Publications
"Taobao, Federalism, and the Emergence of Law, Chinese Style," with Barry R. Weingast (Stanford), Minnesota Law Review, Vol. 102, No.4
Working Papers
"Connecting the Countryside via E-Commerce: Evidence from China," with Victor Couture (UC Berkeley), Benjamin Faber (UC Berkeley) and Yizhen Gu (Jinan), Under Review
- RCT [PDF] [NBER Working Paper] [CEPR Discussion Paper]
- Related policy articles [VoxChina][VoxDev]
- Research summary in Chinese [Jijitang]
- Abstract: E-commerce markets are rapidly growing in the developing world, but this growth has until recently been limited to urban areas. Inspired by growth in cities and numerous case studies on the transformative effects of e-commerce trading on rural markets, policy makers are now targeting large investments to expand access to e-commerce outside of cities. In this paper, we investigate the effect of the first nationwide e-commerce expansion program on household welfare and the underlying channels at work. The program invests in the necessary logistics to ship products to and sell products from tens of thousands of Chinese villages that were largely unconnected to e-commerce. Our analysis combines a new collection of survey and administrative microdata with a randomized control trial (RCT) that we implement across villages in collaboration with a large e-commerce firm. We find that the gains from e-commerce trading are sizable, but only accrue to a minority of rural households who tend to be younger and richer. In contrast to existing case study evidence, we find little evidence for significant income gains to the average rural producer or worker. Instead, the gains are driven by the consumption side, through a significant reduction in household cost of living that is most pronounced in more remote rural markets. Our results also suggest that these effects are mainly due to overcoming the logistical barriers to e-commerce in rural markets, rather than to additional investments targeted at adapting e-commerce to the rural population.
- Keywords: E-Commerce, trade integration, economic development, rural-urban divide
"Law, Chinese Style: Solving the Authoritarian’s Legal Dilemma through the Private Provision of Law," with Barry R. Weingast (Stanford), preparing for submission
- Theoretical Paper [PDF]
- Abstract: How do authoritarian states build the institutional infrastructure (e.g. secure property rights, contract enforcement, and the rule of law) necessary to support efficient markets? Tremendous political impediments hinder states from developing the rule of law. The path for the West involved parliaments and independent judiciaries that constrained the ruler. China’s path differs considerably; from the beginning, it involved the delegation of authority from the central government sometimes known as “federalism, Chinese style.”
- China’s problem with creating the rule of law governing markets is made worse by the “authoritarian’s legal dilemma”; that is, the creation of a strong, non-corrupt judiciary that would supply and only supply private law (e.g., secure property rights, contract enforcement). Although China wants to improve its private law, it wants to avoid an independent judiciary that might challenge and constrain the central government.
- Using China’s online market as the context, this paper explains how new institutional rules are devised in a weak legal environment, and how Taobao – a Chinese online trading platform – has the means to create law, Chinese style. The Chinese government has effectively off-loaded a substantial part of the development of law to private actors. Taobao – China’s dominant online trading platform with over 440 million active users – is not simply an exchange platform, but one in the process of developing a modern legal system that enforces contracts, resolves disputes and prevents fraud. As a private supplier of market infrastructure where formal institutions are lacking, Taobao essentially provides a means for creating law, Chinese style. We argue that law, Chinese style, parallels China’s earlier reforms (1980s-early 1990s) which helped create federalism, Chinese style, that provided the political foundations of early market reform. The new form of delegation also involves a combination of authority and policy experimentation. From the standpoint of the central government, one major advantage of this approach to legal development is that it is much less politically constraining on the central government than the Western approach to public legal systems.
- Keywords: Law and development, market legal infrastructure, authoritarian regimes, e-Commerce platforms
"Regulatory Protection and the Concentration of Trade: Evidence from Chinese Customs Data," with Robert Gulotty (UChicago), Xiaojun Li (University of British Columbia), and Wei Lin (UC Berkeley)
- Big Data [PDF]
- Abstract: To comply with the demands of increasingly regulated markets, firms today must label, package or even rework products to meet the high standards of the destination market. These technical barriers to trade (TBT) can raise prices and perhaps quality, but firms may also respond by moving out of the market entirely or rerouting their trade through third countries. In the former case, top firms enjoy monopolistic rents. In the latter case, firms seeking to meet a standard in a country may shift transit trade toward countries with similar regulatory levels as the destination market. The consequences could be dire for smaller exporters and developing markets that have enjoyed at least some of the rents associated with transit trade. To study these effects, we examine the effects of regulatory protection on the flow of China’s exports between 2000-2007, drawing on a unique dataset that covers the universe of over 130 million customs transactions reported by Chinese firms at the level of the shipment, including price, quantity, and the country of transit prior to arrival at the final market. During this period, China’s exports quadrupled and its trading partners adopted hundreds of regulatory barriers to trade. Joining the customs data with the catalogue of regulatory barriers collected by the World Trade Organization, we examine the consequences of these regulatory barriers for the margins of trade, both across firms and across transit countries, and, for the first time, map the geography of trade for the largest exporter in a world of regulated markets.
- Keywords: Regulatory barriers to trade, international trade, customs data
"Firms under Fire: Market Liberalization, Commercial Interests and China's Economic Statecraft toward North Korea," with Robert Gulotty (UChicago), Xiaojun Li (University of British Columbia), and Wei Lin (UC Berleley)
Work in Progresss
"Opium for the Masses? Field Experimental Evidence on How Consumption Shapes Political Beliefs," data analysis
Other Publications
*All related to fieldwork
Op-ed, Financial Times, “E-commerce Can Ease Social Ills in China’s Villages,” with Wesley Koo (Stanford),
Op-ed, The Paper, “Observations from Taobao (e-Commerce) Villages,” in Chinese [Link]
Book Chapter, “Junpu: The E-Commerce Village,” with Yi Wang (SWUFE), in China's Taobao Villages. Beijing, China: Electronic Industry Press, 2015, in Chinese, translated into English and released in India and the UK
Op-ed, Financial Times, “E-commerce Can Ease Social Ills in China’s Villages,” with Wesley Koo (Stanford),
Op-ed, The Paper, “Observations from Taobao (e-Commerce) Villages,” in Chinese [Link]
Book Chapter, “Junpu: The E-Commerce Village,” with Yi Wang (SWUFE), in China's Taobao Villages. Beijing, China: Electronic Industry Press, 2015, in Chinese, translated into English and released in India and the UK