China Economic Quarterly International (CEQI)

 

Volume 6, Issue 2

June 2026

 

Trade protectionism suppresses Chinese firms’ cross-border M&A

Xiaohua Bao, Jianpeng Deng, Yaning Wei

 

A review of contest theory: Equilibrium strategies and incentive design

Xin Feng, Qian Jiao, Jingfeng Lu

 

Property right strengthening and modern market transformation: Evidence from rural land rent in China under the “Greif Hypothesis”

TongLong Zhang, Liang Zhao, Linxiu Zhang, Biliang Luo

 

The effects of older workers’ employment on youth employment and occupational structure

Guangjun Shen, Weishan Tan

 

How does OFDI help enterprises resolve the “bottleneck” problem: evidence from the US entity list

Weiyi Cai, Xiaoqi Meng, Sijia Qin, Jiamin Wu, Shuying Zhong

 

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Trade protectionism suppresses Chinese firms’ cross-border M&A

Xiaohua Bao, Jianpeng Deng, Yaning Wei

Abstract

The tariff-jumping theory posits that, when confronted with rising tariff barriers, firms increase their investment in the tariff-imposing country in order to circumvent the tariffs. We integrate data on Chinese firms' cross-border mergers and acquisitions (M&A), export, and monthly product-level tariff data from 2018 to 2019. By constructing a shift-share instrumental variable (SSIV), we find that trade protectionism suppresses Chinese firms' cross-border M&A—a finding that contradicts the traditional tariff-jumping hypothesis. This research identifies three potential mechanisms: (1) the Trump tariffs directly reduce firms’ operating performance; (2) the U.S. foreign investment security review process generates a demonstration effect; and (3) uncertainty arising from U.S.-China trade tensions weakens the bargaining power of Chinese firms.

 

A review of contest theory: Equilibrium strategies and incentive design

Xin Feng, Qian Jiao, Jingfeng Lu

Abstract

Contest theory studies strategic competition among individuals or groups for rewards such as positions, market share, or rents. Owing to its wide applicability in settings such as rent-seeking, promotion, litigation, political competition, and research and development (R&D), the theory has become a core area of microeconomics. Taking classical models as its point of departure, this paper reviews the literature on equilibrium analysis and contest design. The two halves of the review are organized around three primitives of a contestant's payoff: the prize structure, the contest success function, and the information set. These primitives are also the three instruments available to a contest designer. Within this framework, it examines several central issues, including prize allocation, contestant heterogeneity, budget constraints, contest technologies, and information disclosure. Finally, it discusses major applications and identifies promising directions for future theoretical research.

 

Property right strengthening and modern market transformation: Evidence from rural land rent in China under the “Greif Hypothesis”

TongLong Zhang, Liang Zhao, Linxiu Zhang, Biliang Luo

Abstract

Avner Greif proposes in The Great Divergence that the historical divergence in the Western world originated from the breakthrough of personalized transactions in medieval trade to achieve-large-scale market expansion, with the key lying in universal property right protection. We refer to this as the “Greif Hypothesis” but it lacks micro-level empirical testing. Taking the development of rural land rental markets in China as an example, we examine the impact of the land right confirmation policy on market structure transformation and find that land right confirmation increases the probability of formal rent by 4%, reduces the probability of informal rent by 1.3%, and promotes the expansion of the rental market. Moreover, formal and informal markets are not interconnected or progressive but rather show a reciprocal relationship of growth and decline.

 

The effects of older workers’ employment on youth employment and occupational structure

Guangjun Shen, Weishan Tan

Abstract

This study examines how older workers' employment affects youth employment and occupational structure, using microdata from China's 2000 and 2010 population censuses and the 2005 and 2015 1% national population sample surveys. We find that higher older-worker employment reduces youth unemployment. Substitution elasticities between older and young workers are below one in technical, clerical, and service occupations, indicating limited substitutability. Older workers' non-agricultural employment is also associated with higher youth employment in managerial, technical, and service occupations. In addition, older workers' non-agricultural labor force participation reallocates young workers across occupations, raising employment in both abstract and manual jobs and producing a shift in the youth occupational distribution.

 

How does OFDI help enterprises resolve the “bottleneck” problem: evidence from the US entity list

Weiyi Cai, Xiaoqi Meng, Sijia Qin, Jiamin Wu, Shuying Zhong

Abstract

Using data from Chinese listed firms (2014-2022) and U.S. entity lists, this article employs difference-in-differences (DID) and triple-difference (DDD) models to explore the impact of OFDI on the innovation of Chinese enterprises under the enactment of the ECRA, and finds that OFDI can promote the innovation of restricted enterprises by expanding overseas revenue scale, overseas technology layout and enhancing the external financing capacity, where the impact of the timing of investment differs. The innovation promotion effect of OFDI helps to alleviate the “backward effect” of export control, and it is more obvious in technology-intensive industries and technology-seeking OFDI.