China's import duty drawback and VAT rebate policies: A general equilibrium analysis |
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Authors: | Chi-Chur CHAO Eden SH YU Wusheng YU |
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Institution: | aDepartment of Economics, Chinese University of Hong Kong, Shatin, Hong Kong;bDepartment of Economics, Oregon State University, Corvallis, OR 97330, USA;cDepartment of Economics and Finance, City University of Hong Kong, Kowloon, Hong Kong;dFood and Resource Economics Institute, The Royal Veterinary and Agricultural University, Copenhagen, Denmark |
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Abstract: | China's duty drawbacks and value-added tax rebates play important roles in promoting exports. Simulations from a CGE model, characterized by a dual production (domestic sales and export processing) and dual import structure (imports used in export processing and for other purposes), confirm our theoretical results on China's exports that (a) such policies are generally export promoting; (b) a small part of the export expansion comes at the expense of a slight decline of the domestic activity through factor re-allocation and input substitution, whereas a larger portion of the expansion is attributed to cheaper access to foreign inputs; (c) export processors use more imported inputs and less domestic inputs; and (d) export intensive sectors are positively affected by these policies, whereas traditional agriculture sector is impacted adversely. These policies generate welfare gains for China. |
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Keywords: | Duty drawback Tax rebate CGE modeling China |
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