Industrial development and trade policy uncertainty: Evidence from China’s WTO accession

Weidi Yuan and Difei Ouyang

Journal of International Economics, 2025, vol. 157, issue C

Abstract: This paper studies how the elimination of trade policy uncertainty around WTO accession affects China’s manufacturing sector. We find a strong cross-sectional relationship between reduced uncertainty and input and output expansion by industry. The growth effect is particularly pronounced in the most labor-intensive industries in line with China’s comparative advantage, and more so in regions with lower shipping costs and a large manufacturing base. A decomposition reveals that the industry expansion can be traced to the extensive margin of new firm entry—consistent with firm-level evidence showing only a modest response among incumbent firms.

Keywords: Trade policy uncertainty; Manufacturing industry; Employment expansion; Chinese economy (search for similar items in EconPapers)
JEL-codes: F13 F14 J21 O14 O47 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:157:y:2025:i:c:s0022199625000625

DOI: 10.1016/j.jinteco.2025.104106

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