Chinese Sector Research Articles

Influence of COVID-19 pandemic on the tourism sector: evidence from China and United States stocks

ABSTRACT The coronavirus disease (COVID-19) has adversely impacted the globally interconnected economy and brought the tourism sector to a temporary standstill. As such, this study aimed to investigate the spillover effect of industrial sectors by emphasizing the tourism sector. The study data was gathered from China and The United States (US) between 2019 and 2020 (pandemic period) using the Multivariate Generalised Autoregressive Conditional Heteroscedastic-Dynamic Conditional Correlation (MGARCH-DCC) and Wavelet Coherence Transform (CWT) techniques to analyse the investment holding period. Country-wise, the sectoral return volatility in China was significantly higher than the US counterpart. Additionally, the intra-sector correlation analyses demonstrated that Chinese sectors successfully mitigated the intra-sector correction in the last quarter of 2019. A short-term holding period was also suggested for investors in China while a long-term counterpart was recommended for investors in the US. Regarding the Chinese and US industrial sectors in the first quarter of 2020, it was mutually concluded that both country stocks reflected high volatility. The tourism sector was also negatively affected throughout the pandemic period (between 2019 and 2020). Essentially, this study offered practical contributions to investors, mutual fund holders, and brokers.

Will infectious disease outbreaks cause a decline in investment of real sector firms? Evidence form 2003 SARS outbreak in China

ABSTRACT The Novel Coronavirus (COVID-19) outbreak prompts researchers and policy makers to re-evaluate the impact of infectious disease on economy. Taking SARS outbreak in 2003 as a quasi-natural experiment, we examined the impact of infectious diseases on Chinese real sector’s investment through a difference in difference (DID) approach. The empirical results show that after the outbreak of SARS, the investment of China’s real sector firms had increased significantly. This conclusion is verified by several robustness tests. The mechanism tests indicate that the SARS epidemic could increase the investment of real sector firms through two paths. First of all, the outbreak of the epidemic led to dramatic fluctuations in the capital market, then companies shifted their assets from the financial market to the relatively low-risk real sector; additionally, in response to the outbreak of SARS, companies and the government reduced operating costs and fees, resulting in a synergistic effect which also increased investment of the real sector.

Building an internationally competitive concentrating solar power industry in China: lessons from wind power and photovoltaics

ABSTRACT This article draws lessons from experiences of developing the photovoltaic (PV) and onshore wind power sectors in China for the development of Chinese Concentrated Solar Power (CSP) into an internationally competitive industry. We analyze the sectoral development with a framework that expands on the concept of lead markets, identifying factors that determine whether domestic industrial development paths may or may not generate export success. We find that the Chinese CSP sector has good potential for becoming internationally competitive because of a strong Chinese knowledge base, a clear eye for product quality, standard-setting, and a focus on the high-efficiency and large-storage technological routes most likely to see growing demand in future international markets. Chinese solar towers are already cheaper than international competitors and so far, appear reliable. However, continued and stable deployment support for CSP, designed to reward dispatchable solar power generation, enabling continued domestic learning-by-doing and -interacting is likely required to realize this export potential. To date, Chinese CSP policy has done many things right and, if the domestic market is maintained through renewed support, has put the Chinese industry well on the path to international competitiveness.

‘Bad Banks’ with Chinese Characteristics: an Ongoing Transformation

ABSTRACT This article analyzes the experience of four asset management companies (AMCs) or ʽbad banks’ established in China in 1999 to address a systemic build-up of non-performing loans (NPLs). It describes the modalities of NPL transfers across several rounds of government interventions. It explains the AMCs evolving asset structure, funding and operations, with particular focus on a significant change in their business model. Overall, AMCs have helped stabilize the Chinese financial sector, albeit at a substantial fiscal cost. While they became permanent features of the financial system, the expansion of non-core activities has reduced their ability to perform their original function and generated additional systemic risk. Recent developments point to a renewed role, although a deeper reform of the NPL market will also be needed.

Economic tools for integration of alternative energy into the energy system of China

The relevance of the research topic is determined by special attention to the development of «green» energy in the state policy of the People's Republic of China. The problem of the development of the Chinese energy sector is the shift of priorities to the search for alternative, clean energy sources that will replace oil and gas. Analysis of recent publications ensures in a persistent interest in the problems of alternative energy in the majority of countries implementing stable economic growth. According to the authors, the processes of integration of alternative energy into the energy system of China, a country with high rates of economic growth, remain unexplored. The purpose of the study is to substantiate the choice of economic instruments for the integration of alternative energy into the energy system of China. The research methods used in the work are comparison, grouping, systems approach, formalization, axiomatic method, analogies, abstraction and modeling. Results of work. Within the framework of this study, the dynamics of changes in the structure of energy consumption in China has been studied, from the point of view of energy sources. China's energy policy issues go hand in hand with its economic policy goals. The country needs to support rapid development and economic growth, but in a much less energy-intensive way. This is widely recognized by the Chinese government, but significant changes in energy consumption versus production could mean major changes in its economic structure. The field of application of the research results is the energy policy of the state, aimed at the greening of life. Findings. The transition to renewable energy is inevitable, so the question is how best to manage this process while minimizing the total cost of energy services and the cost of damage caused by energy use. The combination of energy efficient and renewable energy sources will eventually replace the existing traditional energy system, which is dominated by fossil fuels. The most important factor for such an early transition is the need to address the problem of catastrophic climate change.

Performance Evaluation of the Chinese Healthcare System

This study aims to evaluate the performance of the Chinese healthcare system. It uses sustainable development goal (SDG) 3, set by the United Nations to ensure healthy lives and promote well-being for all at all ages as a benchmark. It uses data of 17 variables ranging from the year 2000 to 2017 and uses a multistage methodology to evaluate the performance. In the first stage, it uses difference in mean test to know whether or not the indicators show an improvement in the second decade of the 21st century compared to the first decade. In the second phase, simple linear regression has been used to know the rate of change of performance of every indicator over the sample period. The third step compares the performance of the healthcare sector with the sustainable goals set by the UN and the fourth phase attempts to forecast performance for the next five years i.e., 2018 to 2022. As per the results, the Chinese healthcare sector has performed very well on many fronts except alcohol consumption in males, road accidents and the incidence of non-communicable diseases. Alcohol consumption by males is touching dangerous levels. Therefore, the policies should focus on educating males to lower their alcohol consumption to stay fit and healthy.

Sector connectedness in the Chinese stock markets

Uncovering the risk-transmitting path within economic sectors in China is crucial for understanding the stability of the Chinese economic system, especially under the current situation of the China–US trade conflicts. In this paper, we aim to uncover the risk spreading channels by means of volatility spillovers within the Chinese sectors using stock market data. By applying the generalized variance decomposition framework based on the VAR model and the rolling window approach, a set of connectedness matrices is obtained to reveal the overall and dynamic spillovers within sectors. We find that 17 sectors (mechanical equipment, electrical equipment, utilities, and so on) are risk transmitters and 11 sectors (national defense, bank, non-bank finance, and so on) are risk takers during the whole period. Under the extreme risk events (i.e., the global financial crisis, the Chinese interbank liquidity crisis, the Chinese stock market crash, and the China–US trade war), the connectedness measures significantly increase and the financial sectors play a buffer role in stabilizing the economic system. Our results are robust to changes of the model parameters. Our study not only uncovers the spillover effects within the Chinese sectors, but also highlights the deep understanding of the risk contagion patterns in the Chinese stock markets.

Opportunities and Challenges of Aging Workforces toward HR Practices in Business Management: A Comparison Between Thailand and China

As the number of elderly population are getting higher, many countries are now facing with rapidly growth in number of aging citizens due to increase in life expectancy, healthcare advancement, and baby boomers become aged. This leads Human Resource sector to understand more on aging workforces as an individual change process in terms of competencies, motivation, behavior and values. The aim of this study is to analyze and compare the opportunities and challenges in managing aging workforces toward Human Resource practices between Thai and Chinese business sectors. In line with the gathering of secondary data and literature-based analysis found that both Thai and Chinese business sectors recognize the common important challenges of the composition of the workforce and also shrinking young labor forces However, business sector in Thailand presents certain challenges from a human resources perspective. i.e.technology challenges when compared to China. Several companies in China realized that aging workforces tends to have positive contributions; as it will increase competitive edge and intellectual capital especially in technology development. However, several companies in Thailand has recruited of aging workforces by increasing the number of part-time employees and offering flexible work options which are a priority for aging workforces.

Asymmetric spillover and network connectedness between crude oil, gold, and Chinese sector stock markets

This paper examines the asymmetric return spillovers between crude oil futures, gold futures and ten sector stock markets of China. The results show using the spillover index of Diebold and Yilmaz (2012, 2014) time-varying asymmetry spillovers among commodity and the ten sectors. Industrials and consumer discretionary sectors are the largest contributor and receiver of spillovers in the system. In addition, basic materials sector is a net contributor of spillovers whereas oil futures, gold futures and the remaining sectors are net receiver of spillovers. Furthermore, the bad return spillovers dominate the good return spillovers. The asymmetry spillovers are influenced by the global financial and European crises (GFC & ESDC), oil price crash and global health crisis (COVID-19 outbreak). Equity investors benefit from adding gold and oil to their individual equity markets. Moreover, the hedging is sensitive to the GFC & ESDC, oil price crash, and COVID-19 outbreak. Finally, the highest hedging effectiveness occurs during COVID-19 spread for the case of oil futures. The result is similar for gold under only good spillovers and it is highest during recovery period under bad spillovers.

Asymmetric volatility spillover among Chinese sectors during COVID-19

Inter-sectoral volatility linkages in the Chinese stock market are understudied, especially asymmetries in realized volatility connectedness, accounting for the catastrophic event associated with the COVID-19 outbreak. In this paper, we examine the asymmetric volatility spillover among Chinese stock market sectors during the COVID-19 pandemic using 1-min data from January 2, 2019 to September 30, 2020. In doing so, we build networks of generalized forecast error variances by decomposition of a vector autoregressive model, controlling for overall market movements. Our results show evidence of the asymmetric impact of good and bad volatilities, which are found to be time-varying and substantially intense during the COVID-19 period. Notably, bad volatility spillover shocks dominate good volatility spillover shocks. The findings are useful for Chinese investors and portfolio managers constructing risk hedging portfolios across sectors and for Chinese policymakers monitoring and crafting stimulating policies for the stock market at the sectoral level.

Corporate Social Responsibility and Profitability: The Moderating Role of Firm Type in Chinese Appliance Listed Companies

Corporate social responsibility (CSR) is among the dominant multi-attribute methods of comprehensively representing the competitiveness of a company. A large number of studies have commonly found that profitability can positively affect CSR. However, positivity depends on firm type and the economy, and there is little research in this area. The objective of this paper is to study and verify whether the profitability of different types of companies has a comparable impact on CSR measures in Chinese appliance listed companies. A specific multi-attribute AHP (analytic hierarchy process) model was proposed to determine the CSR for the conditions of Chines appliance listed companies. The interactive regression model serves to analyse the impact of a firm type. The specific multi-attribute AHP model was verified as a suitable tool for CSR evaluation of Chines appliance listed companies. The regression results show that for family firms, the impact of profitability on CSR is significant, while for non-family firms, the impact was not confirmed. Thus, evidence that family firms fulfil better CSR than non-family firms in the investigated Chinese sector is offered. The findings provide proof that it is essential to distinguish firm types, and the generalised findings are simplified and not valid.

Changing Environment for Opening of Chinese Financial Sector and Implications

Changing Environment for Opening of Chinese Financial Sector and Implications

The Decoupling Analysis of CO <sub>2</sub> Emissions from Power Generation in Chinese Provincial Power Sector

The Decoupling Analysis of CO <sub>2</sub> Emissions from Power Generation in Chinese Provincial Power Sector

The influence of digitalization on Chinese banks: new financial technologies in a plan economy

Nowadays, digitalization has become one of the most significant global development trends. The Chinese banking system, which has only recently been subjected to liberal reforms, is poorly researched in the viewpoint of the digitalization and financial technology impact on it. In this context, it is interesting to identify the main digitalization features in the PRC banking system and to identify this system’s elements which are most susceptible to digitalization influence. The authors set the task to identify how digitalization changes the PRC banking system, in particular, how it affects shadow banking. The major challenges of the article are the high share of the closed data on the Chinese financial sector, the unclarity of the shadow banking activities in the country and their overall negative influence on the economy of PRC and Asian economies and the highly theoretical nature of the digitalization research of banking in the scientific community. The main article’s results consist in that the main differences between digitalization and fintech are determined; it was also proved the Chinese banking system is more adaptable to changing conditions, and the authors suggested the main measures to reduce the shadow banking’ share in China. The main contribution of the article is the revelation of the possible solutions to the problems of shadow banking in China through the use of the new financial instruments of the digital era.

China's Military-Civil Fusion and Military Procurement

executive summary: This essay examines the impact of China's Military-Civil Fusion (MCF) strategy on the country's military procurement and argues that its main contribution lies in increasing China's access to advanced military-related foreign know-how and technologies. main argumentAdopted in 2015, the MCF strategy is the last phase of a prolonged national effort to overcome the embedded hindrances of China's military procurement system by harnessing the civilian sector to that end. The strategy is designed to inject new technologies and R&D into China's military-industrial complex, increase its efficiency, and improve the bargaining position of the People's Liberation Army (PLA) vis-à-vis its suppliers throughout the various phases of procurement. A close examination of the expressed objectives of the MCF, its policy tools, and implementation reveals that (1) the strategy concentrates more on R&D than all other procurement phases, (2) efforts to reduce bureaucratic and functional barriers between the defense and civilian industry sectors face many obstacles, and (3) MCF's greatest achievements lie in transferring advanced military-related expertise from foreign sources to China's military establishment. policy implications • Although the MCF strategy narrows China's military-technology gap with other leading world powers, it does not address the embedded inefficiencies of the country's military procurement system. Hence, its overall effect on the PLA's readiness and warfighting capability is limited. • China's MCF has drawn negative attention from other countries—particularly the U.S.—for the tight relations between the military, civilian industry, and academia. Such criticism affects China's political, technological, and economic relationships with these countries and may have detrimental consequences for relevant Chinese sectors. • MCF's record may provide another demonstration of China's difficulty in injecting market forces into its state-owned sector as well as in addressing problems of inefficiency through measures other than economic liberalization.

Relationships and portfolios between oil and Chinese stock sectors: A study based on wavelet denoising-higher moments perspective

Shanghai crude oil futures contracts (SC) has been the third largest trading volume crude oil futures worldwide. From wavelet denoising-higher moment perspective, we investigate the relationships and portfolios between oil and Chinese stock sectors, based on the daily data of WTI, SC and Chinese sectors. Given the existence of noise and time-varying conditional higher moments in financial data, the Wavelet denoising-GARCHSK and Wavelet denoising-GARCHSK-Copula portfolio methods are proposed to model the margin of variables and construct oil-stock portfolios, respectively. The empirical results indicate that the Wavelet denoising-GARCHSK outperforms the other methods in terms of log likelihood, AIC and BIC. Then, these results also denote that there are the notable industry characteristics in the oil-stock relationships, depending on whether the sector is petroleum-dependent or petroleum-independent as well as locates upstream or downstream of petrochemical industry. In addition, most of the Chinese stock sectors have stronger upper tail dependence with SC than WTI, while the lower tail is the opposite. Finally, it is discovered that the oil-stock portfolios obtained by Wavelet denoising-GARCHSK-Copula portfolio model outperform the control groups in terms of return and ASR and that WTI is a better diversifier for investors in Chinese stock market in most cases.

Investigating the determinants of financial leverage: The case of China's real estate sector

This study empirically investigated the determinants of capital leverage of the Chinese real estate sector. Annual panel data of 130 companies covering the period 2007-2017 were used. Profitability was treated as a latent variable to avoid any specification error. Structural equation modelling (SEM) confirmed that while the size and financial cost have a significant positive effect on the level of capital leverage; liquidity, tangibility, and non-debt tax shield (NTDS) have a significant negative effect. The findings provide supportive evidence for both the trade-off theory and the pecking order theory. An interesting outcome of our research is that despite the substantial difference in institutional structure between China and Western countries, the firm-specific determinants of leverage are partially similar between the two. The policy implications of our research are discussed in the conclusion section.

Psychological contract breach and organizational cynicism and commitment among self-initiated expatriates vs. host country nationals in the Chinese and Malaysian transnational education sector

In today’s global economy, self-initiated expatriates (SIEs) and host country nationals (HCNs) both represent critical human resources for organizations operating globally. Yet, because these two groups of employees have been studied separately, little is known about how SIEs’ and HCNs’ perceptions of, and attitudes towards the organization compare and diverge (vs. converge) in terms of implications for human resource management. This study aims to contribute to fill this gap by examining psychological contract breach, organizational cynicism, and organizational commitment components (i.e., affective, normative, and continuance) among a sample of 156 SIEs and HCNs working in the Chinese and Malaysian transnational education sector. Using a one-year time-lagged study, we found that compared to HCNs, SIEs experienced more organizational cynicism and less affective, normative, and continuance commitment. Moreover, the breach-organizational cynicism relationship was stronger (i.e., more positive) among SIEs than HCNs. The indirect relationships between breach and affective and continuance commitment, as mediated by organizational cynicism, were also stronger (i.e., more negative) among SIEs than HCNs. Implications for human resource management are discussed under the lens of Conservation of Resources theory.

Connectedness and systemic risk spillovers analysis of Chinese sectors based on tail risk network

This paper investigates the systemic risk spillovers and connectedness in the sectoral tail risk network of Chinese stock market, and explores the transmission mechanism of systemic risk spillovers by block models. Based on conditional value at risk (CoVaR) and single index model (SIM) quantile regression technique, we analyse the tail risk connectedness and find that during market crashes, stock market exposes to more systemic risk and more connectedness. Further, the orthogonal pulse function shows that Herfindahl-Hirschman Index (HHI) of edges has a significant positive effect on systemic risk, but the impact shows a certain lagging feature. Besides, the directional connectedness of sectors shows that systemic risk receivers and transmitters vary across time, and we adopt PageRank index to identify systemically important sector released by utilities and financial sectors. Finally, by block model we find that the tail risk network of Chinese sectors can be divided into four different spillover function blocks. The role of blocks and the spatial spillover transmission path between risk blocks are time-varying. Our results provide useful and positive implications for market participants and policy makers dealing with investment diversification and tracing the paths of risk shock transmission.

Chinese Investments in Africa

this article focuses on Chinese investment in Africa and its role in achieving economic development. The author examines the most important Chinese investment sectors and the volume of American and European investments in Africa compared to China in 2016–2018. The article discusses the economic, political, and security goals that China seeks to achieve in Africa with these investments, and identifies the tools it uses to achieve this.