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Industry/Policy View Assessing China’s Financial Risk: Evidence from the Stock Market
Hao Zhou, Haibin Zhu, Xiangpeng Chen, Jul 14, 2017VoxChina welcomes views from industry reports and policy reports.This piece summaries the views about China’s financial risk from - Hao Zhou, the PBC School of Finance at Tsinghua University, Haibin Zhu, J.P. Morgan and Xiangpeng Chen, the PBC School of Finance at Tsinghua University.
Evidence of Precautionary Savings in China
Hui He, Feng Huang, Zheng Liu, Dongming Zhu, Sep 05, 2018China’s household savings rate has been persistently high since the early 1980s despite rapid economic growth and contrary to the predictions of the standard consumption theory. Since China has undergone large structural changes in its transition to a market economy, precautionary savings seem to be a plausible contributing factor to the high savings rate. We use China’s large-scale reform of State-owned Enterprises (SOEs) in the late 1990s as a natural experiment to identify exogenous changes in income uncertainty. We estimate that precautionary savings account for about 40 percent of SOE households’ wealth accumulation from 1995 to 2002.
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.
Chinese Economic Growth Doesn’t Appear Overstated, but Its Heavy Reliance on Credit May Be a Cause for Concern
Hunter Clark, Jeff Dawson, Maxim Pinkovskiy, Xavier Sala-i-Martin, Jun 20, 2017Are China's official GDP growth number exaggerated? Hunter Clark, Jeff Dawson and Maxim Pinkovskiy from the New York Fed and Xavier Sala-i-Martin from Columbia University use satellite measurements of the intensity of China’s nighttime light emissions to proxy for GDP growth. Their estimate of Chinese GDP growth, since 2012, was never appreciably lower, and was in many years higher, than the GDP growth rate reported in the official statistics.
Healthy Life Expectancy in China
Han Li, Katja Hanewald, Shang Wu, Dec 20, 2017We predict and analyze provincial-level healthy life expectancy for 31 provinces of China in 2015. Using data from a wide range of countries, we construct a predictive regression model based on socioeconomic variables such as GDP per capita, health and education expenditures, and the number of hospital beds. We find substantial regional health disparities, with healthy life expectancy varying by up to 10 years between different provinces for both men and women.
