Input Trade Liberalization and Import Switching: Evidence from Chinese Firms

Wei Tian and Miaojie Yu ()
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Wei Tian: University of International Business and Economics (UIBE)
Miaojie Yu: China Center for Economic Research, Peking University

A chapter in Input Trade Liberalization in China, 2023, pp 161-181 from Springer

Abstract: Abstract This paper investigates how input liberalization affects firm import behavior. Using comprehensive production and trade data of Chinese firms, the paper shows that firms switch import sources from developing countries to developed countries as Chinese input tariffs fall. This finding is evident for import value and import scope. The observation holds after excluding the possible influence of reducing processing trade. The paper further demonstrates that the mechanism can be attributed to quality upgrading and innovation led by input cost reductions. The analysis handles the possible endogeneity problem, and the findings are robust and significant to different empirical methodologies and measurements.

Keywords: F1; F13; F14 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-981-99-7599-0_7

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DOI: 10.1007/978-981-99-7599-0_7

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