The Journal of World Economy 2024, No.1
Tax Reform, Business Environment and Market Vitality: Debate on the Effect of Policy Synergy
Wang Shuyi, Yuan Congshuai, Liu Zhikuo
Abstract
This paper mainly focuses on examining the policy effects of “replacing the business tax with the value-added tax” (abbreviated as VAT reform) and analyses whether these effects depend on the business environment, providing information on the effective deployment of fiscal policies. Based on nationwide business registration data, this study finds, using a difference-in-differences approach, that VAT reform has not only significantly increased the number of new service sector enterprises in pilot areas but has also indirectly led to an increase in new industrial enterprises through input-output relationships. However, it should be noted that the impact of the VAT reform on market vitality depends to a large extent on the regional business environment conditions, underlining the importance of policy synergy. In a situation where the scope for tax cuts is increasingly limited, improving the business environment and enhancing policy synergy emerge as effective pathways to maximise the benefits of tax policy adjustments.
Key words
tax reform / business environment / policy synergy
New Logic of Regional Economic Development: New Spatial Economics Including Travel Costs
Yang Kaizhong, Liu Wei, Dong Yaning, Liu Anguo
Abstract
The increasing relative importance of transportation costs for individuals has led to profound changes in the foundation of agglomeration economy. This article takes the lead in establishing a New Spatial Economy core-periphery model that includes travel costs based on the theory of New Spatial Economy. Through mathematical deduction, it explores the inherent logical mechanism between travel costs, qualities of space, and economic development. Research has found that: (1) Qualities of space has an impact on regional economic development. Improving the qualities of space of a region will promote the economic agglomeration, making it more likely to become a core area. (2) The increase in travel costs has led to an widening gap in qualities of space between regions, further strengthening the economic development advantages of regions with higher qualities of space. (3) The quality premium effect drives up the price index of areas with higher qualities of space, which to some extent hedges the agglomeration of economic activities towards areas with higher qualities of space. This article has important value in constructing a new development pattern from a spatial perspective and achieving high-quality development.
Key words
Travel Cost / Qualities of Space / Quality Premium Effect / Regional Economic Development / New Spatial Economic
Fed Monetary Policy Spillovers, Central Bank Expectation Management and Chinese Asset Prices
Li Bin, Lei Yinru, Wang Jian
Abstract
Against the backdrop of persistent global liquidity constraints and escalating geopolitical conflicts, the People’s Bank of China’s (PBC’s) approach of prioritising domestic issues by “balancing internal and external factors” has become a pivotal consideration in its monetary policymaking. This paper presents a compendium of central bank communications on monetary policy reports. It employs textual analysis to extract sentiment indicators from US and Chinese monetary policy reports, examines the impact of the Federal Open Market Committee’s (FOMC’s) monetary policy on China’s capital market and highlights the critical role that PBC plays in preventing external monetary policy shocks. Empirical results indicate that: (1) in addition to the traditional Federal Reserve (Fed) monetary policy shocks, FOMC sentiment communications also significantly affect China’s A-share market and concentrate on the role of dovish sentiment; (2) the PBC can effectively alleviate the adverse impacts of the Fed’s pessimism by releasing positive sentiment reports; and (3) the mechanism analysis suggests that PBC’s positive communication sentiment can effectively mitigate investors’ negative expectations and reduce investors’ disagreement through signalling and synergistic channels, thereby promoting market stability. In conclusion, the paper’s findings provide empirical support for preventing monetary policy spillovers from developed economies.
Key words
central bank communications / Chinese asset prices / US monetary policy spillovers / textual analysis
The Puzzle of the Excessive Export Market Exit of Firms with Specific Import Market Experience
Wei Hao, Tu Yue
Abstract
Excessive export market exit remains an unsolved puzzle. It is now widely acknowledged that international experience contributes to the survival of exports and mitigates export market exit. This study comprehensively explores the effect that a firm’s market-specific import experience has on export market exit. Using Chinese customs data from between 2000 and 2016, on the one hand, the paper empirically finds that import experience increases the likelihood of an exporter’s exit from the export market, which at first glance appears to be counterintuitive; on the other hand, it verifies the following three contrasting but not mutually exclusive mechanisms. (i) The market learning mechanism creates a diminishing impact; (ii) the sunk cost reduction mechanism creates an increasing impact through both the reverse hysteresis and trial-and-error effects; and (iii) the import-export market overlapping mechanism-a newly identified mechanism in the paper-has a decreasing impact through the risk hedging effect, and an increasing impact through the risk amplifying effect, with the former dominating. Further, it uncovers some heterogeneous and synergic effects of the import experience. The study findings revitalise the understanding of the import experience and export market exit, and provide new insights to exporters on how to make the most of import experiences to promote exports and diversify risk.
Key words
import market experience / export market exit / information barriers / sunk cost / import-export market overlapping
Government Governance in the Big Data Era: Digital Government and Corporate R&D Manipulation
Meng Yuan, Yang Rong
Abstract
Using a sample of A-share listed companies between 2014 and 2021 and based on the specific industrial policy of “Management Measures for the Recognition of High-tech Enterprises”, this paper employs the bunching method to examine whether companies have obtained high-tech enterprise status through R&D manipulation. Drawing on this, and using the reform of big data management institutions in various regions as a quasi-natural experiment, the paper employs the difference-in-differences (DID) model to explore the impact that digital government exerts on corporate R&D manipulation. The research reveals that the phenomenon of R&D manipulation is often prevalent among China’s listed companies. However, the development of digital government has significantly suppressed corporate R&D manipulation activities. The key reason for all this lies in the fact that digital government development has been effectively enhancing the government’s capacity to oversee corporate R&D manipulation. Furthermore, the influence of digital government on corporate R&D manipulation is particularly prominent in samples of non-state-owned enterprises and in some cases where internet and media supervision is weak. This paper offers theoretical and empirical evidence for the government to leverage industrial policies more effectively in the new digital era.
Key words
digital government / R&D manipulation; / industrial policy / big data management institution reform
The Governance Role of Government Social Media: Empirical Evidence from Tax Department’s Sina-Microblogs
Sun Kunpeng, Yang Fan
Abstract
This paper focuses on the governance role of government social media. Drawing on tax department’s Sina-microblogs as new media of communication for government affairs, the paper first analyses the mechanism by which they influence corporate tax avoidance from the perspective of incomplete information theory and information intermediary theory. Subsequently, using more than 400,000 pieces of microblog data, we use a multi-period difference-in-differences (DID) model for empirical testing. The study reveals that the tax department’s Sina-microblogs effectively enhance corporate tax compliance, and also play an important role in promoting tax equity among enterprises. Specifically, tax department’s Sina-microblogs play their governance role by the dissemination of tax knowledge and regulations, the deterrence related to tax penalties for corporate reputation, and improvements of corporate trust in the government. This paper contributes to theoretically expanding the literature on the influence of government social media and the factors influencing corporate tax compliance, and it provides practical references for building China’s digital government and deepening the reform of tax enforcement and tax service.
Key words
government social media / Sina-microblogs / corporate tax avoidance / tax equity
How Fee-to-Tax Reform of Environmental Protection Affect Credit Financing: An Interpretation from Enterprises’ Green Response
Zhu Shujin, Chen He
Abstract
Drawing on the backdrop of China’s transition from environmental pollution fees to environmental protection taxes, this paper investigates the financial pathways through which environmental regulations operate from the perspective of bank-business interactions using data from Chinese A-share listed industrial corporations from 2015 to 2020. The study demonstrates that China’s shift from environmental fees to taxes (CEFT) potentially undermines industrial corporations’ capacity to repay loans by increasing environmental costs. As a result, banks heighten their credit auditing practices and grant fewer loans, impeding industrial corporations from raising more funds. The mechanism analysis reveals that although CEFT has credit financing shocks, industrial corporations can partially hedge the credit financing shocks by verbal green image creation and environmentally friendly practices. Given the discrepancy between the green image of industrial corporations and their actual green conduct, banks adjust the term structure of credit fund disbursements to minimise the credit misallocation caused by “greenwashing”. Further analysis indicates that in the CEFT process influencing credit financing, banks implement credit filtering based on external information and this practice has neither anticipated nor lagging effects. The effectiveness of CEFT also remains robust even after considering the potential reduction in credit financing by industrial corporations due to government subsidies or financial speculation activities, and eliminating the potential interference from other policies during the sample period. This paper provides important references on how to coordinate environmental regulations with financial policies and achieve agreed policy effects.
Key words
environmental protection tax / environmental information disclosure / environmental investment / credit discrimination
Urban Green Development Attention and Enterprise Green Technology Innovation
Yang Zhen, Ling Hongcheng, Chen Jin
Abstract
On the basis of constructing the index of “urban green development concern”, this paper manually identifies and measures urban green development concern according to the municipal government work report, and examines the influence of urban green development concern on enterprises’ green technological innovation by using individual fixed-effects model. The study finds that urban green development concern can promote enterprises’ green technological innovation, and there are three channels of action: environmental regulation, CSR strategic response and enterprise green investment, and the overseas experience of executives and media attention positively regulate enterprises’ green technological innovation under urban green development concern. This paper confirms that firms perceiving the green development concept will make strategic responses and resource allocation adjustments.
Key words
attention to urban green development / enterprise green technology innovation / environmental regulations