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China’s Rebalancing: Recent Progress, Prospects, and Policies

Rui C. Mano, Jiayi Zhang, Mar 20, 2019

While China’s growth gathered momentum in 2017, rebalancing was uneven and decelerated along many dimensions reflecting the temporary factors behind the growth pickup. Going forward, rebalancing is expected to proceed as these temporary factors recede, but elevated income inequality and leverage will remain a challenge. The authorities are...

How the Internet Changed Chinese Exports before Ali Baba Came

Ana M. Fernandes, Aaditya Mattoo, Huy Nguyen, Marc Schiffbauer, May 16, 2018

The roll-out of the internet in China boosted firms’ exports and overall performance even before the rise of broadband and major e-commerce platforms. This finding is relevant for the many developing countries trying to strike a balance between widening access to basic internet services and deepening it through the creation of broadband networks and connections to major e-commerce platforms.

The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms

Haichao Fan, Yu Liu, Nancy Qian, Jaya Wen, Aug 08, 2018

This investigation uses a balanced panel of large manufacturing firms to provide novel evidence on the dynamic effects of computerizing VAT invoices on tax revenues and firm behavior in China, 1998-2007. We find that computerization increases cumulative VAT revenues and increases the effective average tax rate. Furthermore, the evidence suggests that the effects of computerization change over time: tax revenue gains are likely to be smaller in the long run. Meanwhile, firms reduce output and input, and increase productivity monotonically over time.

Growing like China: Firm Performance and GVC Position

Davin Chor, Kalina Manova, Zhihong Yu, Apr 14, 2021

We use firm-level customs and manufacturing survey data, together with Input-Output tables for China, to examine how Chinese firms position themselves in global production lines. We document a sharp rise in the upstreamness of China’s imports, while the positioning of its exports has remained relatively stable, over the 1992-2014 period. Participation in global value chains thus appears to have facilitated an...

Market Expanding or Market Stealing? Competition with Network Effects in Bike-Sharing

Guangyu Cao, Ginger Zhe Jin, Xi Weng, Li-An Zhou, Jan 16, 2019

Positive network effects may lead to winner-takes-all in some markets. The column analyses dockless bike-sharing in China to show instead how an incumbent can benefit from positive spillovers from a competitor’s entry. In the case of bike-sharing, consumers multi-home, the market exhibits positive network effects, and investment by two firms is more cost-efficient than investment by one.