Yi Huang, Chen Lin, Sibo Liu, Heiwai Tang
10 August, 2018
Tariffs intended to reduce competition from foreign firms can backfire by also raising the costs of imported inputs for domestic firms. This column examines the market responses to the Trump administration’s initial and subsequent announcements of tariffs on imports from China. US firms that are more dependent on exports to and imports from China experienced lower stock and bond returns but higher default risks around the date of the announcement. Firms’ indirect exposure to US-China trade through domestic input-output linkages affects their responses to the announcements.
Yi Huang, Ugo Panizza, Richard Portes
June, 2018
International borrowing by Chinese nationals has increased rapidly over the past 10 years. Some of this borrowing seems to be motivated by carry trade activities. Regulatory arbitrage may have played a role in this trend.
Yi Huang, Marco Pagano, Ugo Panizza
Jun 28, 2017
China’s 4 Trillion Yuan stimulus in November 2008 may have been successful in allowing China to escape from the Great Recession. But the massive increase in local government debt in the implementation of the stimulus package also led to crowd out of the more productive private sector investment. Yi Huang of Graduate Institute in Geneva and his coauthors Marco Pagano and Ugo Panizza discuss this "dark side" of the Chinese stimulus.
Yi Huang, Marco Pagano, Ugo Panizza
03 November 2016
High levels of public debt are correlated with lower economic growth across countries, but questions remain about whether this relationship is causal. Using Chinese data, this column explores whether increasing public debt crowds out private investment. City-level investment ratios are found to be negatively correlated with local government debt for private manufacturing firms, but not for state-owned or foreign-owned manufacturers. This suggests that as well as the short-term benefits of fiscal stimulus, there might also be negative longer-term effects, such as the crowding out of more efficient firms.
Yi Huang, Jianjun Miao, Pengfei Wang
08 November 2016
The Chinese Shanghai Stock Exchange Composite Index dropped by a third in mid-2015, wiping out billions in share value. One of the responses of the Chinese government was to directly participate in the stock market. This column assesses the costs and benefits of this intervention, finding that the resulting gains amounted to about 5% of Chinese GDP. The value was created not just from increased equity and investor confidence, but also from increased liquidity and reduced probability of default for listed firms.
Ernest Dautovic, Harald Hau, Yi Huang
08 January 2018
Minimum wage policies are controversial in developed and emerging economies alike. This column focuses on China, where minimum wage changes have been particularly frequent and heterogeneous across counties. Results show that Chinese low-income households fully spend their incremental income, with no differences in consumption behaviour across more or less financially constrained households. Only households without a child generally consume a lower proportion of their additional income.
Harald Hau, Yi Huang, Gewei Wang
17 October 2016
Business book writers claim that management quality of some type matters when creating successful firms. But this conventional wisdom has largely defied serious empirical analysis. This column looks at statistical evidence on the productivity response of Chinese firms to minimum wage shocks, and finds that better-managed firms adapt better to adverse competitive shocks. This suggests that management quality matters for this type of adaptability
Yi Huang, Prakash Loungani, Gewei Wang
16 May 2014
Minimum wages are set to increase in China under the country’s latest five-year plan. This column documents that past increases led to lower employment. However, the impact is heterogeneous. Firms with high average wages or large profit margins actually increase employment, while those with low average wages or small profit margins downsize.