Impact of the US–China trade war on resource allocation: Evidence from China's land supply

Jidong Yang, Bin Huang, Qijing Yang and Yulong Zhou

China Economic Review, 2022, vol. 76, issue C

Abstract: This study investigates the impact of the current United States (US)–China trade war on resource allocation, using monthly panel data at the city level; the data relate to the transfer of local government-controlled land from 2017 to 2019. The results show that the trade war significantly changed local governments' economic development strategies. As the trade war progressed, Chinese local governments shifted their attention to boosting the development of high-tech industries by significantly increasing the proportion of land supply for these industries. After the trade war, for every 1% increase in the US exports as a share of gross domestic product (GDP), land supply to high-tech industries increased by 0.25%. This effect is more prevalent in cities with more fiscal resources, a younger secretary of the Communist Party of China (CPC) Municipal Committee, lower levels of public nationalism, and a larger share of foreign enterprises among exporters. These results are consistent with our assumption that the pressure generated by the US–China trade war has significantly increased the potential returns for local governments in terms of developing high-tech industries.

Keywords: Trade war; Local government response; Land supply; Official behavior (search for similar items in EconPapers)
JEL-codes: F13 L50 Q24 R11 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:76:y:2022:i:c:s1043951x22001122

DOI: 10.1016/j.chieco.2022.101854

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