Showing papers in "Journal of Chinese Economic and Foreign Trade Studies in 2017"

FinTechs in China – with a special focus on peer to peer lending

Abstract: Purpose China is a country with the most number of operating peer-to-peer (P2P) lending platforms (approximately 2,000) worldwide. This study aims to provide an overview on FinTechs in China. It was examined why payment services and P2P lending are so popular in China and what are the determinants for the emergence of P2P lending platforms in different provinces in China. Design/methodology/approach This study conducted a descriptive analysis of P2P lending in China and an empirical analysis of determinants of P2P lending in China. Findings This descriptive analysis shows that the surge in the number of the P2P platforms in China follows an inverted U-shaped phenomenon. However, the outstanding balances of P2P lenders is still increasing, while average yields of P2P lenders have sharply plunged. The empirical findings indicate that P2P lending is more extensive in the region with more mobile phone subscriptions; outstanding balance of P2P lenders in region is negatively associated with the size of traditional banking sector; and the number of the P2P platforms in negatively related to the fixed assets investments in region, whereas average yield is positively associated with the fixed assets investments. Originality/value Currently, almost no research papers with empirical analysis of FinTechs, especially P2P lenders, exist. This study estimates a simple model to find determinants of P2P lending.

Big data-driven business model innovation by traditional industries in the Chinese economy

Abstract: Purpose This study aims to construct mechanisms of big data-driven business model innovation from the market, strategic and economic perspectives and core logic of business model innovation. Design/methodology/approach The authors applied deductive reasoning and case analysis method on manufacturing firms in China to validate the mechanisms. Findings The authors have developed an integrated framework to deduce the elements of big data-driven business model innovation. The framework comprises three elements: perspectives, business model processes and big data-driven business model innovations. As we apply the framework on to three Chinese companies, it is evident that the mechanisms of business model innovation based on big data is a progressive and dynamic process. Research limitations/implications The case sample is relatively small, which is a typical trade-off in qualitative research. Practical implications A robust infrastructure that seamlessly integrates internet of things, front-end customer systems and back-end production systems is pivotal for companies. The management has to ensure its organization structure, climate and human resources are well prepared for the transformation. Social implications When provided with a convenient crowdsourcing platform to provide feedback and witness their suggestions being implemented, users are more likely to share insights about their use experience. Originality/value Extant studies of big data and business model innovation remain disparate. By adding a new dimension of intellectual and economic resource to the resource-based view, this paper posits an important link between big data and business model innovation. In addition, this study has contributed to the theoretical lens of value by contextualizing the value components of a business model and providing an integrated framework.

Local residents’ attitude towards road and transport infrastructure (a case of China Pakistan economic corridor)

Abstract: Purpose Road and transportation has a significant role in the prosperity, economic growth and development of a region. The main purpose of this study is to conduct an in-depth analysis of local residents’ attitude towards road and transport infrastructure (China–Pakistan economic corridor, CPEC) and the wider economic, social, cultural and environmental impact on local people. Design/methodology/approach Data were collected using a questionnaire survey from the local people. Factor analysis and structural equation modelling approach were used to test the relation between the observed and latent variables. Findings The result discovered that road infrastructure has significant socio-economic and cultural impacts that significantly affect the local people support for CPEC development. It also revealed that more promotion and awareness regarding benefits of the project for dwellers lead to more support of the local residents in the study area. Practical implications Information provided by this study will help policymakers to gain local resident support for the project and make policies accordingly for the future projects. Originality/value This study investigated the attitude and support of the local people based on the road infrastructure’s social, economic, cultural and environmental impact, which has never been examined in the existing literature.

Neglecting human resource development in OBOR, a case of the China–Pakistan economic corridor (CPEC)

Abstract: Purpose The purpose of this paper is to obtain greater insights into the implications for human resource development (HRD) in times of economic development, with a focus on China–Pakistan economic corridor (CPEC). In recent times of economic development, a number of economic corridors have emerged globally as tools of regional cooperation and development. In the context of Pakistan, there is a lack of appropriate attention to the field of HRD, which has suffered neglect through the decades (Abbasi and Burdey, 2008; Asrar-ul-Haq, 2015). With this conception, the present economic interventions merit a well-constructed and proper HRD policy for Pakistan. This study will provide HRD insights for policymakers, researchers, entrepreneurs and business executives. Design/methodology/approach The research approach of this study is purely based on literature review and on secondary data. Findings Based on the facts and literature reviews, this study concluded that One belt, One Road in general and CPEC in particular as an economic corridor can bring sustainable and long-lasting impact on the economy only if HRD is given proper attention. Originality/value To the best knowledge of the researchers, this is the first study that highlighted the HRD issue in CPEC.

China’s foreign trade policy with OPEC member countries

Abstract: The purpose of this paper is to analyze specifications of the China’s foreign trade policy with Organization of the Petroleum Exporting Countries (OPEC) member countries.,The paper conducts three panel data estimations (fixed effect [FE], random effect [RE] and fully modified ordinary least squares [FMOLS]) based on the gravity model approach for bilateral trade patterns in natural resource and non-natural resource commodities between China and 13 OPEC members over the period of 1998-2014.,The findings reveal that the gravity equation fits the data reasonably well. The existence of long-term relationships between the bilateral trade flows and the main components of gravity model – GDP, income (GDP per capita), the difference in income, exchange rate, the openness level, distance and WTO membership – through the FE, RE and the FMOLS approaches was confirmed. The estimation results show that the trade pattern between China and OPEC member countries relies on the Heckscher–Ohlin theory, thus being explained by difference in factor endowments such as energy resources and technology.,To the best of the authors’ knowledge, this is the first attempt to examine the China’s foreign trade policy with the OPEC member countries through a gravity trade approach.

Silicon Valley, France and China: a comparative study of innovation systems and policies

Abstract: Purpose In this paper, the authors aim to examine some characteristics of the innovation system and policy in France and China. For comparison, they also highlight some high technology features of Silicon Valley and California. Design/methodology/approach The authors study the characteristics of innovation in France and in China. The authors examine the technology systems and policies in both countries and compare their features with those in Silicon Valley. Findings As far as France is concerned, it can be stated that the innovation system and policy are under transformation, going from a strong state involvement to a more decentralized framework. This evolution leads to a multi-level governance of the innovation system and to the emergence of new actors. For China, the most interesting development in China is the evolution of its internet-related sector. The authors argue here that the internet-driven economy is a radical, systemic technological change and it is rapidly growing in China. Originality/value One of the earliest papers comparing the innovation policies and activities in France, China and Silicon Valley.

The relationship between knowledge sharing capability and innovation performance within industrial clusters

Abstract: The purpose of this paper is to clarify the influence of knowledge sharing on innovation performance from the knowledge-based dynamic capabilities perspective within industrial clusters.,This paper designed a five-point Likert questionnaire measuring knowledge sharing, dynamic capabilities, trust and innovation performance, and a sample was collected from the industrial clusters within Fujian province in China. Empirical analysis was applied to test the hypotheses.,Significant relationships were found between knowledge sharing and innovation performance. Three key characteristics of dynamic capabilities were distinguished, namely, knowledge acquisition capability, knowledge integration capability and knowledge creative capabilities. On this basis, further analysis found that dynamic capabilities played a mediating role in this relationship, and trust was a significant moderator.,This paper helps to understand the mechanism between knowledge sharing, knowledge-based dynamic capabilities, trust and innovation. Managers should focus on contributing to knowledge sharing activities, dynamic capabilities and trustful environment to improve innovation effectively.,This paper contributes to the burgeoning literature on the relationship between knowledge sharing and innovation performance in China. Further, it highlights the crucial role of cluster knowledge management in contributing to innovation and management practices.

Innovation and imitation: Competition between the US and China on third-party payment technology

Abstract: Third-party payments were first introduced by the US firm PayPal. Soon after, China developed a localized version of PayPal – Alipay, which became the main payment method for online transactions in China. Currently, the number of global transactions conducted with Alipay is three times that of PayPal. In addition to online transactions, Alipay also integrates with mobile payment applications to provide offline services, making physical transactions more convenient for users. The authors, in this paper, aim to address how third-party payments technology seems to be playing out an innovation-imitation-catch up story.,Krugman (1966) proposed a general-equilibrium model of product cycles under perfect competition where high-tech products are innovated by an “advanced” country and imitated by a “developing” country. The competition between US–China online technologies (e.g. third-party payments) seems to be playing out this innovation-imitation-catch up story.,The USA has already put a lot of effort into the operations of credit cards and checks, as well as other infrastructure such as human resources and installation of relevant systems. China lacks the infrastructure for payments made with credit cards and checks, and therefore China’s opportunity cost of moving directly from cash transactions to third-party payments is much less than that of the USA, which is why China holds follower advantage in third-party payment markets.,The third-party payment technologies appear to be a good example of the argument made by Krugman (1966) regarding the US–China competition on advanced technology, which states that an imitator can catch up with an inventor when the former acquires comparative advantages against the latter.

Is Chinese outward FDI in MENA little

Abstract: This paper aims to investigate the host country determinants of Chinese Outward FDI (OFDI) and, given these determinants, examines whether Chinese OFDI in MENA is less than elsewhere.,Data for the top 40 Chinese OFDI recipients including seven MENA countries from 2003 to 2012 were obtained. A pooled ordinary least squares estimation technique on the lagged explanatory variables and the lagged dependent variable – flows and stocks alternatively – with robust standard errors was used.,Chinese OFDI is market, resource and efficiency seeking and is attracted by poor governance. The seven MENA countries seemingly receive significantly less Chinese OFDI flows compared to other countries. However, careful inspection shows that UAE is creating this bias. This maybe because exporting to UAE rather than licensing or FDI seems like the best scenario, or UAE is already satiated with FDI from other countries, or China is waiting for the right time to enter such an FDI-competitive market like that of UAE.,Chinese OFDI is particularly important for MENA because it has a comparative advantage relative to other FDI source countries, and no research so far has investigated if it is less than in other regions, which could provide insights on how to attract it.

A city-level analysis of the distribution of FDI within China

Abstract: Purpose The study aims to examine whether city-level investment climate, local government effectiveness and corporate income tax rates influence the spatial distribution of foreign direct investment (FDI) across cities in China. Design/methodology/approach The study uses regression analysis using city-level data sets. Findings The study finds that while city-level investment climate and effective local government influence the spatial distribution of FDI across Chinese cities, city-level tax rates have no such influence. Practical implications The results have implications for the design of policies aimed at enhancing FDI flows into emerging countries. Originality/value To date, few studies have investigated the investment location choice at the city level in a single country. The study contributes to the literature by examining the role of government in such investment decisions. It also adds to the previously limited research examining the role of investment climate at the micro level.

What drives OFDI? Comparative evidence from ASEAN and selected Asian economies

Abstract: The purpose of this study is to examine the factors that are influential on outward foreign direct investment (OFDI). A sample of four Association of Southeast Asian Nations (ASEAN) countries is compared with dominant Asian economies during 1981-2013.,The authors used time series data for analysis. An econometric model using ordinary least squares, with a series of complementary tests, was estimated for every country to determine the variables affecting OFDI.,The results depict that exchange rates, income and human capital affect the OFDI of most of the countries in the sample. For comparatively advanced and dominant economies (i.e. China, Japan, South Korea and India), openness is the most influential variable, whereas income levels and exchange rates are dominant factors in case of ASEAN economies. Overall, different types of endowments have a different impact for every country.,Previous studies have primarily examined advanced countries’ OFDI. This work adds to the literature by focusing on ASEAN economies and by making a comparison with the dominant Asian economies. Furthermore, the validity and stability of the model is tested with a series of specification tests. In this way, this work is a useful source of information for every stakeholder.

Influence of systemic banking crisis and currency crisis on the relationship of export and economic growth: Evidence from China

Abstract: Purpose This study aims to investigate the influence of systemic banking crises, currency crises and global financial crisis on the relationship between export and economic growth in China by using the annual time series data from the period of 1972 to 2014. Design/methodology/approach The Johansen and Jeuuselius’ cointegration, auto regressive distributed lag bound testing cointegration, Gregory and Hansen’s cointegration and pooled ordinary least square techniques with error correction model have been used. Findings Results indicate the positive and significant effect of export of goods and services on economic growth in both long and short run, whereas the negative influence of systemic banking crises and currency crises over economic growth is observed. It is also concluded that the impact of export of goods and service on economic growth becomes insignificant in the presence of systemic banking crises and currency crises. The currency crises effect the influence of export on economic growth to a higher extent compared to systemic banking crises. Surprisingly, the export in the period of global financial crises has a positive and significant influence over economic growth in China, which conclude that the global financial crises did not drastically affect the export-growth nexus. Originality/value This paper makes a unique contribution to the literature with reference to China, being a pioneering attempt to investigate the effects of systemic banking crises and currency crises on the relationship of export and economic growth by using long-time series data and applying more rigorous econometric techniques.

A macroeconometric model for trade policy evaluation: evidence from Pakistan

Abstract: Purpose The purpose of the study is to develop a macroeconometric model for evaluation of trade policies and forecasting of trade performance of Pakistan with different regions or group of countries. Design/methodology/approach These regions or group of countries are Organization of Islamic Cooperation, Organization of Economic Cooperation and Development, Association of Southeast Asian Nations, South Asian Association for Regional Cooperation and the rest of the world. A macroeconometric model containing 15 behavioral equations and eight identities. Findings Cointegration results suggest that there exist long-run relationships among variables of all behavioral equations. Additionally, results of different policy shocks based on unit value of export (export price), unit value of import (import price), exchange rate, foreign direct investment, interest rate and foreign exchange reserve suggest that the model is useful for economic planning to sustain growth performance of Pakistan. Originality/value In this study, the authors develop for the first time ever a macroeconometric model for the evaluation and forecasting of regional trade policy and performance for Pakistan.

Dynamics of exchange rate determination and currency order flow in the Thailand foreign exchange market: An empirical analysis

Abstract: Purpose The purpose of this paper is to present the essential role that currency order flow plays in the foreign exchange markets of emerging economies in the determination of their currencies in the short and the long-run against major currencies of the world, which cannot be over emphasized, most especially against the US dollar. Insomuch that, if some of these emerging economies can be successfully transmitted into full development, it would be a good model for other emerging economies and the world at large. Design/methodology/approach A hybrid model (portfolio shift model) proposed by Evans and Lyons (2002a, 2002b) is extended to analyze a data set of every quarter of an hour currency order flow and currency exchange rate fluctuations of Thai Baht (THB) against the US$ for the period of six years (January 2010 to December 2015). To reflect the pressure of currency excess demand, the authors construct a measure of currency order flow in the Thailand currency exchange market. Vector autoregression model is applied to estimate the effectual role of currency order flow in the determination of exchange rate for the THB against the US$. Findings Currency order flow indeed accounted for a sizeable and significant portion of the fluctuations in the THB and the US$ exchange rate. Originality/value Insomuch that, the results show that currency order flow has significant explanatory power in the emerging markets economy to capture the THB exchange rate variability, and it then brings to the attention of the Thailand Monetary Authority the importance that should be attached to the market microstructure.

Chinese imports, industrial production and inflation in Zimbabwe

Abstract: The purpose of this study is to investigate the impact of Chinese import penetration on industrial production and inflation in low income countries, specifically, the impact on textile, wood and furniture, paper and chemical in Zimbabwean industries.,The study adopted bounds test of co-integration advocated by Pesaran et al. (2001) to distinguish between short- and long-run impacts. A sector-specific regression models were specified for textile, wood and furniture, paper and chemical industries and the other one on inflation,The effect of Chinese imports varies across industry. A negative impact on wood and furniture and paper industries is confirmed and rejects an anticipated negative effect on textile industries. However, import penetration had a negative effect on inflation.,The study recommends that the country should consider the trade-off between industrial shrinkage and low prices when formulating trade policy, especially import restrictions, as trade protectionism has failed in most African countries. Temporary trade restriction measures should be implemented and this will encourage dynamic efficiency in domestic industries.,The study identified the need for sector-specific impact of Chinese import penetration on manufacturing sector and the dynamics on inflation.

The role of context-specific factors in IFDI’s influence on OFDI of developing country: Evidence from China

Abstract: Purpose Although prior research has highlighted the importance of foreign direct investment (FDI) on a country’s internationalization, it has largely focused on developed countries. As a result, the FDI performance of a developing country, which differs fundamentally from that of developed countries in their environment, remains unclear. Under the newly development environment, the traditional FDI theories have been challenged by the increasing investments from emerging and transition economies. The theory system needs a fresh situation’s supplement urgently. Design/methodology/approach On the basis of a literature review, this paper constructed an empirical model to further study the moderating effects of context-specific factors on the influence of inbound foreign direct investment (IFDI) on outbound foreign direct investment (OFDI). China was chosen as the representation of a developing country, and its data of mutual investments with 125 countries from 2003 to 2014 were used to carry out hypothesis testing. Findings The analysis and results of this paper suggested: first, for China, the overall influence of IFDI on OFDI is positive. That is to say, IFDI’s positive spillover effect is greater than the negative competition effect. Second, innovational distance’s effect on FDI is complicated. It can either be positive or negative, which calls for further investigation. Third, economic distance negatively affects OFDI and negatively moderates IFDI’s effect on OFDI, especially the export. To some extent, the moderating effect that resulted from the competition effect will reduce overseas investment by extruding some of the local enterprises. Fourth, cultural distance’s effect is closely related to the spillover effect that will positively moderate IFDI’s influence on OFDI. Originality/value This paper enriched the international investment theoretical system by adding a mechanism of multiway international investment of a developing country. The research also has a guiding significance for developing countries’ governments in coordinating mutual international investments. Also, these results have important implications for how policymakers promote OFDI and put forward new theoretical avenues for conceptualizing the internationalization process.

Diverging incentives for reforming China’s restrictions on digital innovations

Abstract: Purpose This paper aims to investigate China’s policy on digital trade with the objective to highlight the rationales behind such policy. Design/methodology/approach China’s policy on digital trade is assessed by analysing the main regulations imposed in the country in the period from 1985 to 2016 that have an impact on digital trade. Findings It was found that there are more than 70 measures imposed today that have a negative impact on digital trade. The measures are diverse and can be justified with several policy objectives, namely, industrial policy, public order and national security, and these support China’s fiscal and state-owned enterprise structure. Originality/value This paper analyses China’s policy on digital trade from a new perspective and provides insights on the rationales behind this policy.

China-United Kingdom Free Trade Area: likely impact on the economy and on specific industry sectors in both countries

Abstract: Purpose The purpose of this paper is to predict the likely economic effects of a free trade area (FTA) on both China and the United Kingdom (hereafter the UK). Design/methodology/approach Following literature review and trade relationship briefing, this paper uses the Global Trade Analysis Project simulation to predict the economic effects of such a FTA on both China and the UK. Findings The simulation results indicate that a China-UK free trade area (hereafter CUFTA) will bring more benefits than harm to both China and the UK, and achieving zero tariff or reducing technological barriers to trade (TBT) is mutually beneficial for both China and the UK, with the growth in GDP, economic welfare as well as import and export. Combining zero tariff and the reduction of TBT in exceptional departments is the most favorable way to improve the macroeconomic effects without bringing damaging effects on the comparative disadvantage industries such as transport equipment, chemicals industries for China and textiles and apparel industry for the UK. Originality/value After the UK voted to leave the European Union, CUFTA is put on the agenda by both the governments, yet there are fewer studies on CUFTA, with this paper being one of the early trials. Besides, based on the simulation results, some policy suggestions will be put forward for future negotiations and industrial policies’ adjustment.

Do country sizes matter? What motivates China’s trade decision in Southern Africa?

Abstract: Purpose This paper aims to test the political-economy hypothesis that country sizes are related with constraints associated with Chinese trade. Design/methodology/approach This study applies a generalized linear mixed approach on panel data of Southern African (henceforth SADC) economies from 2001 to 2014 to observe common Chinese trade patterns among SADC countries. Findings Empirical results support the hypothesis that structural differences exist and smaller SADC countries are disadvantaged in their trade relations with China. Research limitations/implications This paper is exploratory by nature. Its scope and the depth of analysis is constrained by data availability. Originality/value The manuscript has been approved by the author and has never been published, or has been considered for publication elsewhere.