Uncertainty of the Export VAT Rebate Policy: Measurement and Its Effects

Zhang Yanzhe, Xu Helian and Shao Xiaokai ()
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Zhang Yanzhe: School of Economics, Hainan University Haikou China
Xu Helian: School of Economics and Trade, Hunan University Changsha China
Shao Xiaokai: International Business School, Beijing Foreign Studies University Beijing China

China Finance and Economic Review, 2024, vol. 13, issue 2, 90-111

Abstract: Based on the export VAT rebate rate data from 2004 to 2015, this paper measures the uncertainty of Chinese export VAT rebate policy by using unexpected fluctuation of export VAT rebate rate, and finds that the index varies across products, years and industries. Then, the paper studies the influence of the uncertainty of export VAT rebate policy on China’s export growth from both theoretical and empirical perspectives. The research results show that this uncertainty reduces the expected profit of export enterprises and their optimal output, and significantly reduces the growth rate of the ordinary export that applies the export VAT rebate method, but it has no impact on the processing export. By decomposing total value of exports, it is found that the growth in the number of ordinary export relationship and average sales decrease with the increase of uncertainty, while the average price growth rate increases slightly, and these effects are only reflected in the newly entered export relations. The findings suggest that when the uncertainty of export VAT rebate policy is high, enterprises are more cautious about entering the ordinary export market and more likely to adopt a low-quantity-high-price strategy.

Keywords: export VAT rebate; policy uncertainty; export growth; ordinary export (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:cferev:v:13:y:2024:i:2:p:90-111:n:1005

DOI: 10.1515/cfer-2024-0011

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