A Bridge on Economic Issues between China and the World
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Banking and Banking Reforms in China in a Model of Costly State Verification
Jie Luo, Cheng Wang, Mar 26, 2025We present a macro view of China’s financial system, in which a monopolistic banking sector coexists endogenously with bonds and private loans. In equilibrium smaller firms raise finance from private lending, larger firms do so through bank loans, and the largest firms do so by issuing bonds. The model predicts that expanding credit supply increases bank loans but reduces bond finance and private lending, in absolute terms and relative to total credit. In addition, removing the interest rate ceiling on bank lending—a recent reform in China—induces larger loans and higher lending rates, lowering the share of bank loans in total credit. We present empirical evidence to support these predictions.
Rural Road Stimulus and the Role of Matching Mandates on Economic Recovery in China
Anthony Howell, Oct 30, 2024The findings show that the temporary cost share exemption boosts short-term income growth, increases local investment in infrastructure, and promotes entrepreneurial activities, particularly among returning migrants.
Place Prosperity vs People Prosperity: Migration and the Intergenerational Transmission of Knowledge
Carol H. Shiue, Wolfgang Keller, Apr 23, 2025The trajectory of an economy's development can often be better understood through the historical experiences of its populace. Long before the availability of comprehensive official data, Chinese family genealogies are a valuable resource for reconstructing economic evolution over time, as the following shows.
Drive Down the Cost: Learning by Doing and Government Policies in the Global EV Battery Industry
Panle Jia Barwick, Hyuk-soo Kwon, Shanjun Li, Nahim Bin Zahur, Apr 16, 2025Electric vehicle (EV) battery costs have fallen over 90% in the last decade. This study examines how learning-by-doing (LBD) drives this decline and interacts with government policies such as consumer EV subsidies and local content requirements. Leveraging rich data on EV models and battery suppliers from 13 countries with largest EV sales that account for 95% of global EV sales, we develop a structural model of the EV industry that incorporates consumer choices and pricing strategies by EV producers and battery suppliers....
Returnees and Innovation: Evidence from Chinese Publicly Listed Firms
Yibo Qiao, Andrea Ascani, Stefano Breschi, Andrea Morrison, May 28, 2025We investigate the relationship between high-skill returnees and innovation of Chinese publicly listed firms. To this aim, we construct a unique dataset of 2,499 firms over the period 2002–2016 by combining three different data sources (i.e. CNRDS, CSMAR, and LinkedIn). Our results show that different typologies of returnees (employees, technologists, and managers) with different experiences abroad (work versus study) may bring back different skills and impact differently on firm innovation.
