A Bridge on Economic Issues between China and the World
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From Free Rider to Innovator: How China Became a Global Pharmaceutical Powerhouse
Panle Jia Barwick, Hongyuan Xia, Tianli Xia, Jul 22, 2026China has become a serious contender at the frontier of pharmaceutical innovation. A key policy change was the 2016 National Reimbursement Drug List, whereby the government negotiated steep price cuts in exchange for guaranteed coverage and near-universal patient access. This column shows that the reform generated both static gains from expanding patient access to existing innovative drugs, and dynamic gains from stimulating the development of the next generation of therapies. The reform policy offers rare evidence that a well-designed insurance policy can help reconcile the tension between affordability and innovation incentives.
The Chinese Current Account Imbalances: Puzzles, Patterns, and Possible Causes
Chang Ma, Shang-Jin Wei, Sep 02, 2026The debate over China’s current account surplus has reemerged. We argue that its persistence is best explained by structural factors underlying high household and corporate savings, particularly demographics and financial underdevelopment. Industrial policy, housing weakness, the real exchange rate, and measurement concerns offer only partial explanations.
The Generative AI Learning Penalty in Secondary School
David Strömberg, Victor Lei, Yanhui Wu, Oct 01, 2026Generative AT tools can help students complete assignments faster and achieve better scores. But completing these tasks is not the goal; learning from them is. This column uses data on over 25,000 7th to 12th grade students in China to examine how self-directed use of generative AI affects their learning. Time spent on homework for students who used AI went down and homework scores went up, but their exam scores fell. While the initial effect is small, it grows as students become more proficient with AI tools and as more course material is learned after adoption, suggesting that existing short-duration studies may underestimate the long-run learning costs of using generative AI.
Conceptual and Empirical Understanding of the Dynamics of Skill Formation
James J. Heckman, Haihan Tian, Zijian Zhang, Jin Zhou, Jul 31, 2026An analysis of high-frequency data from a large early childhood intervention in China documents the existence of dynamic complementarity and the emergence of new skills over the life-cycle. Dynamic complementarity is a central concept in human development. It characterizes how early learning experiences affect subsequent learning and achievement. Dynamic complementarity and its components do not operate uniformly across ages, skill levels, or ability groups. New skills emerge over the life-cycle explaining fadeout when a measuring instrument is used that does not recognize the emergence of new skills.
Beyond the Heat: Power Rationing Matters More When Extreme Temperature Strikes
Xinya Hao, Yongying Huang, Lin Zhang, Aug 12, 2026As climate change intensifies, extreme heatwaves increasingly trigger severe power shortages in emerging economies like China. Governments are forced to implement power rationing, making difficult trade-offs between satisfying residential electricity demand and sustaining industrial production. Evidence shows that administrative power rationing during these crises inflicts greater economic damage on firm performance than the physical heat itself.
