The Chinese University of Hong Kong-Tsinghua University Joint Research Center for Chinese Economy 清華大學-香港中文大學中國經濟聯合研究中心 - Research Papers The Chinese University of Hong Kong-Tsinghua University <br/>Joint Research Center for Chinese Economy 清華大學-香港中文大學中國經濟聯合研究中心

Research Papers

Qin Chen, Zhiguo He, Chang-Tai Hsieh, Zheng (Michael) Song
This letter documents several facts of China’s post-lockdown economic recovery in April and May. The main findings are summarized as follows. (1) Truck flows and online consumption suggest a strong recovery. (2) The recovery of online job posts stagnated. (3) Smaller firms cut online job posts...

陳沁 ,何治國 , 謝長泰 , 宋錚
本文記錄了四、五月中國解封後期經濟復蘇的若干事實。主要發現概括如下: (1) 卡車貨運流量和線上消費呈現強勁的復蘇趨勢。 (2) 線上崗位發佈的恢復速度放緩、陷入停滯。 (3)...

陳沁 ,何治國 , 謝長泰 , 宋錚
4月8日中國政府結束了對武漢長達76的封鎖。除武漢外,許多地方政府已經放寬了對出行的限制,並將重心轉移到了經濟復蘇上。這篇報告記錄了中國封鎖後期經濟復蘇的若干事實。主要發現概括如下。 (1) 官方統計資料表明製造業正在快速復蘇。製造業的反彈可以從城市間卡車流量、線上崗位發佈和空氣污染排放等非官方資料中找到證據。 (2) 電力消費、零售額和餐飲收入表明服務業產出的下降幅度更大。公司註冊登記資料顯示,近期很少有公司進入服務領域。 (3) 跨區域異質性很大。移動設備訪問地點和公司註冊登記資料表明,東南地區的復蘇更為強勁。 (4)...

Qin Chen, Zhiguo He, Chang-Tai Hsieh, Zheng (Michael) Song
The Chinese government ended the 76-day lockdown of Wuhan on April 8. Outside Wuhan, many local governments had already eased restrictions on movement and shifted their focus to reviving the economy. This letter documents several facts of the post-lockdown economic recovery in China. The main findings...

Haoyuan Ding, Haichao Fan, Shu Lin
We examine the stock market responses to two symbolic events in the outbreak of COVID-19: (1) the lockdown of Hubei province; and (2) the containment of the disease in China and its spread to overseas. Overall, market in China responded negatively (positively) to the first (second) event. Regression...

Qin Chen, Zhiguo He, Chang-Tai Hsieh, Zheng (Michael) Song
On January 23 2020, the Chinese government locked down the city of Wuhan (Hubei Province). In subsequent days, similar measures were taken in other cities in Hubei and throughout China. This letter documents several facts of Chinese economy since the lockdown. The main findings are summarized as...

陳沁 ,何治國 , 謝長泰 , 宋錚
【本期報告對上期報告中的數據進行了更新,補充了來自手機定位和電商大數據分析的結果,並對“封城”之後兩個月中國經濟的重要特徵進行總結。】 1月23日,中國政府為控制COVID-19新型冠狀病毒的傳播封鎖了湖北省武漢市。隨後幾天,湖北省其他城市、中國其他省市均相繼採取了封鎖措施。本文記錄了封城以來中國經濟的一些事實。主要發現總結如下: (1)封城對各類經濟活動(從人口、貨物的流動到經濟總產出)的影響是直接且巨大的。 (2)湖北以外的人口和貨物流動已基本恢復到封鎖前的水準。但商場、辦公樓等場所的日度人口流量仍比封鎖前的水準低三分之一。...

Zhiguo He, Chang-Tai Hsieh, Zheng (Michael) Song
On January 23, the Chinese government locked down the city of Wuhan (Hubei Province).  In subsequent days, similar measures were taken in other cities in Hubei and throughout China.  This note offers some preliminary gauge on the effect of the measures taken to protect public health on...

何治國,謝長泰,宋錚
1月23日,中國政府為控制COVID-19新型冠狀病毒的傳播封鎖了湖北省武漢市。隨後幾天,湖北省其他城市、中國其他省市均相繼採取了封鎖措施。在此背景下,本文將利用三類資料:一是國家統計局所公佈的有關工業產出的官方資料,二是卡車運輸資料(可衡量中國的貨物運輸流動),三是百度人口流動資料(可估計封城對服務業和人口流動的影響),來初步估算量化中國政府為控制疫情保護公眾健康所採取的封城舉措對中國經濟的影響。...

Chong-en Bai, Chang-Tai Hsieh, Zheng Song
Chinese local governments wield their enormous political power and administrative capacity to provide “special deals” for favored private firms. We argue that China’s extraordinary economic growth comes from these special deals. Local political leaders do so because they derive...

Wei Chen, Xilu Chen, Chang-Tai Hsieh, Zheng (Michael) Song
China’s national accounts are based on data collected by local governments. However, since local governments are rewarded for meeting growth and investment targets, they have an incentive to skew local statistics. China’s National Bureau of Statistics (NBS) adjusts the data provided by local...

Yousha Liang, Kang Shi, Lisheng Wang, Juanyi (Jenny) Xu
Focusing on the pricing differential between the Renminbi onshore and offshore exchange rates, this paper characterizes the exchange rate fluctuations and investigates the effect of recent Renminbi currency market reforms. Using GARCH models, we find volatility clustering phenomena and leverage effect...

Soo Hong Chew, Junjian Yi, Junsen Zhang, Songfa Zhong
We study the role of risk aversion underlying son preference in patriarchal societies, where sons serve as better insurance for old-age support than daughters. The implications of an insurance motive on son preference are two-fold. First, prior to the birth of their children, more risk-averse parents...

Shiyuan Pan, Kang Shi, Lisheng Wang, Juanyi (Jenny) Xu
China's M2/GDP ratio keeps rising, although it is already in the highest tier throughout the world. In this paper, we investigate empirically this puzzle using different levels of data. We first provide a quantitative approach to estimate the degree of China's excess liquidity based on cross-country...

Yoram Weiss, Junjian Yi, Junsen Zhang
This paper analyzes cross-border marriages between mainland China and Hong Kong (HK). We examine the effects of a reduction in cross-border marriage costs following an increase in marriage-migration quotas and the handover of HK to China. We find that cross-border marriages mainly involve men from the...

Kang Shi, Shu Lin, Haichun Ye
This study examines the role of credit constraints in determining the trade effect of exchange rate volatility. We first develop a small open economy general equilibrium model with credit constraints. In our model, constrained firms respond to real depreciations and appreciations in an asymmetric way,...

Ming Gao, Travis Ng
Recent lawsuits and anecdotal evidence suggest that some platforms discriminate against certain users through non-price practices, discouraging their participation without directly increasing revenue. We show that a monopolist two-sided platform with a prejudice against certain users - modeled as more...

Kang Shi, Jiandong Ju, Yifu Justin Lin, Qing Liu

Loren Brandt, Johannes Van Biesebroeck, Luhang Wang, Yifan Zhang
We examine the effects of the trade liberalization that accompanied China’s WTO accession on the evolution of markups and productivity of Chinese manufacturing firms. Although these two dimensions of performance cannot be separately identified when firm output is measured by revenue, we show that...

Chong-En Bai, Chang-Tai Hsieh, Zheng (Michael) Song
In 2009 and 2010, China undertook a 4 trillion Yuan fiscal stimulus, roughly equivalent to 12 percent of annual GDP. The "fiscal" stimulus was largely financed by off-balance sheet companies (local financing vehicles) that borrowed and spent on behalf of local governments. The off-balance sheet...

Wei Ha, Junjian Yi, Ye Yuan, Junsen Zhang
Using a newly constructed panel dataset that covers the 14-year period from 1997 to 2011 for more than 100 villages in China, this study analyzes the dynamic effect of rural-to-urban migration on inequality in source villages. Given that income inequality is time persisting, we use a system GMM...

Jun Han, Runjuan Liu, Beyza Ural Marchand, Junsen Zhang
This paper investigates the tariff pass-through mechanism and the distributional effects of trade liberalization in urban China. We study how market structure, specifically the size of the private sector, affects tariff pass-through, and how this mechanism influenced the extent to which households...

Kinda Cheryl Hachem, Zheng Michael Song
Many countries try to mitigate business cycle fluctuations by regulating the activities of their banks. We develop a theoretical framework to study the endogenous response of the banking sector and the implications for the aggregate economy. Under fairly mild conditions, we find that stricter liquidity...

Ying Bai, Ruixue Jia
This paper studies how the abolition of an elite recruitment system—China's civil exam system that lasted over 1,300 years—affects political stability. Employing a panel data set across 262 prefectures and exploring the variations in the quotas on the entry-level exam candidates, we find...

Dongya Li, Yi Lu, Travis Ng, Jun Yang
Some firms have achieved good performance in developing countries where the financial sector is far from established. One explanation in the literature is that these firms benefit from trade credit, a form of informal financing. Using a survey of firms in China conducted by the World Bank in early 2003,...

Shaojie Zhou, Junsen Zhang
This study conducts a long-run analysis on the trends and components of Chinese saving rates from 1953 to 2012. We identify two structural changes in aggregate saving rates around 1978 and 2001, and examine them through a decomposition analysis of the income distribution and sector-specific saving...

Jun Ma, Kang Shi, Honglin Wang, Lisheng Wang
We construct a Dynamic Stochastic General Equilibrium( DSGE) model to illustrate the transmission mechanism of the central bank policy rate in China based on Ma and Wang( 2014). Using a bank- centric financial system to characterize Chinese economy,our model qualitatively demonstrates and quantitatively...

Zheng (Michael) Song, Kjetil Storesletten, Yikai Wang, Fabrizio Zilibotti
We analyze intergenerational redistribution in emerging economies with the aid of an overlapping generations model with endogenous labor supply. Growth is initially high but declines over time. A version of the model calibrated to China is used to analyze the welfare effects of alternative pension...

Zheng (Michael) Song, Guiying Laura Wu
Resource misallocation lowers aggregate productive effi ciency. The existing literature often infers the magnitude of misallocation from the dispersion of average revenue products. However, the methodology is subject to several identification issues.

Chang-Tai Hsieh, Zheng (Michael) Song
Starting in the late 1990s, China undertook a dramatic transformation of the large number of firms under state control. Small state-owned firms were privatized or closed. Large state-owned firms were corporatized and merged into large industrial groups under the control of the Chinese state. The state...

Haifeng Zhang, Hongliang Zhang, Junsen Zhang
In this paper, we examine the economic implications of demographic age structure in the context of regional development in China. We extend the development accounting framework by incorporating age structure and apply it to a panel data set of 28 Chinese provinces. We find that changes in age structure,...

Daoju Peng, Kang Shi, Juanyi (Jenny) Xu
Chinese real business cycle (RBC) exhibits a unique pattern, which is characterized by moderate consumption volatility, substantially low investment volatility, and acyclical trade balance. These features are quite different from business cycles in other emerging markets and cannot be explained by...

Ying Bai, James Kai-sing Kung
Acknowledgments: We thank five anonymous reviewers and an associate editor of this journal, Robert Barro, Sascha Becker, Davide Cantoni, Eric Chaney, Claudia Goldin, Li Han, Avner Greif, Wenkai He, Philip Hoffman, Saumitra Jha, Yi-min Lin, Rachel McCleary, Nathan Nunn, Albert Park, Nancy Qian, Satoru...

Jiandong Ju, Kang Shi, Shang-Jin Wei
While a reduction in import barriers in a partial equilibrium may be thought to lead to an increase in imports and a reduction in trade surplus, the general equilibrium effect can go in the opposite direction. We study how trade reforms affect current accounts by embedding a modified Heckscher-Ohlin...

Zheng (Michael) Song, Kjetil Storesletten, Fabrizio Zilibotti
We construct a growth model consistent with China’s economic transition: high output growth, sustained returns on capital, reallocation within the manufacturing sector, and a large trade surplus. Entrepreneurial firms use more productive technologies, but due to financial imperfections they must...

Hongbin Li, Mark Richard Rosenzweig, Junsen Zhang
In this paper, we use new survey data on twins born in urban China, among whom many experienced the consequences of the forced mass rustication movement of the Chinesecultural revolution, to identify the distinct roles of altruism and guilt in affecting behavior within families. Based on a model...

Research Papers

Qin Chen, Zhiguo He, Chang-Tai Hsieh, Zheng (Michael) Song
This letter documents several facts of China’s post-lockdown economic recovery in April and May. The main findings are summarized as follows. (1) Truck flows and online consumption suggest a strong recovery. (2) The recovery of online job posts stagnated. (3) Smaller firms cut online job posts...

陳沁 ,何治國 , 謝長泰 , 宋錚
本文記錄了四、五月中國解封後期經濟復蘇的若干事實。主要發現概括如下: (1) 卡車貨運流量和線上消費呈現強勁的復蘇趨勢。 (2) 線上崗位發佈的恢復速度放緩、陷入停滯。 (3)...

陳沁 ,何治國 , 謝長泰 , 宋錚
4月8日中國政府結束了對武漢長達76的封鎖。除武漢外,許多地方政府已經放寬了對出行的限制,並將重心轉移到了經濟復蘇上。這篇報告記錄了中國封鎖後期經濟復蘇的若干事實。主要發現概括如下。 (1) 官方統計資料表明製造業正在快速復蘇。製造業的反彈可以從城市間卡車流量、線上崗位發佈和空氣污染排放等非官方資料中找到證據。 (2) 電力消費、零售額和餐飲收入表明服務業產出的下降幅度更大。公司註冊登記資料顯示,近期很少有公司進入服務領域。 (3) 跨區域異質性很大。移動設備訪問地點和公司註冊登記資料表明,東南地區的復蘇更為強勁。 (4)...

Qin Chen, Zhiguo He, Chang-Tai Hsieh, Zheng (Michael) Song
The Chinese government ended the 76-day lockdown of Wuhan on April 8. Outside Wuhan, many local governments had already eased restrictions on movement and shifted their focus to reviving the economy. This letter documents several facts of the post-lockdown economic recovery in China. The main findings...

Haoyuan Ding, Haichao Fan, Shu Lin
We examine the stock market responses to two symbolic events in the outbreak of COVID-19: (1) the lockdown of Hubei province; and (2) the containment of the disease in China and its spread to overseas. Overall, market in China responded negatively (positively) to the first (second) event. Regression...

Qin Chen, Zhiguo He, Chang-Tai Hsieh, Zheng (Michael) Song
On January 23 2020, the Chinese government locked down the city of Wuhan (Hubei Province). In subsequent days, similar measures were taken in other cities in Hubei and throughout China. This letter documents several facts of Chinese economy since the lockdown. The main findings are summarized as...

陳沁 ,何治國 , 謝長泰 , 宋錚
【本期報告對上期報告中的數據進行了更新,補充了來自手機定位和電商大數據分析的結果,並對“封城”之後兩個月中國經濟的重要特徵進行總結。】 1月23日,中國政府為控制COVID-19新型冠狀病毒的傳播封鎖了湖北省武漢市。隨後幾天,湖北省其他城市、中國其他省市均相繼採取了封鎖措施。本文記錄了封城以來中國經濟的一些事實。主要發現總結如下: (1)封城對各類經濟活動(從人口、貨物的流動到經濟總產出)的影響是直接且巨大的。 (2)湖北以外的人口和貨物流動已基本恢復到封鎖前的水準。但商場、辦公樓等場所的日度人口流量仍比封鎖前的水準低三分之一。...

Zhiguo He, Chang-Tai Hsieh, Zheng (Michael) Song
On January 23, the Chinese government locked down the city of Wuhan (Hubei Province).  In subsequent days, similar measures were taken in other cities in Hubei and throughout China.  This note offers some preliminary gauge on the effect of the measures taken to protect public health on...

何治國,謝長泰,宋錚
1月23日,中國政府為控制COVID-19新型冠狀病毒的傳播封鎖了湖北省武漢市。隨後幾天,湖北省其他城市、中國其他省市均相繼採取了封鎖措施。在此背景下,本文將利用三類資料:一是國家統計局所公佈的有關工業產出的官方資料,二是卡車運輸資料(可衡量中國的貨物運輸流動),三是百度人口流動資料(可估計封城對服務業和人口流動的影響),來初步估算量化中國政府為控制疫情保護公眾健康所採取的封城舉措對中國經濟的影響。...

Chong-en Bai, Chang-Tai Hsieh, Zheng Song
Chinese local governments wield their enormous political power and administrative capacity to provide “special deals” for favored private firms. We argue that China’s extraordinary economic growth comes from these special deals. Local political leaders do so because they derive...

Wei Chen, Xilu Chen, Chang-Tai Hsieh, Zheng (Michael) Song
China’s national accounts are based on data collected by local governments. However, since local governments are rewarded for meeting growth and investment targets, they have an incentive to skew local statistics. China’s National Bureau of Statistics (NBS) adjusts the data provided by local...

Yousha Liang, Kang Shi, Lisheng Wang, Juanyi (Jenny) Xu
Focusing on the pricing differential between the Renminbi onshore and offshore exchange rates, this paper characterizes the exchange rate fluctuations and investigates the effect of recent Renminbi currency market reforms. Using GARCH models, we find volatility clustering phenomena and leverage effect...

Soo Hong Chew, Junjian Yi, Junsen Zhang, Songfa Zhong
We study the role of risk aversion underlying son preference in patriarchal societies, where sons serve as better insurance for old-age support than daughters. The implications of an insurance motive on son preference are two-fold. First, prior to the birth of their children, more risk-averse parents...

Shiyuan Pan, Kang Shi, Lisheng Wang, Juanyi (Jenny) Xu
China's M2/GDP ratio keeps rising, although it is already in the highest tier throughout the world. In this paper, we investigate empirically this puzzle using different levels of data. We first provide a quantitative approach to estimate the degree of China's excess liquidity based on cross-country...

Yoram Weiss, Junjian Yi, Junsen Zhang
This paper analyzes cross-border marriages between mainland China and Hong Kong (HK). We examine the effects of a reduction in cross-border marriage costs following an increase in marriage-migration quotas and the handover of HK to China. We find that cross-border marriages mainly involve men from the...

Kang Shi, Shu Lin, Haichun Ye
This study examines the role of credit constraints in determining the trade effect of exchange rate volatility. We first develop a small open economy general equilibrium model with credit constraints. In our model, constrained firms respond to real depreciations and appreciations in an asymmetric way,...

Ming Gao, Travis Ng
Recent lawsuits and anecdotal evidence suggest that some platforms discriminate against certain users through non-price practices, discouraging their participation without directly increasing revenue. We show that a monopolist two-sided platform with a prejudice against certain users - modeled as more...

Kang Shi, Jiandong Ju, Yifu Justin Lin, Qing Liu

Loren Brandt, Johannes Van Biesebroeck, Luhang Wang, Yifan Zhang
We examine the effects of the trade liberalization that accompanied China’s WTO accession on the evolution of markups and productivity of Chinese manufacturing firms. Although these two dimensions of performance cannot be separately identified when firm output is measured by revenue, we show that...

Chong-En Bai, Chang-Tai Hsieh, Zheng (Michael) Song
In 2009 and 2010, China undertook a 4 trillion Yuan fiscal stimulus, roughly equivalent to 12 percent of annual GDP. The "fiscal" stimulus was largely financed by off-balance sheet companies (local financing vehicles) that borrowed and spent on behalf of local governments. The off-balance sheet...

Wei Ha, Junjian Yi, Ye Yuan, Junsen Zhang
Using a newly constructed panel dataset that covers the 14-year period from 1997 to 2011 for more than 100 villages in China, this study analyzes the dynamic effect of rural-to-urban migration on inequality in source villages. Given that income inequality is time persisting, we use a system GMM...

Jun Han, Runjuan Liu, Beyza Ural Marchand, Junsen Zhang
This paper investigates the tariff pass-through mechanism and the distributional effects of trade liberalization in urban China. We study how market structure, specifically the size of the private sector, affects tariff pass-through, and how this mechanism influenced the extent to which households...

Kinda Cheryl Hachem, Zheng Michael Song
Many countries try to mitigate business cycle fluctuations by regulating the activities of their banks. We develop a theoretical framework to study the endogenous response of the banking sector and the implications for the aggregate economy. Under fairly mild conditions, we find that stricter liquidity...

Ying Bai, Ruixue Jia
This paper studies how the abolition of an elite recruitment system—China's civil exam system that lasted over 1,300 years—affects political stability. Employing a panel data set across 262 prefectures and exploring the variations in the quotas on the entry-level exam candidates, we find...

Dongya Li, Yi Lu, Travis Ng, Jun Yang
Some firms have achieved good performance in developing countries where the financial sector is far from established. One explanation in the literature is that these firms benefit from trade credit, a form of informal financing. Using a survey of firms in China conducted by the World Bank in early 2003,...

Shaojie Zhou, Junsen Zhang
This study conducts a long-run analysis on the trends and components of Chinese saving rates from 1953 to 2012. We identify two structural changes in aggregate saving rates around 1978 and 2001, and examine them through a decomposition analysis of the income distribution and sector-specific saving...

Jun Ma, Kang Shi, Honglin Wang, Lisheng Wang
We construct a Dynamic Stochastic General Equilibrium( DSGE) model to illustrate the transmission mechanism of the central bank policy rate in China based on Ma and Wang( 2014). Using a bank- centric financial system to characterize Chinese economy,our model qualitatively demonstrates and quantitatively...

Zheng (Michael) Song, Kjetil Storesletten, Yikai Wang, Fabrizio Zilibotti
We analyze intergenerational redistribution in emerging economies with the aid of an overlapping generations model with endogenous labor supply. Growth is initially high but declines over time. A version of the model calibrated to China is used to analyze the welfare effects of alternative pension...

Zheng (Michael) Song, Guiying Laura Wu
Resource misallocation lowers aggregate productive effi ciency. The existing literature often infers the magnitude of misallocation from the dispersion of average revenue products. However, the methodology is subject to several identification issues.

Chang-Tai Hsieh, Zheng (Michael) Song
Starting in the late 1990s, China undertook a dramatic transformation of the large number of firms under state control. Small state-owned firms were privatized or closed. Large state-owned firms were corporatized and merged into large industrial groups under the control of the Chinese state. The state...

Haifeng Zhang, Hongliang Zhang, Junsen Zhang
In this paper, we examine the economic implications of demographic age structure in the context of regional development in China. We extend the development accounting framework by incorporating age structure and apply it to a panel data set of 28 Chinese provinces. We find that changes in age structure,...

Daoju Peng, Kang Shi, Juanyi (Jenny) Xu
Chinese real business cycle (RBC) exhibits a unique pattern, which is characterized by moderate consumption volatility, substantially low investment volatility, and acyclical trade balance. These features are quite different from business cycles in other emerging markets and cannot be explained by...

Ying Bai, James Kai-sing Kung
Acknowledgments: We thank five anonymous reviewers and an associate editor of this journal, Robert Barro, Sascha Becker, Davide Cantoni, Eric Chaney, Claudia Goldin, Li Han, Avner Greif, Wenkai He, Philip Hoffman, Saumitra Jha, Yi-min Lin, Rachel McCleary, Nathan Nunn, Albert Park, Nancy Qian, Satoru...

Jiandong Ju, Kang Shi, Shang-Jin Wei
While a reduction in import barriers in a partial equilibrium may be thought to lead to an increase in imports and a reduction in trade surplus, the general equilibrium effect can go in the opposite direction. We study how trade reforms affect current accounts by embedding a modified Heckscher-Ohlin...

Zheng (Michael) Song, Kjetil Storesletten, Fabrizio Zilibotti
We construct a growth model consistent with China’s economic transition: high output growth, sustained returns on capital, reallocation within the manufacturing sector, and a large trade surplus. Entrepreneurial firms use more productive technologies, but due to financial imperfections they must...

Hongbin Li, Mark Richard Rosenzweig, Junsen Zhang
In this paper, we use new survey data on twins born in urban China, among whom many experienced the consequences of the forced mass rustication movement of the Chinesecultural revolution, to identify the distinct roles of altruism and guilt in affecting behavior within families. Based on a model...