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Begin New Search Topic Governance Political Geography Asia Content Type Working Paper

1. The Internationalisation of the Chinese Renminbi and China’s Digital Currency Plans

Author:
Lorenzo Bencivelli and Michele Savini Zangrandi
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
China has made major reforms to boost the international standing of its currency. The global presence of the renminbi remains contained, however. This is due to China’s economic structure (a persistent current account surplus and a partially closed financial account) and the government’s grip on the economy. China is also a Central Bank Digital Currency (CBDC) forerunner. The digital yuan (e-cny) is already active in a large scale trial. Many claim that the e-cny could provide a major boost to the internationalisation of the renminbi. However, the internationalisation of the renminbi would require major economic reforms that cannot be bypassed by the deployment of new technologies. The e-cny is therefore unlikely to boost the renminbi’s international presence. Yet, its underlying technology could be exported to other countries wishing to deploy their own-currency CBDCs. Much like with telecommunication equipment, this scenario would put China in the position of being a provider of a critical infrastructure. In the longer run, the export of e-cny technology might also facilitate the creation alternative payment networks, though this scenario is not very likely.
Topic:
Political Economy, Governance, Finance, Currency, and Digital Policy
Political Geography:
China and Asia

2. Implicit Subsidies for Infrastructure and Their Implications for Contingent Liabilities in Selected East Asian Countries

Author:
Astrid Dita and Sandy Maulana
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
A government's investment decision for infrastructure development is a form of budget commitment which results in direct liabilities and possible contingent liabilities. The latter is often overlooked when the project preparation is weak where potential risks are insufficiently identified and mitigated and its impact on budget sustainability may worsen in the absence of sound surveillance. Infrastructure projects may thus lead to unmitigated fiscal risk without proper investment decision-making and monitoring framework particularly in the presence of less-than-mature fiscal systems and low public investment management capacity (e.g. as demonstrated by the inability to develop sound project business cases or distinguish project financing from funding issues).
Topic:
Development, Infrastructure, Governance, and Investment
Political Geography:
Asia and ASEAN

3. Who wins and who loses from state subsidies?

Author:
Sourafel Girma, Holger Görg, and Ignat Stepanok
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
China is perceived to rely on subsidizing firms in targeted industries to improve their performance and stay competitive. We implement an approach that allows for the joint estimation of direct and indirect effects of subsidies on subsidized and non-subsidized firms. We find that firms that receive subsidies experience a boost for productivity. However, our approach highlights the importance of indirect effects, which are generally neglected in the literature. We find that, in general but not always, non-subsidized firms experience reductions in their productivity growth if they operate in a cluster where other firms are subsidized. These negative externalities depend on the share of firms that receive subsidies in the cluster. Aggregating direct and indirect effects into a (weighted) total effect shows that this negative indirect effect tends to dominate. We interpret our results in the light of a simple heterogenous firm type model, which highlights that subsidization, in a competitive environment of firms, may potentially harm non-subsidized firms.
Topic:
Governance, Business, Subsidies, and Competition
Political Geography:
China and Asia

4. Black Mirror Statecraft: Combating PRC Hostile Social Manipulation and Sharp Power in an Era of Great Power Competition

Author:
Jonathan Lushenko
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
Council on International Policy (CIP)
Abstract:
The Netflix television hit Black Mirror postulates a world in which personal mobile devices and other forms of interconnected infosphere technology produce alarming and increasingly animalistic human behavior. In the episode titled “Nosedive,” the main protagonist struggles to boost her social credit score – an algorithmic rating of all daily social interactions – to enhance her socio-economic status, earn special privileges, and sustain access to basic human resources through mostly contrived and inauthentic behavior. At first, this Twilight Zone-type plot seems unbelievable until realizing that a social credit system now exists in the People’s Republic of China (PRC).
Topic:
Science and Technology, Communications, Governance, and Public Opinion
Political Geography:
China and Asia

5. PRC Foreign and Military Policy, 1977-81: Shades of Mao, the Imprint of Deng

Author:
Frederick C. Teiwes and Warren Sun
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
China Studies Centre, The University of Sydney
Abstract:
This Working Paper is a draft chapter for a book on the poorly understood CCP elite politics of the early post-Mao period, tentatively entitled Hua Guofeng, Deng Xiaoping, and the Dismantling of Maoism. Conventional wisdom pictures the period up to the December 1978 Third Plenum as a struggle between Hua and Deng, reflecting neo-Maoist v. reformist tendencies, and won by Deng at the plenum. In fact, there was broad consensus between them, Hua was more proactive in key areas, and there is no evidence of anything approaching a power struggle. This paper, however, deals with an area where elements of accepted views of Deng hold up. In essence, Deng held both the foreign policy and particularly PLA portfolios, notably where they concerned the crucial relationships with the US, Soviet Union, Japan, and Vietnam. In external relations Deng was broadly regarded to have performed brilliantly, while Hua was thought a mere cypher. Overall, Hua was clearly secondary in external relations, but he took the bold step of initiating relations with revisionist Yugoslavia, made the most telling proposal in the high-level negotiations with the US, and deeply impressed dominant European leaders Margaret Thatcher and Helmut Schmidt. Deng’s foreign policy outlook was deeply influenced by Mao, he could push Mao’s “horizontal line” concept to counterproductive extremes, almost losing the Sino-Japanese Peace Treaty, and rather than brilliantly negotiating US normalization, the Chinese side was slow to grasp the outcome that was always there. Most significant, and revealing of the underlying dynamic of CCP politics, was the war against Vietnam. This was truly Deng’s war, opposed by not only Hua, but also by a broad array of senior civilian and PLA officials, including surviving marshals. This was essentially the first time since his return to work in 1977, in contrast to persuading his colleagues through intense effort, that Deng simply asserted his authority. Neither here or elsewhere, was argument decisive as it had generally been under Hua’s leadership to that point. What was decisive was Deng’s enormous prestige as the most outstanding of the surviving “old revolutionaries” who achieved the success of 1949. It was the same factor that allowed Deng’s quiet coup against Hua at the turn of 1979-80, with no significant resistance from Hua or anyone else, and with no explanation being made in any official forum until well after the fact.
Topic:
Diplomacy, Politics, Governance, Leadership, and Normalization
Political Geography:
China and Asia

6. An Analysis of the Binding Constraints on Digital Financial Inclusion in India Using a Decision Tree Methodology

Author:
Nandini Harihareswara and Howard Miller
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The past decade has seen significant innovation and growth in the volume and value of digital payments in India. However, we find that the associated gains have been heavily concentrated in favor of wealthier and urban customers and have had less impact on lower income and rural populations. While some customers now have a far greater selection of quick, cheap, and convenient digital payments methods, as much as 65 percent of the population remains effectively excluded. Using a decision tree framework, we test a range of factors on the supply and demand sides that could be binding constraints on further digital finance penetration. We find that an unlevel playing field in favor of the (primarily state-owned) banking sector results in a lack of effective competition that could be inhibiting greater innovation and outreach in favor of lower-income and marginalized people. This unlevel playing field is potentially a function of institutional weakness combined with the nexus of control of the government and the banking sector, which is reinforced by the position of the National Payments Corporation of India. This control may also be viewed by the government as necessary to protect economic stability in a very dynamic market. To the extent that institutional deficiencies are the root cause of regulatory barriers to the entry of new providers and the scope of digital financial services offered, they are a binding constraint on advancing digital financial inclusion. Under this market structure, the outreach and inherent business models of digital payments and transfers do not provide sufficient perceived benefits to attract large segments of the population. Further, a lack of trust in providers combines with the perception of low benefits to generate an additional binding constraint, preventing the market from reaching a critical mass at which the bulk of the population would have the means and the incentives to use the system. Therefore, the market remains at an equilibrium below its potential.
Topic:
Development, Governance, Finance, and Digitalization
Political Geography:
India and Asia

7. Women Left Behind

Author:
Radhika Jain and Pascaline Dupas
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
Using administrative data on over 4 million hospital visits, we document striking gender disparities within a government health insurance program that entitles 46 million poor individuals to free hospital care in Rajasthan, India. Females account for only 33% of hospital visits among children and 43% among the elderly. These shares are lower for more expensive types of care, and far lower than sex differences in illness prevalence can explain. Almost two-thirds of non-childbirth spending is on males. We combine these data with patient survey, census, and electoral data to show that 1) the program is unable to fully offset the costs of care-seeking, which results in disparities in hospital utilization because some households are willing to allocate more resources to male than female health; 2) lowering costs does not reduce disparities, because males benefit as much as females do; and 3) long-term exposure to village-level female leaders reduces the gender gap in utilization, but effects are modest and limited to girls and young women. In the presence of gender bias, increasing access to and subsidizing social services may increase levels of female utilization but fail to address gender inequalities without actions that specifically target females.
Topic:
Gender Issues, Governance, Health Care Policy, Women, Inequality, and Health Insurance
Political Geography:
India and Asia

8. The Political Economy of India’s Transition to Goods and Services Tax

Author:
Chanchal Kumar Sharma
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
What kept the Goods and Services Tax (GST) from becoming a reality in India for a quarter of a century after the adoption of the structural adjustment programme in 1991? What made it possible in 2016? To what extent the Indian model of GST reflects a compromise between the need to keep fiscal federalism intact and to respond to a more global economic imperative? To what extent India’s transition to a concurrent dual GST has brought about a change in the principles, rules, frameworks, and institutions guiding intergovernmental fiscal interactions? This paper investigates these issues and shows that the shifts in the indirect tax regime in India since independence have taken place within the structural context of constitutional rules, the economic policy paradigm and political dynamics. Party congruence after 2014 helped to facilitate the introduction of the GST, but the shape thereof was strongly marked by path-dependent logics and the role of state governments as institutional veto players. In addition, the paper examines the ways in which India’s transition to a concurrent dual GST has brought about a fundamental change in the principles, rules, frameworks, and institutions guiding intergovernmental fiscal interactions.
Topic:
Development, Political Economy, Governance, Tax Systems, Institutions, and Services
Political Geography:
India and Asia

9. Serve the People: The Eradication of Extreme Poverty in China

Author:
Tricontinental: Institute for Social Research
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Tricontinental: Institute for Social Research
Abstract:
Grandmother Peng Lanhua lives in a two-hundred-year-old rickety wooden house in a remote village of Guizhou Province. Born in 1935, she grew up in a China that was under Japanese occupation and entered adolescence during the Chinese Revolution. Peng is one of the few people in her community who did not want to relocate as part of the government’s poverty alleviation programme when the government designated her house unsafe to live in. Since 2013, eighty-six other households whose houses were deemed too dangerous or for whom jobs could not be generated locally were moved to a newly built community an hour’s drive away. But Peng has her reasons for not moving. She is eighty-six years-old and lives with Alzheimer’s disease. In addition to low-income insurance and a modest pension, she receives supplemental income from a new grapefruit company that leased her family’s land. The company, whose dividends are distributed to villagers like Peng as part of the national anti-poverty efforts, was established to develop the local agricultural industry. Peng’s daughter and son-in-law live next door in a two-storey house they built with government subsidies. Her children are employed. In other words, her basic needs are cared for, and relocation is voluntary. ‘We can’t force anyone to move, but we still have to provide the “three guarantees and two assurances”’, says Liu Yuanxue, the Party cadre sent to live in the village to see that every household emerges from extreme poverty. He is referring to the government poverty alleviation programme’s guarantee of safe housing, health care, and education, as well as being fed and clothed. Liu visits Peng on a monthly basis, as he does with all the households in the village. Through these visits, he comes to know the details of each person’s life. ‘The floor is too messy’, Liu says, jokingly reprimanding Peng’s daughter-in-law as he enters the large wooden house. She is also a member of the Communist Party of China. On the wall, a poster of Chairman Mao and, next to him, President Xi Jinping, pay homage to two of China’s socialist leaders who bookend the course of Peng’s life. Below their portraits sit a weathered table and a dusty terracotta water jug, an internet router flashing green beside them. A string of ethernet cables and wires stretch to different corners of the house (each house gets free internet and CCTV satellite television for three years before a subsidised rate sets in). There are energy-saving lightbulbs in each room and a satellite dish installed next to Peng’s hanging laundry. An extension of the house was built with a toilet and shower equipped with solar-heated running water, the mud floor poured over with concrete. As Lenin said, ‘Communism is Soviet power plus the electrification of the whole country’. Strengthening the Party in the countryside and meeting the concrete needs of the people have been pillars in China’s fight against poverty. Liu’s visit to Peng’s house is just one everyday scene in that process. The fact that Peng has lived in this house for half a century is also a product of the Revolution; in the 1970s, during the Cultural Revolution, the house was confiscated from a rich landlord and redistributed to three poor peasant families, including Peng’s. That cadres like Liu visit her on a monthly basis, that her house has been made safe to live in through the recent renovations, and that there is internet to connect the poorest of rural villages with the world is a continuation of this revolutionary history. After all, ensuring that the country’s workers and peasants like Peng get housed, fed, clothed, and cared for is part of China’s long struggle against poverty and a fundamental stage in constructing a socialist society.
Topic:
Poverty, Governance, Inequality, and Socialism
Political Geography:
China and Asia

10. China's Belt and Road Initiative in Italy: An Analysis of Financial Cooperation

Author:
Nicola Bilotta
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
Financial cooperation is essential to boosting bilateral economic ties, providing firms with more effective instruments to operate in foreign markets. It should come as no surprise, then, that financial cooperation was a pillar of the 2019 Memorandum of Understanding (MoU) reached between Italy and China in support of the latter’s Belt and Road Initiative (BRI). However, a preliminary analysis of BRI-related commercial agreements between Italian financial institutions and their Chinese counterparts shows that they have not resulted in any ground-breaking development. These Memoranda have apparently just added a “BRI” badge to pre-existing trends of collaboration. The BRI-related MoUs in the field of financial cooperation do not, for the time being at least, justify concerns that China may gain an economic foothold in Italy large enough to win it much political influence. A more realistic risk is that these MoUs may undermine a common European approach to China, weakening the negotiating stance of the European Union’s. Paper prepared in the framework of the IAI project “When Italy embraces the BRI”.
Topic:
Foreign Policy, Political Economy, Governance, Finance, and Belt and Road Initiative (BRI)
Political Geography:
China, Europe, Asia, and Italy