 Why does China protect its labour‐intensive industries more?The Economics of Transition, 2006, vol. 14, issue 2, 289-319 Abstract: China's tariff structure favours labour‐intensive sectors, and this is at odds with traditional theory of comparative advantage. The paper argues that tariffs in China are a mechanism for protecting technology‐backward domestic – especially state‐owned enterprises (SOEs) from competition technology‐advanced foreign enterprises producing in China. With relatively integrated labour markets and cross‐firm technology differences, SOEs’ subsistence is supported by subsidized credit and limited access of foreign firms’ local production to tariff‐protected domestic markets. Labour market integration and capital subsidies increase the relative cost of labour in SOEs compared to their foreign competitors, hurting more domestic firms in industries that use labour more intensively. Restrictions to FIEs’ (foreign‐invested enterprises) access to tariff‐protected product markets, which protect more labour‐intensive industries, compensate for the greater cost disadvantage of SOEs in labour‐intensive sectors. Date: 2006 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:etrans:v:14:y:2006:i:2:p:289-319 Ordering information: This journal article can be ordered from Access Statistics for this article The Economics of Transition is currently edited by Philippe Aghion and Wendy Carlin More articles in The Economics of Transition from The European Bank for Reconstruction and Development Contact information at EDIRC. |
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