Trade Destruction and Trade Diversion: Evidence from China

Over the past three decades, we have seen a dramatic increase in the incidence of temporary trade barriers such as antidumping duties and countervailing duties. China has been at the receiving end of a large number of such measures. In this paper, we study how China's exports to its major trade partners have been affected when its major trade partners have used these measures either against China or against other countries. We find that Chinese exports to the country that imposed an antidumping duty decreased by approximately 35 percent. At the same time, an antidumping duty used by the importing country that was directed towards other countries but not against China led to an approximate 30‐percent increase in China's exports to the policy‐imposing country. These results remain robust across various specifications. Our findings have important policy implications. In particular, the magnitude of these effects highlights why it is important to curb the recent widespread use of these barriers.     

美韩FTA对中国出口的贸易替代效应研究

美国和韩国于2007年6月正式签署了自由贸易协定。两国都是中国重要的出口市场,中美和中韩出口结构存在一定的竞争性。美韩FTA将会使中国出口产品面临相对较高的关税,差异性的关税可能使美国市场上中国出口产品被韩国替代,同时,韩国市场上中国出口产品也可能被美国替代。本文考察了三国HS2位编码产品的国际竞争力和平均实施关税,以定量估计美韩FTA对中国造成的贸易替代效应。结果表明,在美国市场上,中国的纺织品和服装出口将受到明显影响;在韩国市场上,中国农产品和工业品出口都会受到不同程度影响,且受影响的产品种类较多。     

Has China displaced other Asian countries' exports?

This paper uses gravity modelling to explore whether and how the growth of China's exports is displacing exports of other Asian countries to third markets over the period 1990–2003. Chinese exports are defined both narrowly and more broadly to include exports from Hong Kong. We investigate whether the displacement effect on Asian exports differs when exports from Hong Kong and China are combined compared to the narrow case of Chinese exports only. Aggregate and disaggregated analyses are undertaken. In the latter, we explore whether the displacement effect varies across Asian countries and in trade with different types of countries. We find evidence of a displacement effect which is more pronounced in developed markets and stronger for Hong Kong and China combined. Further it is the high income Asian exporters that experienced a greater displacement effect. We also investigate whether China's development has generated any offsetting effects on its neighbours' exports to China itself and find that Chinese growth has indeed increased China's imports from the Asian countries in the sample and in particular from Japan and Korea.     

Global production networks and China's processing trade

This paper unveils a systematic pattern in China's processing trade. In a cross-section of Chinese provinces, the average distance traveled by processing imports (import distance) is negatively correlated to the average distance traveled by processing exports (export distance). To explain this pattern, we set up a three-country industry-equilibrium model in which heterogeneous firms from two advanced countries, East and West, sell their products in each other's markets. Each firm can use two modes to serve the foreign market. It can directly export its products from its home country. Alternatively, it can indirectly export to the foreign market by assembling its product in a third low-cost country, China, which is located in the vicinity of East. Our model establishes two theoretical predictions relating China's geographical location to its processing trade patterns. First, China's processing exports are negatively affected by both an increase in import distance and a rise in export distance. Second, China's processing exports to East Asian countries are more sensitive to export distance and less sensitive to import distance than its processing exports to non-Asian countries. We find empirical support for both predictions.     

全球价值链分工下的双边贸易收益核算：以中美贸易为例

通过构建双边贸易收益核算模型,从总体规模、行业结构、实现方式等层面对中美双边贸易收益进行核算。本文发现中美双边出口中均包含着大量的对方国内增加值,与增加值贸易差额比较,传统统计口径的中美贸易差额出现明显高估。其中中国对美货物出口的贸易顺差被显著高估,而服务出口的贸易顺差被明显低估。在中美双边贸易中,中国对美出口包含的本国国内增加值比重不到七成,而美国对华出口包含的本国国内增加值比重超过八成。中国出口到美国的产品绝大部分表现为最终产品并且被美国当地消费,而美国出口到中国很大部分表现为中间品,并且通过对增值折返及对第三国出口的形式实现。     

The Impact of COVID-19 on Chinese trade and production: An empirical analysis of processing trade with Japan and the US

The COVID-19 pandemic severely disrupted international trade, leading countries to grapple with product shortages and firms to experience major supply chain issues. These challenges increased production costs and significantly contributed to lower trade and higher inflation. In this paper, we examine the impact of COVID-19 on Chinese trade through its two main trading partners: Japan and the US. By differentiating products by product type and processing status, we find evidence that products in the middle of the global supply chain were most affected by the pandemic and that the severity of the shock depends on the partner country’s role in the global supply chain. Additionally, we find that Chinese exports are more impacted than Chinese imports, regardless of processing status. These findings are largely consistent with economic theory. Understanding that the effects of global shocks vary by product and country will help guide policies that minimize supply chain disruptions.     

Trade in factor income and the US-China trade balance

US multindoational enterprises sell considerable amounts of products to China's domestic consumers that are “made” in either China or other countries. However, these sales are not counted as US exports to China. To account for this, we propose a beyond-borders approach to measuring trade flows that explicitly considers firm ownership, termed “trade in factor income (TiFI),” that defines the US-owned factor income induced by China's final demand as US exports to China. Applying this approach to OECD data, we find that on average from 2005 to 2016 in TiFI terms, US exports to China were 20.34% and 8.21% greater, China's exports to the US were 1.64% and 16.04% less, and the US trade deficits with China were 17.4% and 32.0% less than the trade figures reported in value added and gross terms, respectively. The concept of TiFI transforms trade measures from a territory-based “made in” label to a factor income-based “created by” label.     

Flying with the Dragon: Estimating Developing Countries’ Gains from China's Imports

As a large trading nation, China competes with importing countries’ domestic and third‐country markets but also creates growth opportunities for exporters. Most studies on China trade shocks or “China shocks” focuse on the impacts of import competition on developed economies. The present paper complements research on China shocks by exploring the other side of the trade exposure to China – China as the largest importer, rather than as an exporter. We analyze the effects of export expansion into China on the local labor markets of the exporting developing countries for the years 1992 to 2018. Using detailed export and employment data, we estimate employment pattern variations in manufacturing industries with exports from other developing countries as instruments for export exposure. We find that the increase in trade exposure to China in the world economy has caused extensive job gains in manufacturing industries in developing countries that were exporters. On average, our estimations show that this trade exposure created approximately 1.5 million additional jobs from 1992 to 2018, which made an important contribution to manufacturing industries in developing countries. Our empirical analysis also shows that trade had stabilizing effects on employment in the countries in our sample generally.     

Structural change in the Chinese economy and changing trade relations with the world

This paper examines the impact of structural change in China, in particular a reduction in the savings rate, an increase in the share of skilled workers, and an increase in productivity in technologically advanced manufacturing sectors targeted by Made in China 2025. Baseline projections until 2040 are generated with the WTO Global Trade Model, a dynamic computable general equilibrium model. With the modelled structural changes, the Chinese economy is projected to reorient its focus increasingly onto the domestic economy, raising the share of private household and government consumption in GDP, turning China's trade surplus into a trade deficit, reducing China's share in global exports, raising the share of services in both production and exports, shifting the destination markets of Chinese exports from developed to developing countries, and changing its pattern of comparative advantage away from sectors like light and heavy manufacturing to electronic and machinery equipment. The large bilateral trade surplus vis-a-vis the United States is projected to fall to almost zero.     

Can the Japanese agri-food producers survive under freer trade? A general equilibrium analysis with farm heterogeneity and product differentiation

The roles of firm heterogeneity and product differentiation in the manufacturing industries have attracted research attention on the “new new trade theory.” The agricultural sectors also produce new goods using product differentiation through breeding, branding, and other activities. In reaction to globalization, the Japanese Government has sought to revitalize its agri-food sectors by promoting exports of differentiated products. This computable general equilibrium study examines the relevance of this policy, focusing on five agri-food sectors other than grains. We simulate Japan’s three trade deals and a policy intervention that cuts fixed export costs to promote exports. We show that only a few agri-food sectors can increase exports and maintain domestic output under freer trade, and that export promotion would markedly increase entrants into export markets and increase exports of the vegetables and fruit, and processed food product sectors. In these trade deals, tariff and nontariff barriers have different impacts on trade, output, and farm/firm entry.     

COVID-19 and trade: Simulated asymmetric loss

This paper uses 2018 data as a benchmark to build a numerical 26-country global general equilibrium model with trade cost and an endogenous trade imbalance structure. We assume that COVID-19 will increase the trade cost between countries and decrease labor supply in production. We use China’s trade data from January to April in 2020 to calibrate the influence level parameters and then simulate the trade effects of COVID-19 in China, the EU, the US, and the world. Our simulation results find that all countries’ trade and exports will be significantly hurt by the pandemic. Due to the trade diversion effect and the price growth effect, some countries will see an increase in import trade. Comparatively, the pandemic has the most negative impact on global trade, followed by the EU, the US, and China. As the pandemic deepens, the negative impact on trade will increase. The worldwide pandemic has the most significant impact on US trade, with an effect about 1.5 times that of the average world effect.     

Global value chains and the “missing exports” of the United States

Many American multinational corporations have turned into factory-less. They outsource the production of their products to foreign companies and derive the largest share of their revenues from intellectual property and services embedded in physical products sold to international consumers. However, conventional trade statistics are compiled based on the value of goods crossing national borders, as declared to customs. The value added associated with intellectual property and services embedded in physical goods is not recorded as an export. Current trade statistics greatly underestimate US exports. In this paper, we use the case of Apple, the largest American consumer products company and a typical factory-less manufacturer, to illustrate the failure of conventional trade statistics to report actual US export capacity in the age of global value chains. According to our analysis of this case, if the value added of Apple intellectual property and services embedded in all Apple products sold to foreign consumers were counted as part of US exports, total US exports in 2015 would increase by 3.4%, and its trade deficit would decrease by 7.0%. In terms of bilateral trade, the value added under examination here would raise the US exports to China and Japan by 16.6% and 8.7% respectively, and lower its trade deficit with the two countries by 5.2% and 7.8% accordingly.     

Penetration of industrial country markets by agricultural products from developing countries

About 55% of food and about 60% of non-food agricultural exports of the developing countries are sold in industrial country markets. Market access is therefore important.While the developing countries have been able to increase the market penetration of their manufactured exports in industrial countries at a remarkable rate of about 8% in the 1970s, market penetration in agricultural commodities has generally been less successful.From 1970 to 1980 the developing countries were able to increase their market penetration in processed agricultural commodities from 3.5 to 3.7%, which amounts to an average annual increase of only 0.6%. In basic agricultural products like sugar, maize, tomatoes and beef they even incurred losses in their market share that corresponded to an increase in the degree of self-sufficiency (and probably of protective trade barriers) of the industrial countries, in particular the EC.     

New Insights on US Aggregate and State Level Trade with the China Region

Aggregate trade data with breakdown into related and non‐related party components show that US multinational enterprises use different trading strategies in the China region relative to other countries. US trade with the China region in 2002–2007 is characterized by arm's‐length transactions. State‐level trade data show great variability in state engagement with the region through trade: exports to the region range from 1 to 28 percent of state exports. In addition, compared to exports to other countries, exports to the region are highly concentrated. At the extreme, for some states, 96–98 percent of exports to the region are computer and electronic products. Finally, gravity regressions show that state exports to Hong Kong are positively associated with the relative size of the Hong Kong‐born population in the states. There is no evidence that stricter labor regimes lead to lower state exports.     

《欧洲议会和理事会关于农产品质量计划的法规提案》述评

对于中国地理标志产品出口而言,《欧洲议会和理事会关于农产品质量计划的法规提案》(《提案》)明显增强了技术性贸易壁垒,将直接影响中国农产品、食品或者传统特产在欧盟的市场份额。以第19条为例,《提案》是欧盟打压中国地理标志产品(尤其是中草药)的延续,将加重中国地理标志产品生产者的经营成本,增大中国地理标志产品生产者的经营风险,并将引发中国地理标志产品商业秘密的外泄。对此,应当强化中国地理标志产品的保护色彩,优化地理标志主管部门之间的协调机制,创新地理标志品牌提升的发展思路。     

全球华人网络的出口贸易效应及其影响机制研究

文章利用全球131个国家(或地区)的华人网络和贸易数据,考察了华人网络对国家之间出口贸易的影响,通过区分华人网络中的直接联系与间接联系,检验了移民偏好机制和移民信息机制的有效性。研究结果表明:华人网络不仅会通过直接联系促进中国对海外华人所在国出口贸易的增长,而且会通过间接联系带动海外华人所在国之间出口贸易规模的扩大;移民信息机制是华人网络促进国家之间出口贸易增长的主要机制,但是,华人网络会同时通过移民信息机制和移民偏好机制促进差异化商品和资本品出口贸易增长。进一步的研究发现,发达国家移民网络的出口贸易创造效应普遍高于发展中国家,华人网络的出口贸易创造效应明显高于其他发展中国家。因此,中国不仅要重视海外华人在促进中国出口发展中的重要作用,而且要积极地引进国际人才特别是来自发达国家的国际人才,通过参与其他国家的移民网络构建中国与世界各国的联系,促进中国出口贸易稳定增长。     

中国制造业出口贸易的技术结构分布及其国际比较

借鉴Lall(2000)及OECD(2008)的方法,利用1995～2006年三位数《标准国际贸易分类》数据,本文分析了中国制造业出口贸易的技术结构分布,并与世界主要国家和地区进行了比较。研究发现:(1)从贸易统计上看,中国制造业出口的技术结构已经由低技术制造业转向了高技术制造业。(2)与日本、美国和德国等世界主要发达国家以汽车、化工和机械等中技术制成品出口为主不同,中国的出口主要集中在低技术制成品和高技术制成品,其中低技术制成品以纺织、皮革和鞋类为主,而高技术制成品则以信息和通信技术产品为主。(3)中国出口贸易的技术结构与发展中经济体更为相似,特别是向亚洲新兴工业经济体不断趋同;与发达经济体的差异虽然较大,但正迅速向其趋同。由于中国高技术产品的出口贸易主要依靠外资企业和加工贸易,中国出口贸易的技术结构分布和贸易竞争力可能被夸大了。     

Analysis of Chinese Manufacturing Export Duration

This paper studies the duration of Chinese manufacturing exports and its determinants, using disaggregated 6‐digit level Harmonized System product trade data from 1995 to 2007. Cox proportional hazard, Weibull and exponential models are used to examine the effects of various factors on export duration. It is revealed that export duration tends to be rather short‐lived. It is also found that GDP and GDP per capita of the export destination have positive effects on export duration, while trade relationships with distant and landlocked countries are generally of shorter duration. In addition, export duration is longer for differentiated and parts and components products, as well as products with large initial trade values. WTO membership is also important for longer export duration. Our empirical analysis suggests that developed markets, such as the USA and the EU, are important to China, and should still be the major sources for Chinese export growth in the long run. Moreover, technical innovation of firms and free trade agreement negotiations will be helpful for sustainable export growth.     

Product Cycles, Innovation, and Exports: A Study of Indian Pharmaceuticals

This paper studies the product cycle and neo-technology theories of trade in the context of generic pharmaceuticals. It analyzes the export performance of 131 Indian pharmaceutical firms for the period 1989–2004. The results indicate that technology proxied by foreign patent rights has a positive impact on exports. This suggests that developing countries with innovation skills for process innovations are capable of penetrating international markets in the later stages of the product cycle by using patents, which were the barriers to trade in the early stages of the product cycle.