What Drives China’s Exports: Evidence from a Domestic Consumption Expansion Policy

Ruling Hong, Mengxun Liu (), Haoming Yang and Qianqian Zhang
Additional contact information
Ruling Hong: College of Economics and Management, China Agricultural University, Beijing 100083, China
Mengxun Liu: College of Economics and Management, China Agricultural University, Beijing 100083, China
Haoming Yang: International College Beijing, China Agricultural University, Beijing 100083, China
Qianqian Zhang: College of Economics and Management, China Agricultural University, Beijing 100083, China

Sustainability, 2023, vol. 15, issue 4, 1-15

Abstract: The relationship between domestic demand and exports has remained the focus of the academic world for a long time. A large body of research has confirmed the promotion effect of international trade on domestic demand. This study uses a difference-in-difference (DID) model to estimate instrumental variables. In addition, we have discussed that China’s “Home Appliances to the Countryside” policy as an instrumental variable for domestic demand as it affects exports through the two-stage least squares (2SLS) method. The empirical results show that expanding domestic demand can significantly promote exports. The internal mechanism is that the subsidy policy stimulates domestic demand, which improves total factor productivity (TFP). TFP could enhance the international competitiveness of enterprises effectively. Furthermore, this study negates the channel that prices decline in promoting export. A series of robustness test policies that promote domestic demand can significantly boost exports. This study provides evidence for the solid complementary relationship between domestic demand and exports in the home appliance industry.

Keywords: domestic demand; exports; home appliances to the countryside; DID (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/15/4/3142/pdf (application/pdf)
https://www.mdpi.com/2071-1050/15/4/3142/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:15:y:2023:i:4:p:3142-:d:1062662

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().