Zeyi Qian (钱则一)

This paper studies the determinants of the spatial distribution of economic activities in China. Specifically, we focus on the different patterns of sectoral growth across Chinese provinces in the last two decades, followed by a series of dramatic policy reforms, including trade liberalization, infrastructure development, productivity growth, and relaxation of mobility restrictions for workers. To understand how those factors interact with each other to shape the spatial distribution of economic activities across regions and sectors, we develop a spatial general equilibrium model of international trade in the spirit of the Melitz-Chaney framework. We extend the heterogeneous firm model to a multi-sector and multi-region setup, incorporating rich sectoral and regional interactions. We bring the model to the data for the Chinese economy and simulate the counterfactual equilibria to account for the underlying mechanism of regional development. First, we show the stylized facts of regional development in China following its accession to the WTO, major infrastructure investments, and the reforms of migration restriction known as hukou. These policy reforms significantly reduced both inter- and intra-national trade costs and migration costs. Using the firm-level data, which spans the period from 1998 to 2013, we find that the number of firms in labor-intensive sectors (e.g., electronics) grew at an average annual rate of 12.2% in inland provinces, which exceeds the average rate of 6.8% in coastal provinces. In contrast, less labor-intensive and more trade-dependent sectors (e.g., steel) exhibited the opposite pattern, with an average annual rate of 16.1% in coastal provinces compared with 9.5% in inland provinces. Furthermore, contrary to the predictions of the naive Melitz model, the firm size distribution suggests that the competition is less tight in coastal provinces despite its exposure to foreign competition. Motivated by the descriptive evidence, we develop the multi-sector, multi-region general equilibrium model with heterogeneous firms that features heterogeneity in sectoral production technologies and tradability as well as spatial mobility of workers. We conducted numerical exercises to understand the model mechanism and to examine the key factors shaping the regional distribution of economic activities. With a two-region and two-sector setup, we examined the impacts of lower domestic trade costs on sectoral growth across regions. We specify the parameter values to replicate two representative regions, the coastal (close to the international market) and the inland, and two sectors, labor-intensive electronics and less labor-intensive and more trade-dependent steel. Our result suggests that the labor-intensive sector grows more in the inland region to benefit from lower wages, while the less labor-intensive sector expands to take advantage of better access to international markets. This relocation of economic activities, which is accompanied by the relocation of workers, is consistent with the descriptive evidence. This result suggests that the heterogeneity across sectors and regions plays an important role in shaping regional growth in China. We quantify the model using Chinese firm-level data and inter-regional input-output tables, and simulate the economy in 2002 and 2007. We then conduct policy counterfactuals to understand how trade and migration costs affect the spatial distribution of economic activities in China. We consider three counterfactual scenarios: first, we assess the effects of China’s WTO accession by keeping the international trade cost at the pre-WTO level while allowing other fundamentals to evolve as in the data. Second, we focus on the role of domestic infrastructure development by simulating the economy with the 2007 fundamentals while keeping the domestic trade costs fixed at the 2002 level. Third, we fix the mobility friction of labor at the 2002 level and see the impacts of hukou reforms on the spatial distribution of economic activity. Throughout the counterfactual exercises, we offer new insights into the role of sectors, geography, and labor mobility in shaping regional economic growth and aggregate welfare across China.

1. The 11th International Workshop on Regional, Urban, and Spatial Economics in China, June14-15, 2024, Southeast University, Nanjing, China
2. 2024 Chinese Economists Society (CES) China Annual Conference , July 5-7, 2024, Zhejiang University, Hangzhou, China

Coming soon.

When capital leaves a country and then flows back as Foreign Direct Investment (FDI), we call it round-tripping FDI. It is widely suspected that China's official FDI statistics contain a substantial amount of round-tripping FDI. However, it is difficult to quantify the round-tripping FDI due to the lack of data. In this paper, we propose two methods to identify round-tripping FDI. The first one tracks capital flows at firm level. If a firm in China invests in a foreign firm and the foreign firm makes an investment back to China shortly after, then we consider this investment to China as round-tripping FDI. Our second measure of round-tripping FDI adds to the first measure by including investments in China made by Chinese investors/firms registered in tax havens. By this second method, round-tripping FDI accounts for as much as 65 percent of the total FDI China received from 1999 to 2015. Our firm-level analysis shows that industrial enterprises facing higher tax burdens are more likely to make round-tripping FDI. We also show that at the city level, adjusted FDI statistics by subtracting the estimated round-tripping FDI are better predictors of local imports and exports. Finally, we show that provinces receiving higher shares of round-tripping FDI are more likely to be punished for illegal financial activities. Taken together, these findings suggest that our measures of round-tripping FDI, although noisy, are indicative of real transactions.

1. Chinese Economists Society 2023 North America Conference, April 1, 2023, University of Oklahoma, USA
2. Camphor Economics Circle Seminar, July 12, 2019, University Of Chinese Academy Of Social Sciences, Beijing, China

As an important supplement to formal agreements and institutional arrangements, the establishment of international twin cities has strengthened trust and in-depth communication between cities, becoming an important catalyst and booster for international economic cooperation. Based on the perspective of foreign trade high-quality development, this paper examines the impact of the“circle of friends” formed by international twin cities on the export trade between cities using the data of matching pairs between 287 Chinese cities and 136 countries or regions in 2002-2015.The results find that: (1)The agree ments ofinternational twin cities have significantly promoted the export volumeand export value of Chinese cities by 10.0%and 11.6% respectively.(2) The trade promotion effect of international twin cities is more derived from trade creation rather than trade transfer. (3）In addition to affecting exports by intensive margins, international twin cities have also promoted the expansion margins of exports in terms of the number of product types and the proportion of high-tech industries.(4)With SARS and the global financial crisis as incident impacts, the agreements of international twin cities has strengthened the ability of Chinese cities to resist risks in exports. (5)The results of heterogeneity analysis show that the agree ments of international twin cities have more obvious export promotion effect on non-Belt and Road countries and geographically adjacent countries in China.

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In the context of developing a high-level open economy, evaluating the impact and role of FDI from multiple perspectives is an important prerequisite for correctly drawing up the negative list of foreign investment access. From the perspective of enterprise survival and industrial security, this paper empirically tests the influence and mechanism of foreign capital on the host country. Specifically, on the basis of accurately measuring the survival rate of enterprises by using the micro big data of enterprise registration from SAIC (the State Administration of Industry and Commerce), we identify the economic effect of FDI on the host country from the perspective of enterprise survival, and examine the heterogeneity and mechanism of the Promotion Effect of FDI. At the same time, this paper also examines the impact of FDI on industrial security from the perspectives of technology availability, technology controllability and supply chain security. The results show that: (1) FDI significantly improves the survival rate of enterprises in host countries by encouraging new establishment of enterprises and reducing the death of existing enterprises. (2) Preference of foreign capital for local private enterprises in supply chain layout makes the survival promotion effect of private enterprises more obvious. (3) The entry of foreign capital promotes the survival of enterprises in host countries through efficiency and competition mechanism. (4) When the foreign investment market access policy intervention is less in the industry, FDI on the survival of the host country's enterprises to promote the effect is more obvious. (5) From the perspective of technology availability, technology controllability and supply chain security, FDI has improved the industrial security level of host country to a large extent.

This paper is my Master's Thesis. 曾获 《世界经济年鉴》2021年国际发展经济学最佳中文论文TOP10， 上海市社会科学界第十八届学术年会优秀论文， 中国知网《学术精要数据库》2023年7-8月高影响力论文， 被《人大报刊复印资料》转载

As the cornerstone of building a comprehensive transportation system and a modern economic system, CHSR（China High-speed Railway）has greatly changed the way of national production and life, affecting the efficiency of spatial allocation of resources and reshaping the economic geography. The rapid development of CHSR, on the one hand, leads to the spatial concentration of production factors and resources and the peripheral development of small and medium-sized cities; On the other hand, brings about the increasingly fierce competition among small and medium-sized cities for high-speed railway stations. Are small and medium-sized cities battle for high-speed rail stations to "compete for inferior"? In order to answer this "paradox", based on the night light data and density gradient index, this paper re-measures the spatial agglomeration degree with defining the capital city or the central city as the core. On this basis, a theoretical hypothesis of "man-bear race" between the central cities that open high-speed railway and the small and medium-sized cities that compete for high-speed railway is put forward, and the hypothesis is verified by data. The research findings of this paper are as follows.(1) The opening of high-speed railway leads to the agglomeration of economic activities to provincial capitals or central cities, while small and medium-sized cities are becoming the peripheries, that is, "people cannot run faster than bears"; (2) Compared with the small and medium-sized cities without high-speed rail, the small and medium-sized cities with high-speed rail can achieve relatively fast economic growth, that is, "running ahead of their competitors"; (3) The theoretical logic of "man-bear race" well explains the "paradox" that small and medium-sized cities compete for " inferior position" through high-speed railway stations, that is, "they can't run faster than bears, but they have to run faster than their partners".

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