A Bridge on Economic Issues between China and the World
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The Burden of Education Costs in China: A Struggle for All, but Heavier for Lower-Income Families
Dezhuang Hu, Hongbin Li, Tang Li, Lingsheng Meng, Binh Thai Nguyen, Mar 27, 2024Household education expenditure in China accounts for a substantial portion of household income, averaging around 17.1%, and it is inversely related to household income. As a necessity, education expenditure imposes excessively high costs on lower-income families. China needs to formulate policies to alleviate the financial burden on families, reform the school system, and enhance educational equity.
Daily Price Limits and the Magnet Effect
Ting Chen, Zhenyu Gao, Jibao He, Wenxi Jiang, Wei Xiong, Oct 25, 2017We find that the widely adopted daily price limit rules may induce large investors as a group to pursue a destructive trading strategy of pushing stock prices to the upper price limit and then profiting from selling these stocks on the next day. Their trading accelerates the price increase on the day that the upper price limit is reached, thus leading to the so-called Magnet Effect. This unintended effect renders the daily price limits — a market stabilization scheme — counterproductive.
Rising Intergenerational Income Persistence in China
Yi Fan, Junjian Yi, Junsen Zhang, Jul 04, 2018Although studies on economic inequality and intergenerational mobility have gained traction in the last decade, little is known about the temporal changes in the intergenerational association of economic status, especially in developing and transitional economies. We find an increasing pattern in intergenerational income persistence across China’s transitional period. To promote intergenerational mobility, the Chinese government should continue to remove rural-urban migration barriers and initiate various programs to subsidize the education of children from disadvantaged families, known as the “left-behind” children.
Chinese Corporate Credit Ratings: Comparing Global and Domestic Agencies
Xianfeng Jiang, Frank Packer, Dec 06, 2017When comparing the credit ratings of domestic and global agencies on Chinese corporations, because of the differences in ratings scales, it is best to focus on the domestic and global agency orderings of relative credit risk. Testing for differences in the determinants of ratings, we find that asset size is weighed more heavily as a positive factor by domestic agencies, while profitability and state-ownership are weighed more positively by global rating agencies, which also weigh leverage more heavily as a negative factor. In spite of these differences, both domestic and global ratings appear to be priced into the market values of rated bonds.
Understanding the Chinese Stock Market: Long-term Performance and Institutional Reforms
Franklin Allen, Jun Qian, Chenyu Shan, Lei Zhu, Jul 05, 2017The Chinese economy had spectacular growth in the past three decades, however the Chinese stock market had the worst performance among the major stock markets. Professor Franklin Allen from Imperial College, Professor Jun Qian from Fanhai International School of Finance, Fudan University, and coauthors offer their explanation of this puzzling divergence.
