A Bridge on Economic Issues between China and the World
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The Demand for Reverse Mortgages in China
Katja Hanewald, Hazel Bateman, Hanming Fang, Shang Wu, May 15, 2019Reverse mortgages are financial products that allow older homeowners to live in their property and receive income for as long as they live; repayment is made from the proceeds of the property sales upon the homeowners’ death. A recent pilot program in China by Happy Life Insurance found almost no takeup of such products. We investigate whether, if reverse...
Overpricing in China’s Corporate Bond Market
Yi Ding, Wei Xiong, Jinfan Zhang, Nov 27, 2019In China’s corporate bond market, the yield spread of newly issued bonds at their first secondary-market trade is on average 5.35 bps higher than the issuance spread. This overpricing is robust across bond issuances with different credit ratings, maturities, issuance types, and issuer status. Evidence suggests that competition among underwriters drives this overpricing through two specific channels—either through rebates to participants in issuance auctions or through direct auction bidding by the underwriters for themselves or their clients.
How Do Zombie Firms Affect Innovation? Evidence from China’s Industrial Firms
Yun Dai, Wei Li, Yongqin Wang, May 08, 2019Zombie firms are insolvent firms that continue to operate due to continued access to financing at extremely low costs. Nie et al. (2016) find that in the year 2013 about 14 percent of Chinese-listed firms and 7.5 percent of Chinese manufacturing firms are defined as zombie firms. The large amount of financing subsidies distributed to insolvent zombie firms...
The Impact of the China Tire Safeguard
Sunghoon Chung, Joonhyung Lee, Oct 23, 2019This column evaluates the impact of the China tire safeguard on the US tire industry. Contrary to claims made by the US government, we find that total employment and average wages in the tire industry were unaffected by the safeguard. This result is not surprising as we find that Chinese tires have been completely diverted to other exporting countries due to the strong presence of multinational corporations in the world tire market. On the other hand, US domestic tire prices increased by up to 10% during the safeguard period...
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.
