinant of trade surpluses than the rest of the profession seems to think…I would gladly read and review it.  Be very suspicious if you do not see such a link appear!

Another claim from Pettis that would not generate widespread agreement is: “…in an efficient, well-managed, and open trading system, large, persistent trade imbalances are rare and occur in only a very limited number of circumstances.” (see the above link)  That is harder to test because arguably the initial conditions never are satisfied, but it does not represent the general point of view, which among other things, considers persistent differences in time preferences and productivities across nations.

Now, it does not save all of this mess to make a series of good, commonsense observations about China, as Patrick Chovanec has done (Say’s Law does hold in the medium-term, however).  And as Brad Setser has done.

In fact, those threads (and their citation) make me all the more worried.  There is not a general realization that the underlying theory does not make sense, and that the main claim about the determinants of trade surpluses is wrong, and that it requires a funny and under-argued tracing of virtually all trade imbalances to pathology.  And to be clear, this is a theory that only a small minority of economists is putting forward.  I am not the dissident here, rather I am the one delivering the bad news.

So the theory is wrong, and don’t let commonsense, correct observations about China throw you off the scent here.

Does China need more consumption?

I am repeatedly puzzled by this claim, which you will find in Michael Pettis, Paul Krugman, and others (WSJ), even Stephen Roach.  It might make sense for short-run matters, when prices are (maybe) sticky.  But as of late we are talking about how to restructure China for medium- and long-term growth.

Investment good prices are not sticky forever!  If rates of return are too low, those prices will fall, thereby restoring higher rates of return.  Somehow I never see that point mentioned.

Note that China is not in a liquidity trap, so weird liquidity trap results are not going to apply here.  If you are worried about some kind of downward spiral of everything, monetary policy can fill the gap.

Paul Krugman for one writes (NYT):

The result is that China has a huge quantity of savings all dressed up with no good place to go.

China needs investment in lots of things, starting with say health care?  There is a major doctor shortage and the quality of Chinese health care is abysmal.  It is true that China also needs more consumption of health care, rather than production of health care with no one consuming it.  But that is not what people mean when they say China needs more consumption.

It is plausible to argue that China has inefficiency wedges that favor some kinds of investment over consumption, such as massive subsidies for infrastructure construction.  But it is odd to conclude that China needs outright “more consumption,” which indeed will limit China’s prospects for the future.  What China needs is “both more consumption and more investment in the discouraged sectors.”  That would both boost growth and the welfare of Chinese citizens.

The policy differences here are quite concrete.  Don’t expect to get far by printing up lots of money, giving it to Chinese consumers, and telling them to spend it.  You might, however, help growth rates if you could free up or otherwise assist China’s numerous dysfunctional sectors, again with health care being one very obvious example.

The WSJ wrote:

…top leader Xi Jinping has deep-rooted philosophical objections to Western-style consumption-driven growth…

C’mon people!  Can I call it “Western-style production-driven growth”?  (Where do you think most real income for consumption comes from?)  The rebellion against Say’s Law has gone way too far.

Excess All-Cause Mortality in China After Ending the Zero COVID Policy

In this cohort study across all regions in mainland China, an estimated 1.87 million excess deaths occurred among individuals 30 years and older during the first 2 months after the end of China’s zero COVID policy. Excess deaths predominantly occurred among older individuals and were observed across all provinces in mainland China, with the exception of Tibet.

So what is the proper sarcastic headline here?  “I guess that flu was worse than we thought!”?  Or “How is it that China ran out of ivermectin?”  Here is the new JAMA piece, via Rich Dewey.

To be clear, I never thought Zero Covid was a sustainable policy for China.  The real criminal negligence lies with CCP leadership, which turned down opportunities to pursue joint mRNA vaccine production — with the West of course — earlier on.

China estimate of the day

The paper’s title is “The Largest Insurance Expansion in History: Saving One Million Lives Per Year in China”:

The New Cooperative Medical Scheme (NCMS) rolled out in China from 2003-2008 provided insurance to 800 million rural Chinese. We combine aggregate mortality data with individual survey data, and identify the impact of the NCMS from program rollout and heterogeneity across areas in their rural share. We find that there was a significant decline in aggregate mortality, with the program saving more than one million lives per year at its peak, and explaining 78% of the entire increase in life expectancy in China over this period. We confirm these mortality effects using micro-data on mortality, other health outcomes, and utilization.

It is striking how few Westerns have even heard of this policy, one of the more important global events in recent years.  I do however wish to ask if this estimate is in accord with other, more general estimates from the literature.  The Amish, for instance, don’t see doctors so often and their life expectancy seems to be perfectly fineThe new paper is from Jonathan Gruber, Mengyun Li, and Junjian Yi.