A Bridge on Economic Issues between China and the World
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E vs. G: Environmental Policy and Earnings Management in China
Darwin Choi, Feifei Lai, Mar 12, 2025We examine the conflict between environmental and governance issues arising from China’s automatic air pollutant monitoring system, introduced in 2012. Our findings suggest that polluting firms engage in downward earnings management to potentially minimize regulatory attention, with factors such as firm size, profitability, and market conditions influencing the extent of this behavior. This study highlights the unintended consequences of environmental policies.
Integrating Jurisdictions, Dividing Workers: Consolidation, Labor Markets, and the Migrant-Local Wage Gap in China
Shiyu Bo, Yi Wang, Dec 24, 2025We examine how China’s recent wave of city-county mergers reshaped local labor markets. Using individual-level data from the China Migrants Dynamic Survey and a staggered difference-in-differences approach, we find that the reform boosted wages by strengthening local economies and improving governance...
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.
Destination-Specific Export Expansions and Their Impact on Education and Long-Term Outcomes in China
Junsen Zhang, Kang Zhou, Jul 17, 2024This article discusses that export expansions to wealthy countries significantly increased high school enrollment rates in specific regions and among certain groups in China, but this impact did not translate into an increased prevalence of higher education. Instead, it had long-term effects on employment and fertility outcomes for the affected cohorts.
Firm-to-Firm Referrals
Jing Cai, Wei Lin, Adam Szeidl, Dec 25, 2024Referring suppliers to clients reshaped the supplier-client network and improved business performance.
