This study examines the enduring effects of China’s planned economy on contemporary social attitudes. By leveraging spatial disparities in the historical distribution of state-owned enterprises and external shocks such as the First Five-Year Plan and the Third Front Construction movement, we find that a one percentage point increase in the historical SOE proportion of industrial output corresponds with a 0.57% to 0.89% increase in the contemporary preference for state-owned sectors. The results are robust after controlling the contemporary SOE employment share, and this effect does not apply to the younger generation born after the marketization reform. Furthermore, we provide evidence that city-level state ownership preferences significantly impact the likelihood of SOEs receiving subsidies, with this effect notably amplified in cities governed by locally-born leaders, but the share of locally-born leaders has been trending down.

This paper represents the first attempt to show how heterogeneous shock experiences help explain the enduring scars on household future behaviors. Using a large-scale household survey with 15,652 observations combined with geospatial transportation big data, we identify a novel belief-updating mechanism through which crises may exert prolonged impacts on household asset allocation and consumption patterns. An increase in the duration of previous lockdown experience is associated with a 10.52% escalation in enhanced anxiety for future precautionary saving motivations. This experience-based learning perspective supports the resolution of long-lasting overreactions to negative shocks via belief revisions and extends to households’ consumption behaviors. The lingering effects continue to skew households' beliefs even when conditions improve. Additionally, households with different individual-based shock experiences may exhibit varying perceptions of external shocks, resulting in disparate belief revision processes.

We analyze the effects on Chinese firms of the "China Connect" equity market liberalization. Because China is a capital abundant country, unlike typical emerging markets in the literature, the benefits and costs of liberalization are logically different. Nonetheless, the liberalization brought benefits: lower funding costs, higher stock prices, and more investment for connected firms compared to unconnected firms, despite a common negative effect on all firms from capital outflows. These benefits come from a new channel: reducing domestic credit misallocation between private- and state-owned enterprises. We also document costs: connected firms became more sensitive to external shocks than unconnected firms.

This paper focuses on evidence from stock markets as it investigates the spillovers from the United States to mainland China and Hong Kong SAR during the subprime crisis. Using both univariate and multivariate GARCH models, this paper finds that China's stock market is not immune to the financial crisis, as evidenced by the price and volatility spillovers from the United States. In addition, HK's equity returns have exhibited more significant price and volatility spillovers from the United States than China's returns, and past volatility shocks in the United States have a more persistent effect on future volatility in HK than in China, reflecting HK's role as an international financial center. Moreover, the impact of the volatility from the United States on China's stock markets has been more persistent than that from HK, due mainly to the United States as the origin of the subprime crisis. Finally, as expected, the conditional correlation between China and HK has outweighed their conditional correlations with the United States, echoing increasing financial integration between China and HK.

he paper assesses the vulnerability of China to external shocks via the indirect negative effect of a slow-down in exports on domestic demand for investment. In the last decade China has increased its dependence on external demand, particularly from the advanced countries; at the same time it has become a primary destination market for goods produced in the rest of emerging Asia. Since 2001 investment expenditures have represented a key driver of Chinese GDP growth; as a very large share of activity in the manufacturing sector is export oriented, we expect fixed capital investment in this sector to be highly related to exports. Overcoming serious shortcomings in available data, we estimate an investment equation for the period 1993-2006 and find an elasticity of investment to exports in the manufacturing sector in the range between 0.9 and 1. Taking into account the dominant contribution of capital accumulation to Chinese GDP growth, we conclude that the growth effects of an external demand shock could become significant when taking into account the domestic investment channel.